[Federal Register Volume 68, Number 22 (Monday, February 3, 2003)]
[Proposed Rules]
[Pages 5378-5428]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-2443]



[[Page 5377]]

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Part IV





Department of Health and Human Services





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Food and Drug Administration



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21 CFR Part 1



Registration of Food Facilities and Prior Notice of Imported Food Under 
the Public Health Security and Bioterrorism Preparedness and Response 
Act of 2002; Proposed Rules

  Federal Register / Vol. 68, No. 22 / Monday, February 3, 2003 / 
Proposed Rules  

[[Page 5378]]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

21 CFR Part 1

[Docket No. 02N-0276]
RIN 0910-AC40


Registration of Food Facilities Under the Public Health Security 
and Bioterrorism Preparedness and Response Act of 2002

AGENCY: Food and Drug Administration, HHS.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Food and Drug Administration (FDA) is proposing a 
regulation that would require domestic and foreign facilities that 
manufacture, process, pack, or hold food for human or animal 
consumption in the United States to register with FDA by December 12, 
2003. The proposed regulation would implement the Public Health 
Security and Bioterrorism Preparedness and Response Act of 2002 (the 
Bioterrorism Act), which requires domestic and foreign facilities to 
register with FDA by December 12, 2003, even in the absence of final 
regulations. Registration is one of several tools that will enable FDA 
to act quickly in responding to a threatened or actual terrorist attack 
on the U.S. food supply by giving FDA information about all facilities 
that manufacture, process, pack, or hold food for consumption in the 
United States. In the event of an outbreak of food-borne illness, such 
information will help FDA and other authorities determine the source 
and cause of the event. In addition, the registration information will 
enable FDA to notify quickly the facilities that might be impacted by 
the outbreak.

DATES: Submit written or electronic comments by April 4, 2003. Written 
comments on the information collection provisions should be submitted 
by March 5, 2003.

ADDRESSES: Submit written comments to the Dockets Management Branch 
(HFA-305), Food and Drug Administration, 5630 Fishers Lane, rm. 1061, 
Rockville, MD 20852. Submit electronic comments to http://www.fda.gov/dockets/ecomments. Submit written comments on the information 
collection provisions to the Office of Information and Regulatory 
Affairs, the Office of Management and Budget (OMB), New Executive 
Office Bldg., 725 17th St. NW., rm. 10235, Washington, DC 20503, Attn: 
Stuart Shapiro, Desk Officer for FDA.

FOR FURTHER INFORMATION CONTACT: Leslye M. Fraser, Center for Food 
Safety and Applied Nutrition (HFS-4), Food and Drug Administration, 
5100 Paint Branch Pkwy., College Park, MD 20740, 301-436-2378.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Background and Legal Authority
II. Preliminary Stakeholder Comments
III. The Proposed Regulation
    A. Highlights of Proposed Rule
    B. General Provisions
    1. Who Must Register Under This Subpart? (Proposed Sec.  1.225)
    2. Who Is Exempt From This Subpart? (Proposed Sec.  1.226)
    3. What Definitions Apply to This Subpart? (Proposed Sec.  1.227)
    C. Procedures for Registration of Food Facilities
    1. When Must You Register? (Proposed Sec.  1.230)
    2. How and Where Do You Register? (Proposed Sec.  1.231)
    3. What Information is Required in the Registration? (Proposed 
Sec.  1.232)
    4. What Optional Items are Included in the Registration Form? 
(Proposed Sec.  1.233)
    5. How and When Do You Update Your Registration Information? 
(Proposed Sec.  1.234)
    D. Additional Provisions
    1. What Other Registration Requirements Apply? (Proposed Sec.  
1.240)
    2. What Happens if You Fail to Register? (Proposed Sec.  1.241)
    3. What Does Assignment of a Registration Number Mean? (Proposed 
Sec.  1.242)
    4. Is Food Registration Information Available to the Public? 
(Proposed Sec.  1.243)
IV. Analysis of Economic Impacts
    A. Benefit-Cost Analysis
    B. Need for the Regulation
    C. Reason for the Regulation
    D. Options
V. Initial Regulatory Flexibility Act
VI. Unfunded Mandates
VII. Small Business Regulatory Enforcement Fairness Act (SBREFA) Major 
Rule
VIII. Paperwork Reduction Act of 1995
IX. Analysis of Environmental Impact
X. Federalism
XI. Comments
XII. References

I. Background and Legal Authority

    The events of September 11, 2001, highlighted the need to enhance 
the security of the U.S. food supply. Congress responded by passing the 
Public Health Security and Bioterrorism Preparedness and Response Act 
of 2002 (``the Bioterrorism Act'') (Public Law 107-188), which was 
signed into law on June 12, 2002. The Bioterrorism Act includes a 
provision in title III (Protecting Safety and Security of Food and Drug 
Supply), Subtitle A--Protection of Food Supply, section 305, which 
requires the Secretary of Health and Human Services (the Secretary) to 
develop regulations mandating domestic and foreign facilities that 
manufacture, process, pack, or hold food for human or animal 
consumption in the United States to register with FDA by December 12, 
2003. The provision creates section 415 and amends sections 301 and 801 
of the Federal Food, Drug, and Cosmetic Act (the act) (21 U.S.C. 331 et 
seq.).
    The major components of section 305 of the Bioterrorism Act are as 
follows:
    [sbull] The owner, operator, or agent in charge of a facility is 
responsible for submitting the registration form to FDA;
    [sbull] The registration form must include the name and address of 
each facility at which, and all trade names under which, the registrant 
conducts business. Foreign facilities also must include the name of the 
U.S. agent for the facility;
    [sbull] FDA also may require each facility to submit the general 
food category (as identified under Sec.  170.3 (21 CFR 170.3)) of the 
food manufactured, processed, packed, or held at the facility, if FDA 
determines this submission necessary through guidance. FDA plans to 
issue such guidance;
    [sbull] Foreign facilities exporting food to the United States are 
required to register unless the food undergoes further processing or 
packaging by another facility outside the United States;
    [sbull] Other facilities excluded from the registration requirement 
are: farms, restaurants and other retail facilities, nonprofit food 
establishments in which food is prepared for or served directly to the 
consumer, and fishing vessels (except those engaged in processing as 
defined in Sec.  123.3(k) (21 CFR 123.3(k)));
    [sbull] FDA shall notify the registrant when it has received the 
registration and assign a unique registration number to each registered 
facility. This number is not subject to public disclosure under section 
552 of title 5, United States Code (the Freedom of Information Act);
    [sbull] FDA may encourage electronic registration; and
    [sbull] Registered facilities must notify FDA in a timely manner of 
changes to their registration information.
    In addition to section 305 of the Bioterrorism Act, FDA is relying 
on sections 701(a) and 701(b) of the act (21 U.S.C. 371(a) and (b)) in 
issuing this proposed rule. Section 701(a) authorizes the agency to 
issue regulations for the efficient enforcement of the act, while

[[Page 5379]]

section 701(b) of the act authorizes FDA and the Department of Treasury 
to jointly prescribe regulations for the efficient enforcement of 
section 801 of the act.

II. Preliminary Stakeholder Comments

    On July 17, 2002, FDA sent a letter to members of the public 
interested in food issues outlining the four provisions in title III of 
the Bioterrorism Act that require FDA to issue regulations in an 
expedited time period, and FDA's plans for implementing them (see 
http://www.cfsan.fda.gov/[tilde]dms/sec-ltr.html). In the letter, FDA 
invited stakeholders to submit comments to FDA by August 30, 2002, for 
FDA's consideration as it developed this proposed rule. FDA also held 
several meetings with representatives of industry, consumer groups, 
other Federal agencies, and foreign embassies after sending out the 
July 17, 2002, letter, in order to solicit stakeholder comments. In 
response to these solicitations, FDA received numerous comments 
regarding section 305 of the Bioterrorism Act.
    FDA has considered all the comments received by August 30, 2002. 
FDA will consider all comments received thus far along with the 
comments we receive during the public comment period on this proposed 
rule as we develop the final rule. Some of the significant comments FDA 
received on or before August 30, 2002, include:
    [sbull] Defining farm to include typical post-harvesting 
operations, if all food is grown on the farm;
    [sbull] Including food product categories in a format that 
satisfies both the requirements of the Bioterrorism Act and stakeholder 
concerns;
    [sbull] Allowing facilities that handle most or all of the food 
categories listed to check ``most/all'' food product categories instead 
of requiring them to check every product category handled by the 
facility;
    [sbull] Maintaining flexibility regarding qualifications for a U.S. 
agent;
    [sbull] Including dates the facility is in operation, if its 
business is seasonal;
    [sbull] Defining ``facility'' to include multiple buildings on a 
single site, or buildings within the same general physical location;
    [sbull] Allowing a corporate headquarters or other central 
management to submit registrations for multiple facilities;
    [sbull] Providing for both electronic and paper registration;
    [sbull] Providing registration numbers instantaneously, if 
registration is done electronically;
    [sbull] Requiring only trade names of facilities, as opposed to 
brand names of products the facility produces;
    [sbull] Defining ``food'' consistent with the act's definition;
    [sbull] Including a model of what the electronic registration 
screen would look like;
    [sbull] Defining ``timely updates'' to mean within 30 calendar days 
of changes to information on the registration form; and
    [sbull] Requiring facilities that begin to manufacture, process, 
pack, or hold food for consumption in the United States on or after 
December 12, 2003, to register before they begin such activities.

III. The Proposed Regulation

    This proposed rule implements the food facility registration 
requirements in section 305 of the Bioterrorism Act. Together with the 
proposed rules implementing section 307 (prior notice), section 306 
(recordkeeping), and section 303 (administrative detention) of the 
Bioterrorism Act, registration of food facilities will enable FDA to 
act quickly in responding to a threatened or actual bioterrorist attack 
on the U.S. food supply or to other food-related emergencies. 
Registration will provide FDA with information about facilities that 
manufacture, process, pack, or hold food for consumption in the United 
States. In the event of an outbreak of food-borne illness, such 
information will help FDA and other authorities determine the source 
and cause of the event. In addition, the registration information will 
enable FDA to notify quickly the facilities that might be impacted by 
the outbreak.
    In establishing and implementing this proposed rule, FDA will 
comply fully with its international trade obligations, including the 
applicable World Trade Organization (WTO) agreements and the North 
American Free Trade Agreement (NAFTA). For example, FDA believes this 
proposed rule is not more trade-restrictive than necessary to meet the 
objectives of the Bioterrorism Act. FDA has endeavored to make the 
registration process as simple as possible for both domestic and 
foreign facilities.

A. Highlights of Proposed Rule

    The key features of this proposed rule are as follows:
    [sbull] Owners, operators, or agents in charge of facilities 
engaged in manufacturing, processing, packing, or holding food for 
consumption in the United States must register the facility with FDA;
    [sbull] Facilities covered under this rule must be registered by 
December 12, 2003;
    [sbull] Domestic facilities must register with FDA, whether or not 
food from the facility enters interstate commerce;
    [sbull] A foreign facility may designate its U.S. agent as its 
agent in charge for purposes of registering the foreign facility;
    [sbull] Foreign facilities are exempt from registering if food from 
these facilities undergoes further processing or packaging by another 
facility outside the United States. The facility is not exempted from 
registration if the processing or packaging activities of the 
subsequent facility are limited to the affixing of a label to a package 
or other de minimis activity. The facility that conducts the de minimis 
activity also must register.
    [sbull] The following facilities are also exempt from registering: 
Farms; retail facilities; restaurants; nonprofit food facilities in 
which food is prepared for, or served directly to, the consumer; 
fishing vessels not engaged in processing, as defined in Sec.  
123.3(k); and facilities regulated exclusively, throughout the entire 
facility, by the U.S. Department of Agriculture (USDA) under the 
Federal Meat Inspection Act (21 U.S.C. 601 et seq.), the Poultry 
Products Inspection Act (21 U.S.C. 451 et seq.), or the Egg Products 
Inspection Act (21 U.S.C. 1031 et seq.);
    [sbull] FDA strongly encourages electronic registration, which will 
be quicker and more convenient for both facilities and FDA than 
registration by mail.

B. General Provisions

1. Who Must Register Under This Subpart? (Proposed Sec.  1.225)
    As required by the Bioterrorism Act, the proposed rule applies to 
facilities engaged in the manufacturing/processing, packing, or holding 
of food for human or animal consumption in the United States. The 
proposed rule applies to both domestic and foreign food facilities. 
Individual homes are not subject to the regulation if the food that is 
manufactured/processed, packed, or held in the home does not enter 
commerce.
    FDA is proposing in Sec.  1.225(b) to require all domestic 
facilities that manufacture/process, pack, or hold food to register, 
whether or not the food from the facility enters interstate commerce. 
The Bioterrorism Act provides that ``any facility engaged in 
manufacturing, processing, packing, or holding food for consumption in 
the United States'' must register and defines ``domestic facility'' as 
``a facility located in any of the States or Territories.'' Therefore, 
FDA tentatively concludes that the statute requires all domestic 
facilities to

[[Page 5380]]

register, whether or not they engage in interstate commerce. Moreover, 
having a central database of all domestic facilities producing food 
would greatly assist FDA in limiting the effects of a food-related 
emergency covering several States. Nonetheless, because FDA recognizes 
that this is an important and controversial issue, the agency is 
seeking comment on whether the agency has authority to exempt domestic 
facilities engaged only in intrastate commerce from the registration 
requirement and, if so, whether FDA should use that authority. FDA also 
seeks comment on how many intrastate facilities are not covered by one 
of the exemptions from the registration requirement (e.g., the farm or 
retail exemption). Finally, FDA invites recommendations on what 
screening questions the agency could ask to enable the owner, operator, 
or agent in charge of a facility to easily determine whether the 
facility is an interstate or intrastate facility.
    For both domestic and foreign facilities, FDA is proposing in Sec.  
1.225(a) and (b) that the owner, operator, or agent in charge, register 
the facility. FDA is also proposing in Sec.  1.225(c) that the U.S. 
agent may register a foreign facility if the foreign facility has 
designated the U.S. agent as its agent in charge. If a foreign facility 
wants to designate its U.S. agent as its agent in charge for purposes 
of registering, FDA recommends that the facility and U.S. agent enter 
into a written agreement authorizing the U.S. agent to register the 
facility and specifying the U.S. agent's other responsibilities. There 
are other roles in the course of business that an agent in charge may 
fill. A formal written agreement between the facility and its U.S. 
agent would provide clarity for both. Because the proposed rule would 
require the U.S. agent to reside or maintain a place of business in the 
United States, allowing the U.S. agent to register the foreign facility 
will give foreign facilities reliable access to electronic registration 
that some facilities might not otherwise have. For example, within the 
United States, Internet access is readily available to members of the 
public at many local libraries and certain places of business (e.g., 
photocopying centers).
    This process will allow a foreign facility to be registered much 
more quickly than requesting a paper registration form from FDA by 
mail, waiting to receive the registration form in the mail from FDA, 
completing the registration form and sending it to FDA by mail, waiting 
for FDA to enter the information manually into the electronic 
registration database--which could take several weeks to several months 
depending on the number of paper registrations FDA has received 
previously--and awaiting a response from FDA by mail that contains the 
confirmation of registration and the facility's registration number.
2. Who is Exempt From This Subpart? (Proposed Sec.  1.226)
    In Sec.  1.226, FDA is proposing to exempt several types of 
facilities from the registration requirement. First, as noted 
previously, FDA is proposing in Sec.  1.226(a) to exclude foreign 
facilities, ``if food from these facilities undergoes further 
manufacturing/processing (including packaging) by another foreign 
facility outside the United States.'' In other words, foreign 
facilities involved in the initial stages of manufacturing/processing 
food are not required to register if another facility further 
manufactures/processes or packs the food produced at that facility 
outside the United States.
    This exemption would not apply to facilities if the ``further 
manufacturing/processing'' at the subsequent facility is of a de 
minimis nature, such as adding labeling to a package or adding plastic 
rings to the outside of beverage bottles to hold them together. The 
facility conducting the de minimis activity would also be required to 
register. This proposal is based on FDA's tentative conclusion that the 
statute's exclusion of labeling and ``similar activity of a de minimis 
nature'' from the definition of ``further processing and packaging'' 
applies only for purposes of the definition of ``foreign facility.'' 
FDA tentatively concludes that this limitation does not apply to the 
term ``processing'' as used elsewhere in the registration provision of 
the Bioterrorism Act. Accordingly, facilities that label food or engage 
in similar activities would be required to register as processors. FDA 
requests comment on this interpretation of the Bioterrorism Act.
    The following are examples of which foreign facilities would be 
subject to, or exempt from, the registration requirement, based on the 
activities they perform:
    (1) A foreign facility would be required to register if it prepares 
a finished food and places it into packages suitable for sale and 
distribution in the United States.
    (2) A foreign facility distributing food to food processors outside 
the United States for further manufacturing/processing before the food 
is exported for consumption in the United States would not be required 
to register, unless the further manufacturing/processing entails adding 
labeling or other de minimis activity. If the further manufacturing/
processing is of a de minimis nature, both the facility conducting the 
de minimis activity and the facility immediately prior to it would be 
required to register.
    (3) The last foreign facility that manufactures/processes an 
article of food before it is exported to the United States would be 
required to register, even if the food subsequently is held or stored 
at a different facility outside of the United States. FDA is proposing 
to require these manufacturers/processors to register because the 
Bioterrorism Act exempts a foreign facility from registering only if 
another facility subsequently processes or packages the food.
    (4) Facilities located outside the United States that take 
possession, custody or control of finished foods for holding, packing, 
and/or storage prior to export to the United States, would be required 
to register.
    Even though the last processors and packagers of food are required 
to register under the proposed rule, the Bioterrorism Act also requires 
foreign facilities that pack and/or hold food subsequent to the 
processing and packaging process to register with FDA. Requiring 
registration of foreign facilities that conduct a significant activity 
with respect to the food, starting with the last manufacturer/processor 
involved, and ending with the last facility before the food is shipped 
to the United States, is consistent with the Bioterrorism Act, and 
ensures that FDA has contact information for foreign facilities whose 
operations would be expected to affect food exported for consumption in 
the United States. This requirement achieves a balance between 
protecting the U.S. food supply, and not unduly burdening foreign 
facilities.
    Consistent with the Bioterrorism Act, FDA also is proposing in 
Sec.  1.226(g) to exempt certain fishing vessels from the registration 
requirement. These vessels include ``those that not only harvest and 
transport fish but also engage in practices such as heading, 
eviscerating, or freezing intended solely to prepare fish for holding 
on board a harvest vessel.'' However, consistent with the Bioterrorism 
Act's reference to Sec.  123.3(k), the proposed rule provides that 
``those fishing vessels otherwise engaged in processing fish, which for 
purposes of this section means handling, storing, preparing, heading, 
eviscerating, shucking, freezing, changing into different market forms, 
manufacturing, preserving, packing, labeling, dockside unloading, or 
holding

[[Page 5381]]

are subject to all of the regulations in this subpart.''
    FDA also is proposing in Sec.  1.226(h) to exempt facilities that 
are regulated exclusively, throughout the entire facility, by USDA 
under the Federal Meat Inspection Act (21 U.S.C. 601 et seq.), the 
Poultry Products Inspection Act (21 U.S.C. 451 et seq.), or the Egg 
Products Inspection Act (21 U.S.C. 1031 et seq.). Such facilities 
include meat and poultry slaughterhouses. This section complies with 
section 315 of the Bioterrorism Act entitled ``Rule of Construction,'' 
which states that nothing in title III of the Bioterrorism Act, or an 
amendment made by title III, shall be construed to alter the 
jurisdiction between USDA and the U.S. Department of Health and Human 
Services under applicable statutes and regulations.
    FDA is proposing in Sec.  1.226 that facilities that are jointly 
regulated by FDA and USDA will be required to register under this rule 
because they are under FDA's jurisdiction as well as that of USDA. 
Examples of facilities jointly regulated by FDA and USDA include 
slaughter facilities that slaughter cattle and deer, and food 
processing facilities that process meat and nonmeat products, such as 
frozen T.V. dinners containing both meat, which is regulated by USDA, 
and fish, which is regulated by FDA.
    As specified in the Bioterrorism Act, FDA also is proposing to 
exempt several other facilities from the registration requirement. 
These facilities, which are discussed in the definitions section, 
include farms (Sec.  1.226(b)); retail facilities (Sec.  1.226(c)); 
restaurants (Sec.  1.226(d)); and nonprofit food facilities in which 
food is prepared for, or served directly to, the consumer (Sec.  
1.226(e)).
3. What Definitions Apply to This Subpart? (Proposed Sec.  1.227)
    As specified in proposed Sec.  1.227, the following definitions are 
used throughout the proposed rule:
    a. The act. The proposed rule (Sec.  1.227(a)) defines ``the act'' 
as the Federal Food, Drug, and Cosmetic Act. The proposed rule applies 
the definitions of terms in section 201 of the act (21 U.S.C. 321) to 
such terms in the proposed rule.
    b. Calendar day. FDA is proposing in Sec.  1.227(c)(1) to define 
``calendar day'' as every day shown on the calendar. This term includes 
weekend days.
    c. Facility. FDA is proposing in Sec.  1.227(c)(2) to define a 
``facility'' as ``any establishment, structure, or structures under one 
management at one general physical location, or, in the case of a 
mobile facility, traveling to multiple locations, that manufactures/
processes, packs, or holds food for consumption in the United States. 
Individual homes are not facilities if the food that is manufactured/
processed, packed, or held in the home does not enter commerce.'' In 
response to comments that FDA received during its early outreach 
efforts, FDA is clarifying in the proposed rule that a facility is not 
limited to one building, but can consist of several contiguous 
structures.
    The definition of ``facility'' also specifies that a facility must 
be under one management. This means that, for purposes of the proposed 
rule, a single building may house distinct facilities if they are under 
separate management. If a facility is under joint management of two or 
more companies, the joint management arrangement is considered one 
management.
    A mixed-type facility performs activities of a facility that is 
ordinarily required to register and activities of a facility that is 
ordinarily exempt, such as a farm or retail facility. In order to 
determine whether a mixed-type facility must register, FDA will 
consider whether the activity that would require registration is merely 
incidental to the activities of an exempt facility. If these activities 
are merely incidental, the facility need not register. For further 
clarification, see the discussion of the definitions of ``farm,'' 
``retail facility,'' and ``restaurant'' that follow.
    i. Domestic facility. FDA is proposing in Sec.  1.227(c)(2)(A) to 
define ``domestic facility'' consistent with the definition of 
``State'' in section 201(a)(1) of the act (21 U.S.C. 321(a)(1)). That 
is, FDA is proposing to define a domestic facility as one that is 
located in any State or Territory of the United States, the District of 
Columbia, or the Commonwealth of Puerto Rico.
    ii. Foreign facility. FDA is proposing in Sec.  1.227(c)(2)(ii) to 
define a foreign facility as a facility other than a domestic facility 
that manufactures, processes, packs, or holds food for consumption in 
the United States.
    d. Farm. FDA is proposing in Sec.  1.227(c)(3) to define ``farm'' 
in part as ``a facility in one general physical location devoted to the 
growing of crops for food, the raising of animals for food (including 
seafood), or both.'' A farm may consist of contiguous parcels of land, 
ponds located on contiguous parcels of land, or, in the case of netted 
or penned areas located in large bodies of water, contiguous nets or 
pens. Some examples of farms include: Apple orchards, hog farms, dairy 
farms, feedlots, or aquaculture facilities.
    The definition of ``farm'' includes: (i) Facilities that pack or 
hold food, provided that all of the food used in such activities is 
grown or raised on that farm or is consumed on that farm; and (ii) 
facilities that manufacture/process food, if all of the food used in 
such activities is consumed on that farm or another farm under the same 
ownership. ``Farm'' includes such facilities because they are 
activities incidental to farming that most farms engage in (e.g., 
holding and packing of harvested crops). Facilities that engage in 
manufacturing/processing, packing, or holding of food that is not 
described in the definition of ``farm'' must register because such 
activities are not activities that most farms engage in and are thus 
not included in the definition of ``farm.''
    A farm that manufactures/processes, packs, or holds food is not 
required to register with FDA, if all of the food used in such 
activities is consumed on that farm or another farm under the same 
ownership. For example, a farm that manufactures/processes animal feed 
from ingredients obtained off the farm for consumption by animals on 
the farm would be exempt because most farms that raise animals engage 
in this activity.
    This definition does not extend to facilities that grow crops and 
raise animals and also manufacture/process food that is sold for 
consumption off the facility because such activities are not incidental 
to farming. For example, a facility that grows oranges and 
manufactures/processes them into orange juice for sale to a distributor 
would be required to register as a manufacturing/processing facility.
    A facility could meet the definition of ``farm'' if all of the 
activities on the farm meet the description in Sec.  1.227(c)(3)(i), 
(c)(3)(ii), or both. For example, one farm could meet the description 
in Sec.  1.227(c)(3)(i) if all of the food packed or held on the farm 
was grown on that farm. A second farm could meet the description in 
Sec.  1.227(c)(3)(ii) if all of the food manufactured/processed on the 
farm is consumed on that farm, even if some of the food was not grown 
or raised on the farm (e.g., animal feed processed on the farm using 
materials obtained off the farm and fed to cattle on that farm).
    It should be noted that the proposed retail exemption also may 
apply to facilities that grow crops and raise animals. Thus, a facility 
that grows crops and raises animals and that also manufactures/
processes, packs, or holds food and sells it directly to consumers 
would be exempt from registering as a retail facility under Sec.  
1.226(e), whether or not the food was all grown or raised on that 
facility. Similarly, a facility would be exempt as both a farm and a 
retail facility if it sold crops grown on

[[Page 5382]]

the farm to consumers at a roadside stand.
    FDA is proposing to require co-op facilities that manufacture/
process, pack, or hold food, and that are not subject to the farm 
exemption, to register with FDA. Co-ops are organizations formed to 
perform activities, including manufacturing/processing or packing food, 
for their members. The product of these activities is distributed to 
the members or the public. A farm that grows wheat for distribution to 
co-op members would be exempt from registration, but a processing 
facility owned by the co-op would be required to register if it is not 
located on the farm and mills the wheat into flour for consumption by 
co-op members off the farm.
    The definition of farm does not include facilities that contract 
with multiple farmers to grow crops or raise animals. These facilities 
may manufacture/process feed and distribute it to the contract farmers 
for feeding to animals being raised on the farm. FDA is proposing that 
the facilities that manufacture/process feed for the contract farmers 
would be required to register. The farms that grow the crops or raise 
the animals would be exempt from the registration requirement.
    e. Food. FDA is proposing in Sec.  1.227(c)(4) to define ``food'' 
as it is defined in section 201(f) of the act. That definition is: ``* 
* * (1) articles used for food or drink for man or other animals, (2) 
chewing gum, and (3) articles used for components of any such 
article.'' FDA also is proposing to include some examples of products 
that are considered food under section 201(f) of the act. These 
examples include, but are not limited to: Fruits; vegetables; fish; 
dairy products; eggs; raw agricultural commodities for use as food or 
components of food; animal feed, including pet food; food and feed 
ingredients and additives, including substances that migrate into food 
from food packaging and other articles that contact food; dietary 
supplements and dietary ingredients; infant formula; beverages, 
including alcoholic beverages and bottled water; live food animals 
(such as hogs and elk); bakery goods; snack foods; candy; and canned 
foods. ``Substances that migrate into food from food packaging'' 
include immediate food packaging or components of immediate food 
packaging that are intended for food use. Outer food packaging is not 
considered a substance that migrates into food.''
    f. Holding. FDA is proposing in Sec.  1.227(c)(5) to define holding 
as storage of food. The proposed rule gives examples of holding 
facilities as including, but not being limited to: Warehouses, cold 
storage facilities, storage silos, grain elevators, or liquid storage 
tanks.
    g. Manufacturing/processing. FDA is proposing in Sec.  1.227(c)(6) 
to define manufacturing/processing as ``making food from one or more 
ingredients, or synthesizing, preparing, treating, modifying or 
manipulating food, including food crops or ingredients.'' Some examples 
of manufacturing/processing include, but are not limited to: Cutting, 
peeling, trimming, washing, waxing, eviscerating, rendering, cooking, 
baking, freezing, cooling, pasteurizing, homogenizing, mixing, 
formulating, bottling, milling, grinding, extracting juice, distilling, 
labeling, or packaging. FDA is defining manufacturing and processing 
together because the meanings of the terms overlap. For example, 
combining two materials into a finished product, such as macaroni and 
cheese, could be considered manufacturing, processing, or both. Since 
both manufacturers and processors are required to register with FDA, 
FDA does not believe it is necessary to distinguish between 
manufacturing and processing in the proposed rule.
    h. Nonprofit food facility. FDA is proposing in Sec.  1.227(c)(7) 
to define a nonprofit food facility as ``a charitable entity that 
prepares, serves, or otherwise provides food to the public.'' Examples 
of these facilities include: food banks, soup kitchens, and nonprofit 
food delivery services. FDA is proposing that in order to qualify as a 
nonprofit food facility, the entity must be exempt from paying income 
tax under the U.S. Internal Revenue Code. This requirement serves to 
ensure that FDA's definition of a nonprofit facility is consistent with 
that of other agencies of the U.S. Government.
    i. Packing. FDA is proposing in Sec.  1.227(c)(8) to define packing 
as ``placing, putting, or repacking a food into different containers 
without making any change to the form of the food.'' Facilities engaged 
in packing of food for consumption in the United States must register 
under the proposed rule, unless exempt.
    j. Port of entry. For purposes of the proposed rule, FDA is 
defining ``port of entry'' as ``the water, air, or land port at which 
the article of food is imported or offered for import into the United 
States, i.e., the port where food first arrives in the United States.'' 
FDA is proposing this definition because the port where the food 
arrives in the United States may be different than the port where the 
entry of the article of food is processed for U.S. Customs purposes, 
i.e., where the article is ``entered.'' Under U.S. Customs Service 
statutes, products can be imported into one port, then transported to 
another port under a custodial bond before a consumption entry is 
filed. For example, food may be imported into the United States from 
Canada through Buffalo, NY, but not entered for consumption with U.S. 
Customs until it reaches St. Louis, MO, several days later. In this 
example, under FDA's proposed definition, the port of entry is Buffalo, 
NY.
    The registration authority in the Bioterrorism Act is intended to 
give FDA better tools to deter, prepare for, and respond to 
bioterrorism. Given this purpose, ``port of entry'' must be defined as 
the port of arrival. Allowing food from a facility that has not 
registered and that is presented for importation into the United States 
to be shipped around the country and potentially lost to Government 
control simply is not consistent with the Bioterrorism Act's stated 
purpose. FDA believes that its ability to protect U.S. consumers from 
terrorism or other food-related emergencies will be strongest if food 
can be examined, and if necessary, held at the point where it first 
arrives in the United States. FDA requests comment on its proposal to 
define ``port of entry'' as the port of arrival.
    k. Restaurant. FDA is proposing in Sec.  1.227(c)(10) to define a 
restaurant as ``a facility that prepares and sells food directly to 
consumers for immediate consumption.'' As defined in the rule, some 
examples of restaurants include, but are not limited to: Cafeterias, 
lunchrooms, cafes, bistros, fast food establishments, food stands, 
saloons, taverns, bars, lounges, catering facilities, hospital 
kitchens, day care kitchens, and nursing home kitchens. See section 
III.B.3.c of this document for a discussion of mixed-type facilities, 
which may include restaurants.
    Due to possible ambiguity in the term, ``catering facilities'', FDA 
states in the proposed restaurant definition that facilities that 
provide food to interstate conveyances, such as airplanes, passenger 
trains, and cruise ships, rather than directly to consumers, are not 
restaurants. Facilities that provide food to interstate conveyances are 
not considered restaurants because they do not serve food directly to 
consumers for immediate consumption. For example, a facility that 
provides sandwiches to a passenger train for eventual sale to 
passengers would not be considered a restaurant. However, the snack bar 
on the train that sells the sandwiches to consumers would be considered 
a restaurant. FDA has historically

[[Page 5383]]

inspected these facilities that provide food to interstate conveyances 
and considers them processors, rather than restaurants.
    Because the proposed rule also applies to facilities that 
manufacture/process, pack, or hold food for animal consumption in the 
United States, by analogy, the term ``restaurants'' also includes pet 
shelters, kennels, and veterinary facilities in which food is provided 
to animals.
    l. Retail facility. In Sec.  1.227(c)(11), the proposed rule 
defines a retail facility as ``a facility that sells food products 
directly to consumers only. The term includes, but is not limited to, 
grocery and convenience stores, vending machine locations, and 
commissaries. The term includes facilities that not only sell food 
directly to consumers, but that also manufacture/process food in that 
facility solely for direct sale to consumers from that same facility.''
    The Bioterrorism Act does not limit the retail facility exemption 
to human food. However, the legislative history to the Bioterrorism Act 
states that the retail exemption applies to food for ``human'' 
consumption. Therefore, FDA is taking comments on whether the retail 
exemption should also be applied to food for animal consumption.
    The proposed rule would also require facilities that sell both 
directly to consumers and to distributors and wholesalers to register. 
Examples of these facilities are warehouse clubs. Because such 
facilities do not sell food directly to consumers only, they do not 
meet the definition of a ``retail facility.''
    m. U.S. agent. FDA is proposing in Sec.  1.227(c)(12) to define a 
U.S. agent as ``a person residing or maintaining a place of business in 
the United States whom a foreign facility designates as its agent.'' 
This definition is consistent with FDA's drug, biologics, and device 
registration regulations found in parts 207, 607, and 807 (21 CFR parts 
207, 607, and 807), respectively. In order to ensure that the U.S. 
agent is available to assist FDA in contacting foreign facilities, the 
proposed definition of U.S. agent also specifies that the U.S. agent 
``cannot be in the form of a mailbox, answering machine, or service, or 
other place where an individual acting as the foreign facility's agent 
is not physically present.'' FDA also is proposing to have the U.S. 
agent's responsibilities include acting as a communications link 
between FDA and the facility, such that FDA will treat representations 
provided by the U.S. agent to FDA as those of the foreign facility, and 
will consider information FDA provides to the U.S. agent as the 
equivalent of providing the same information or documents directly to 
the foreign food facility. As noted previously, FDA also is proposing 
to allow the U.S. agent to register on behalf of the foreign facility. 
FDA recommends that the U.S. agent and facility enter into a written 
agreement specifying the U.S. agent's responsibilities. The facility 
does not need to submit a copy of the agreement to FDA as part of its 
registration. If the foreign agent registers a facility without 
authorization from the facility, FDA will consider the registration to 
be a materially false, fictitious, or fraudulent statement to the U.S. 
Government under 18 U.S.C. 1001.
    n. You or registrant. FDA is proposing in Sec.  1.227(c)(13) to 
define ``you'' or ``registrant'' as ``the owner, operator, or agent in 
charge of a facility that manufactures/processes, packs, or holds food 
for consumption in the United States.'' FDA is proposing to use ``you'' 
or ``registrant'' throughout the proposed rule for easier readability.

C. Procedures for Registration of Food Facilities

1. When Must You Register? (Proposed Sec.  1.230)
    The Bioterrorism Act requires facilities subject to its 
requirements to be registered with FDA no later than December 12, 2003. 
Proposed Sec.  1.230 would require facilities that currently 
manufacture/process, pack, or hold food for consumption in the United 
States to be registered by December 12, 2003. FDA is proposing that 
facilities that begin to manufacture/process, pack, or hold food for 
consumption in the United States on or after December 12, 2003, must be 
registered before they begin such activities. This also would apply to 
facilities engaged in seasonal activities that may not be operating in 
December, 2003. Before these facilities could begin to manufacture/
process, pack, or hold food for consumption in the United States after 
December 12, 2003 (or resume operations after this date), they must be 
registered with FDA.
    FDA is planning to have both its electronic and paper registration 
systems operational at least 2 months before the statutory deadline of 
December 12, 2003. FDA will announce the exact date these systems will 
be available for registration in the final rule. On or before October 
12, 2003, FDA will publish in the Federal Register either a final rule 
setting forth the final registration requirements, or a notice 
providing an address to which paper registrations should be sent, if 
either the final rule or the electronic system for accepting 
registrations has not been completed by that date. Registrations should 
not be mailed to FDA before publication of that document in the Federal 
Register. Registrations mailed to FDA before the date announced in the 
Federal Register publication will not be accepted.
2. How and Where Do You Register? (Proposed Sec.  1.231)
    Although FDA is proposing to allow registration by either 
electronic or paper means, FDA is planning to devote most of its 
resources earmarked for registration to building and maintaining an 
electronic food facility registration system. The majority of 
facilities, both in the United States and abroad, have access to the 
Internet, either within their companies or through public libraries, 
copy centers, schools, or Internet cafes, as well as through a foreign 
facility's U.S. agent if the facility makes such arrangements. If the 
U.S. agent does not have Internet access onsite, the agent may register 
the facility electronically from a local library or other public 
facility that offers Internet access either free or for a relatively 
small fee. In this manner, all foreign facilities would be able to 
obtain an automatic electronic confirmation of registration and the 
facility's registration number similar to domestic facilities that 
register electronically.
    Registering electronically will benefit both facilities and FDA. 
FDA will be able to accept electronic registrations from anywhere in 
the world 24 hours a day, 7 days a week through a link on FDA's 
Internet Web site. Electronic registration also will enable a facility 
to be registered more quickly than registering by mail, since obtaining 
confirmation of registration and the facility's registration number 
online should be instantaneous once a facility fills in all required 
fields on the registration screen. In contrast, registration by mail 
may take several weeks to several months, depending on the efficiency 
of the mail system and the number of paper registrations that FDA will 
need to enter manually into the system. Registrations received by mail 
will be processed in the order in which they are received.
    Regarding the electronic Internet-accessible system, the registrant 
will be able to fill out the entire form online. In order to ensure 
that the form is filled out completely, the electronic system will not 
accept a registration submission until all of the mandatory fields are 
completed. Because FDA intends to allow companies the option of filing 
registration forms on behalf of one or more of their facilities, FDA 
will give the registrant the option of completing additional 
registration forms for other

[[Page 5384]]

facilities after the first registration form, and each subsequent 
registration form, is completed.
    FDA is proposing in Sec.  1.231(b) that a registrant may register 
by mail if none of the means of electronic access mentioned previously 
are reasonably available. In registering by mail, a registrant also may 
fill out one or more forms on behalf of one or more facilities. A 
registrant registering by mail must pick up a copy of the form from FDA 
headquarters, call FDA at a toll-free number (that will be provided in 
the final rule) to request a copy of the form, or send FDA a written 
request for the form. Once the registrant receives the mailed copy of 
the form, the form must be filled out completely and legibly, and 
mailed back to FDA at the address provided in the final rule. Once FDA 
receives the form, an agency employee will check to make sure all 
mandatory fields are filled out completely and legibly. If the form is 
not complete or is illegible, it will be returned to the registrant for 
completion, provided that the registrant's mailing address is legible 
and valid. If the form is complete and legible, FDA will manually enter 
the data on the form into the system as soon as practicable, which will 
depend on the number of other registration forms awaiting manual entry 
into the system.
    The Bioterrorism Act requires FDA to notify the registrant that it 
has received the facility's registration and to assign the facility a 
unique registration number. Accordingly, FDA is proposing the 
following: If a facility registers electronically, FDA will provide the 
registrant with an automatic electronic confirmation of registration, 
along with the facility's registration number. This notification will 
be similar to an automatic electronic receipt many companies provide 
consumers when they purchase products online (i.e., via the Internet). 
If the facility registers by mail, FDA will be able to provide the 
registrant with confirmation of registration and the facility's 
registration number only after FDA manually enters the registration 
information into the system. Depending on the number of other paper 
registrations FDA receives, this entry process could take several weeks 
to several months. After the registration information is entered into 
the system, FDA will mail a copy of the information entered to the 
registrant, along with confirmation of registration and the 
registration number. If any of the information that was entered into 
the system is incorrect, the registrant must mail an update to correct 
the information within 30 calendar days.
    For electronic registrations, FDA is proposing in Sec.  1.231 to 
consider the facility registered when FDA electronically transmits the 
facility's registration number. If a registration is done by mail, the 
facility is registered once the data are entered into the registration 
system and the system generates a registration number. This means that 
the facility information will be entered into the registration system 
before the facility receives its registration number, if registration 
is done by mail. FDA strongly encourages all facilities, both foreign 
and domestic, to register electronically, as that minimizes the delay 
in having FDA mail the registrant a form, the registrant returning the 
completed form to FDA, FDA entering the facility's data manually into 
the registration system, and FDA subsequently mailing the registration 
number and receipt of registration to the facility. To the extent 
possible, all covered facilities should make every effort to register 
electronically or send in their registration form as far in advance as 
possible of the date they are intending to import their products into 
the United States (but not sooner than the announced date) since the 
Bioterrorism Act requires FDA to hold imported products of any 
unregistered facility at the U.S. port of entry until the facility is 
registered with FDA.
    The Bioterrorism Act precludes FDA from requiring facilities to 
register electronically. Given FDA's preference for electronic 
registration and the ease of electronic registration for both 
registrants and FDA, FDA is requesting comments regarding what other 
means FDA should use to encourage electronic registration. FDA also is 
requesting comments from facilities that believe they will be unable to 
register electronically, as well as comments regarding data on the 
number of these facilities.
    No registration fee is required for either the electronic or paper 
registration. FDA is proposing that registrants must submit all 
registration information in the English language. FDA is proposing to 
require submissions to be in English in order for FDA to understand the 
content of submissions and ensure that registration data are entered 
accurately.
3. What Information is Required in the Registration? (Proposed Sec.  
1.232)
    FDA is proposing in Sec.  1.232 that registrants must submit to FDA 
certain information, including: The name, full address, phone number, 
fax number, and e-mail address of the facility (paragraph (a)); the 
name and address of the parent company (paragraph (b)), if the facility 
is a subsidiary of the parent company; emergency contact information, 
including the contact's name, title, office phone, home phone, cell 
phone (if available), and e-mail address (if available) (paragraph 
(c)); all trade names the facility uses (paragraph (d)); and the name, 
address, phone number, fax number (if available), and e-mail address 
(if available) of the U.S. agent for foreign facilities (paragraph 
(f)). FDA is planning to include all of this information in the 
mandatory section of the registration form. At the end of the form, FDA 
is planning to provide a statement in which the registrant will certify 
that the information submitted is true and accurate, and that the 
individual submitting the registration is authorized by the facility to 
do so (paragraph (g)). This statement also will require the phone 
number, e-mail address (if available), and fax number (if available) of 
the person submitting the registration.
    Section 305 of the Bioterrorism Act also states that FDA may 
require registrants to submit the general food categories of food 
produced at the facility, if FDA determines through guidance that such 
information is necessary. FDA plans to issue such guidance, and make it 
available for comment in accordance with good guidance practices (21 
CFR 10.115). The guidance will address FDA's finding that such food 
categories are necessary. Section 305 of the Bioterrorism Act 
specifically provides that the food categories to be used are those 
provided in Sec.  170.3. FDA tentatively concludes that information on 
the category of food manufactured, processed, packed, or held at each 
facility that must register is necessary for a quick, accurate, and 
focused response to a bioterrorist incident or other food-related 
emergency, because the categories will assist FDA in conducting 
investigations and surveillance operations in response to such an 
incident. These categories will also enable FDA to quickly alert 
facilities potentially affected by such an incident if FDA receives 
information indicating the type of food affected. For example, if FDA 
receives information indicating that soft drinks could be affected by a 
bioterrorist incident or other food related emergency, FDA would be 
able to alert soft drink manufacturers/processors, packers, and holders 
about this information. Additionally, the food categories, in 
conjunction with the prior notification requirements in 21 CFR part 1, 
subpart I, would aid FDA in verifying that

[[Page 5385]]

imported products are correctly identified by where and by when they 
were produced. For example, if the registration information identifies 
a facility as producing only dairy products and FDA receives a prior 
notice purportedly from the facility for the shipment indicating that 
the facility is shipping nuts, FDA can target that facility for 
verification based on the discrepancy. FDA believes, however, that 
information about a facility's food product categories is a key element 
for both FDA and industry to allow for rapid communications to 
facilities directly impacted by an actual or potential bioterrorist 
attack or other food-related emergency. FDA, therefore, is proposing in 
Sec.  1.232(e) to include on the registration form as a mandatory field 
the categories from Sec.  170.3. For ease of use, however, the more 
common categories found in FDA's product code builder at www.fda.gov/search/databases.html will be listed as the main categories on the 
form, followed by the food product categories in Sec.  170.3 as 
references for each FDA product code category. For example, the 
registration form includes coffee and tea as a product category, which 
includes the products listed in Sec.  170.3(n)(3) and (n)(7). 
Categories not in Sec.  170.3 will be listed as optional selections.
    FDA believes its proposed approach will both permit the agency to 
collect vital information regarding usable categories of products 
produced at the facility, and address industry's concern that the food 
product categories in Sec.  170.3 are unworkable. FDA is interested in 
receiving comments on whether use of FDA's product code builder 
categories as the primary selection, with references immediately after 
each entry to the food product categories in Sec.  170.3 that apply to 
each selection, addresses the comments' concerns regarding use of the 
categories in Sec.  170.3, while complying with the requirements of the 
Bioterrorism Act.
    FDA also is proposing to include several other fields that relate 
directly to the statutory requirements. The first of these is the name, 
address, phone number, facsimile number (if available), and e-mail 
address (if available) of the U.S. agent. Because the U.S. agent will 
act as a communications link between the facility and FDA, it is vital 
for FDA to have reliable contact information for the U.S. agent.
    FDA also is proposing that a mandatory section of the form include, 
if applicable, the name and address of the parent company, if the 
facility is owned by a parent corporation. This information is 
important for FDA in understanding the relationship between a facility 
and its parent company regardless of the name under which a facility 
may be operating.
    FDA also is proposing to include as a mandatory section the 
emergency contact information for a facility, which would include an 
individual's name, title, office phone, home phone, and cell phone (if 
available). If FDA receives information regarding a potential or actual 
threat to the nation's food supply, or other food-related emergency, it 
must be able to get in touch with an individual at each potentially 
affected facility who could respond immediately to the threat at any 
hour. The emergency contact person does not have to be physically 
located at the facility; however he or she must be accessible and able 
to respond in an emergency. Thus, for example, a parent corporation can 
list as the emergency contact the name of an individual at headquarters 
who has overall responsibility for responding to emergencies at any 
facility owned by the parent company.
    FDA is planning to include at the end of the form a statement in 
which the person submitting the registration information will certify 
that the information submitted on the form is true and accurate and the 
person registering the facility is authorized to do so. If a person 
submits false information on the registration form, or if a person 
registers a facility without being authorized to do so, that 
registration will be considered a materially false, fictitious, or 
fraudulent statement to the U.S. Government under 18 U.S.C. 1001, which 
subjects the person to criminal penalties. FDA is including this 
language on the registration submission to deter individuals from 
either submitting false information, or registering a facility if they 
are not authorized by the facility to register it. This applies both to 
individuals who do not have any relationship with the owner, operator, 
or agent in charge of a facility, and to those who have a connection to 
the owner, operator, or agent in charge of a facility, such as the U.S. 
agent, but who do not have authorization from the facility to register 
on its behalf.
4. What Optional Items Are Included in the Registration Form? (Proposed 
Sec.  1.233)
    FDA also is proposing in Sec.  1.233 to include several optional 
fields on the registration form. These items are consistent with the 
statutory directive, and will enable FDA to communicate more quickly 
with facilities that may be the target of a bioterrorist attack or 
other food-related emergency. These proposed fields include:
    (a) a preferred mailing address, which would allow a facility's 
corporate headquarters to serve as the primary contact with FDA instead 
of the facility;
    (b) the type(s) of activity conducted at the facility (e.g., 
manufacturing/processing, packing, or holding), which would allow FDA 
to target its communications in emergencies to those facilities 
potentially impacted based on the information FDA receives (e.g., a 
threat to a type of food product at manufacturing facilities);
    (c) food categories not included in Sec.  170.3 (e.g., dietary 
supplements, infant formula, and food for animal consumption), which 
would be helpful to FDA for responding to a terrorist incident or other 
food safety emergency involving these foods;
    (d) the type of storage or manufacturing/processing facility, in 
the event that the facility is solely a warehouse/holding facility and 
stores multiple types of food;
    (e) a food product category of ``most/all food product 
categories'', if the facility manufactures, processes, packs, or holds 
foods in most or all of the categories under Sec.  170.3; and
    (f) the approximate dates of operation, if the facility's business 
is seasonal.
    FDA encourages all facilities to submit this optional information 
if it applies to the facility's operations.
5. How and When Do You Update Your Registration Information? (Proposed 
Sec.  1.234)
    FDA is proposing in Sec.  1.234 that the owner, operator, or agent 
in charge must submit a timely update to FDA via the Internet (or by 
paper copy if no Internet access) within 30 calendar days of any change 
to any of the information previously submitted, including, but not 
limited to, the name of the owner, operator, or agent in charge. FDA is 
proposing 30 calendar days in order to balance the needs of both 
industry and FDA. In order for FDA to have accurate information for 
responding to terrorist threats or other food related emergencies, 
facilities must submit updates within an expedited timeframe. However, 
FDA also understands that the need to submit updates may coincide with 
transitions occurring at the facility in which the facility may not be 
able to provide updates immediately after such transitions occur. FDA 
believes that requiring updates within 30 calendar days of changes to 
the information on the initial registration submission is a reasonable 
balance between FDA's and industry's interests. FDA requests comments 
on this 30-day timeframe.
    With respect to the content of the update, FDA is proposing that 
the

[[Page 5386]]

update must include any changes to any information the facility 
previously submitted, including, but not limited to, changes to 
information regarding food product categories. This information, 
including these categories, will assist FDA in conducting 
investigations and surveillance operations in response to a 
bioterrorist incident. If this information is outdated it will 
interfere with FDA's ability to quickly ascertain the nature and scope 
of the problem and to alert affected facilities and prevent further 
distribution of harmful food. Therefore, for efficient and effective 
implementation of the Bioterrorism Act, FDA is proposing to require 
registrants to update previously submitted information in both the 
mandatory and optional categories, if the registrant originally 
submitted information in both categories and that information changes. 
FDA requests comments on this proposed requirement and how it will 
affect the submission of optional information.
    A facility canceling a registration must do so on a separate 
cancellation form electronically or by mail.

D. Additional Provisions

1. What Other Registration Requirements Apply? (Proposed Sec.  1.240)
    In proposed Sec.  1.240, FDA has included a provision reminding 
registrants that they must comply with all other applicable 
registration requirements, including those found in part 108 (21 CFR 
part 108), related to emergency permit control. FDA wants to ensure 
that registrants subject to the registration regulation being proposed 
to implement the Bioterrorism Act are aware that this registration does 
not take the place of that required in part 108, or any other 
registration requirements.
    FDA seeks to minimize the burden of this rule on covered facilities 
and the submission of duplicative information. FDA is aware that 
existing registrations required by FDA and other federal agencies ask 
for information that may be duplicative of some of the information FDA 
is proposing be submitted under this rule. The Bioterrorism Act 
requires that certain facilities register with FDA. The Bioterrorism 
Act also specifies that certain information must be contained in the 
facilities' registration submissions. FDA seeks comments on whether 
there are registration requirements under which facilities must submit 
duplicative information to more than one Federal agency. If so, FDA 
also seeks comments on whether there is any way, consistent with the 
requirements and purpose of the Bioterrorism Act, to minimize the 
duplication of information required to be submitted under these 
registration requirements. In particular, FDA is interested in comments 
on whether it has authority, under the Bioterrorism Act or another 
regulatory mandate, to grant a partial or full exemption from the FDA 
registration requirement to facilities that have already registered 
with another Federal agency. If such authority exists, FDA is also 
interested in whether the goals of the Bioterrorism Act could be met if 
FDA does not have complete registration information.
2. What Happens if You Fail to Register? (Proposed Sec.  1.241)
    As provided in the Bioterrorism Act, two consequences may occur if 
a facility covered under these regulations fails to register. Failure 
of either domestic or foreign facilities to register is considered a 
prohibited act under section 301 of the act (21 U.S.C. 331). Under 
section 302 of the act (21 U.S.C. 332), the United States can bring a 
civil action in Federal court to enjoin persons who commit a prohibited 
act and, under section 303 of the act (21 U.S.C. 333), can bring a 
criminal action in Federal court to prosecute persons who commit a 
prohibited act. Under section 305a of the Bioterrorism Act, FDA can 
seek debarment of any person who has been convicted of a felony 
relating to importation of food into the United States.
    FDA seeks comment on circumstances under which a firm's 
registration should be considered null and void and on circumstances 
under which a firm's registration should be revoked. FDA also seeks 
comment on the process for such determinations.
    For foreign facilities that fail to register and attempt to import 
food into the United States, the Bioterrorism Act requires the food be 
held at the port of entry unless FDA directs its removal to a secure 
facility. FDA is proposing in Sec.  1.241(e) that if FDA determines 
that removal to a secure facility is appropriate (e.g., due to a 
concern with the security of the article of food or due to space 
limitations in the port of entry), FDA may direct that the article of 
food be removed to a bonded warehouse, container freight station, 
centralized examination station, or another appropriate secure facility 
that has been approved by FDA. Perishables, however, may not be stored 
in U.S. Customs Service's bonded warehouses; thus FDA may direct fresh 
produce or seafood that requires storage to another facility. FDA and 
the U.S. Customs Service plan to issue guidance for their field offices 
that will identify locations of secure storage.
    In order to minimize confusion about who is responsible for making 
arrangements if food is held under section 801(l) of the act (21 U.S.C. 
381(l)), FDA is proposing in Sec.  1.241(f) that the owner, purchaser, 
importer, or consignee must arrange for storage of the article of food, 
in an FDA-designated secure facility and must promptly notify FDA of 
the location. Any movement of the article to the facility must be 
accomplished under bond. We note that when section 801(l) of the act 
requires that food be held, it does not appear to mandate that the 
Government take actual physical custody of the goods; instead it limits 
both the movement of the goods and the potential storage locations, 
thereby making Government oversight straightforward. As described 
previously, U.S. Customs Service has identified a well-established 
network of storage facilities that are secure. When these storage 
facilities are used, charges are borne by the private parties. We thus 
believe that although Congress intended strict controls over food 
refused admission under section 801(l) of the act, it did not intend to 
require FDA or U.S. Customs Service to take custody of or pay for the 
holding of such food. We seek comment on this issue.
    The article of food must be held at the port of entry or in the 
secure facility until the owner, operator, or agent in charge of the 
foreign facility has submitted its registration information to FDA, FDA 
has registered the facility, and FDA has notified the U.S. Customs 
Service and the person who submitted the registration that the facility 
is registered and the article of food no longer is subject to a hold 
under section 801(l)(1) of the act. Notwithstanding section 801(b) of 
the act, while any article of food is held at its port of entry or in a 
secure facility under section 801(l) of the act, it may not be 
delivered to any of its importers, owners, or consignees.
    The Bioterrorism Act does not provide specific procedures for the 
disposition of food under hold under section 801(l) of the act when no 
subsequent registration is submitted. FDA thus believes that the 
general requirements of Title 19 of the United States Code and the U.S. 
Customs implementing regulations that apply to imports for which entry 
has not been made apply in these circumstances. Under 19 U.S.C. 1448 
and 1484, entry of merchandise must be made within the time period 
prescribed by regulation, which is 15 calendar days after the food 
arrives in the United States. (See 19 CFR 142.2.) If entry is not made 
within this timeframe, the carrier or other authorized party is 
required to

[[Page 5387]]

notify U.S. Customs Service and a general order warehouse. Generally, 
at that point the warehouse must arrange to take and store the food at 
the expense of the consignee. The disposition of this merchandise is 
governed by 19 U.S.C. 1491 and the implementing regulations at 19 CFR 
part 127.
    Typically, after 6 months, unentered merchandise is deemed 
unclaimed and abandoned and can be disposed of by the United States. 
Before this 6 month period runs, however, such merchandise can be re-
exported. FDA and U.S. Customs Service plan to develop additional 
guidance to explain how the agencies will handle food when it must be 
placed in general order warehouses due to failure to register.
    Even though delivery is not allowed, FDA believes that importers, 
owners, and consignees of food that has been refused under section 
801(l) of the act can make arrangements for food to be held: these 
arrangements can be made without taking possession of the food. FDA 
recognizes that food may be shipped in the same container or truck with 
nonfood items. Since articles that are not food are not subject to 
these regulations, when mixed or consolidated imported freight contains 
articles of food that must be held at the port of entry or moved to a 
secure facility, those articles under hold must be dealt with before 
the rest of the shipment proceeds.
    FDA also is proposing in Sec.  1.241(h) that determination that an 
article of food is no longer subject to hold under section 801(l) of 
the act is different than, and may come before, determinations of 
admissibility under other provisions of the act or other U.S. laws. A 
determination that an article of food is no longer subject to hold 
under section 801(l) of the act does not mean that it will be granted 
admission under other provisions of the act or other U.S. laws.
3. What Does Assignment of a Registration Number Mean? (Proposed Sec.  
1.242)
    FDA is proposing in Sec.  1.242 to state that assignment of a 
registration number to a facility means that the facility is registered 
with FDA. Assignment of a registration number does not in any way 
denote FDA's approval or endorsement of a facility or its products. 
Therefore, any representation in food labeling that creates an 
impression of official approval, endorsement, or apparent safety 
because a facility that manufactures/processes, packs, or holds the 
food is registered by FDA would be misleading and would misbrand the 
food under section 403(a)(1) of the act (21 U.S.C. 343(a)(1)).
4. Is Food Registration Information Available to the Public? (Proposed 
Sec.  1.243)
    The Bioterrorism Act provides that registration information and any 
information contained therein that would disclose the identity or 
location of a specific registered facility is not subject to disclosure 
under 5 U.S.C. 552 (the Freedom of Information Act). This provision 
does not apply to information obtained by other means or that has 
previously been disclosed to the public as defined in 21 CFR 20.81. FDA 
is proposing to codify this provision in Sec.  1.243.

IV. Analysis of Economic Impacts

A. Benefit-Cost Analysis

    FDA has examined the economic implications of this proposed 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 and safety, and other advantages; 
distributive impacts; 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 is also considered a significant regulatory action if it 
raises novel legal or policy issues. FDA has determined that this 
proposed rule is a significant regulatory action as defined by 
Executive Order 12866.

B. Need for the Regulation

    The purpose of this regulation is to ensure FDA has knowledge of 
all domestic and foreign facilities that manufacture/process, pack, or 
hold food for consumption in the United States. In the event of an 
actual or threatened bioterrorist attack on the U.S. food supply or 
other food-related public health emergency, such information will help 
FDA and other authorities determine the source and cause of such an 
event, and allow FDA to communicate with potentially affected 
facilities. The benefits of this regulation would be realized by 
accomplishing this purpose, as well as other, related benefits. For 
example, FDA is developing a regulation, 21 CFR part 1, subpart I, to 
implement prior notice provisions in section 307 of the Bioterrorism 
Act. Information provided to FDA in a facility's registration would be 
helpful in FDA's assessment of whether a shipment may present a threat 
of serious adverse health consequences or death to humans or animals.

C. Reason for the Regulation

    FDA is proposing three regulations that will work in harmony to 
improve food safety. Food safety is mostly a private good. 
Establishments have powerful incentives to ensure that the ingredients 
they purchase are not contaminated and that their production processes 
are protected from unintentional and intentional contamination. 
Deliberate (intentional) contamination of food linked to a particular 
product or facility--particularly if the facility is considered 
negligent--would be extraordinarily costly to a firm. Indeed, the 
private incentives to avoid deliberate contamination should be similar 
to the private incentives for food safety. Deliberate food 
contamination events nonetheless differ from ordinary outbreaks of 
foodborne illness in that they are more likely to be low probability 
events with severe public health consequences.
    Although private incentives lead to private efforts to protect 
against deliberate contamination at the facility level, there are 
external effects associated with privately produced protection. Private 
incentives fail to provide the optimal amount of information about the 
food production and distribution system. Getting food from the farm or 
sea to the plate involves a complex system of production and 
distribution. The system works using local knowledge and information; 
each participant needs to know only as much about the overall system as 
is necessary for his or her business. Market prices convey most of the 
information necessary for the ordinary production and distribution of 
food. In the event of an actual or suspected contamination of the food 
supply, however, more complete information is needed where it can be 
centrally used. The suspect food must be traced backward and forward 
through the distribution chain, both to protect consumers and to find 
the source and cause of the event.
    No individual firm or organization has sufficient financial 
incentive to establish a central information system relating to food 
safety for the entire economy. The nation's food processors and 
importers as a whole would benefit from such a system because it would 
be easier to uncover and solve problems, but the private costs to 
create the system

[[Page 5388]]

probably would be prohibitive for any single firm or third party 
organization.
    We estimate that an effective system of information would require 
several hundred thousand participants to gather information and provide 
it to a central system. The private transactions costs to bring all the 
participants together voluntarily and get them to agree to create such 
a system would be extraordinarily high. No single organization could 
capture additional revenue sufficient to cover the cost. Also, because 
the provision of information by some participants makes it available 
for all, there would be a tendency for establishments to try to be free 
riders in the information system. But the more information and 
participation in the system, the more effective it is.
    Another way of looking at the problem of participation is in terms 
of marginal private benefits and marginal social benefits. By gathering 
and providing the information used in a food safety system, an 
individual establishment receives additional private benefits from 
enhancing the safety of its own food. In addition, participating in the 
system increases the effectiveness of the entire information system. In 
other words, the more establishments participate in the system, the 
better it works. The individual establishment does not capture this 
additional social benefit. The marginal private benefit (enhanced 
safety for individual establishments) is less than the marginal social 
benefit (the marginal private benefit plus the increased effectiveness 
of the entire information system). The difference between private and 
social benefit reduces the incentive for establishments to participate 
in a voluntary private system.
    The events of September 11, 2001, led Congress to conclude that 
public creation and provision of an information system is necessary. 
The Bioterrorism Act and its implementing regulations would establish 
an information system that would allow FDA to have a more integrated 
picture of the food distribution system. This particular regulation 
addresses one important aspect of this information system: The need to 
know what facilities manufacture/process, pack, or hold food for 
consumption in the United States, what types of food each facility 
handles, and how each facility can be contacted. However, as stated 
previously, FDA is proposing three regulations to address these needs, 
so the costs and benefits of any one regulation will be closely 
associated with related provisions in other proposed rules. With the 
regulations in place, the agency would have the additional tools 
necessary to help prevent and respond to threats to the nation's food 
supply as well as to other food safety problems.

D. Options

    FDA analyzes the costs and benefits of eight regulatory options 
that address the goal of deterring or containing purposeful or 
accidental contamination of the U.S. food supply. Option 1 is the 
status quo and provides the baseline against which all the other 
options are measured. Option 2 has the most complete coverage of 
domestic and foreign facilities and required information in the 
registration. Options 3 through 5 are each less comprehensive than 
option 2. Options 6 and 7 use a different definition of mixed-type 
facilities and option 7 permits U.S. agents to register on behalf of 
the foreign facility they represent. Option 7 is the proposed option. 
Option 8 is a discussion of the costs and benefits of the Bioterrorism 
Act's registration provisions becoming requirements without FDA issuing 
a regulation (statutory default provision).
    [sbull] Option 1 is to not impose any new regulatory or statutory 
requirements.
    [sbull] Option 2 requires the registration of domestic and foreign 
facilities that manufacture/process, pack, or hold food for consumption 
in the United States, whether or not food from the facility enters 
interstate commerce. Farms, fishing vessels, nonprofit food facilities, 
facilities exclusively regulated by USDA, and retail facilities are 
exempted from the registration requirement. Mixed-type facilities that 
perform some activities of a farm or retail facility but that also 
manufacture/process food for consumption off that facility must 
register under this option. Foreign facilities are also required to 
have a U.S. agent to facilitate communication between the foreign 
facility and FDA.
    [sbull] Option 3 has the same requirements and coverage as option 
2, but excludes facilities that participate only in intrastate 
commerce. FDA tentatively concludes that this option is not legally 
viable, as the Bioterrorism Act does not seem to exempt facilities 
participating only in intrastate commerce.
    [sbull] Option 4 has the same coverage and requirements as option 
2, but excludes all mixed-type facilities, regardless of whether they 
also manufacture/process food for consumption off the facility or pack 
or hold food not grown or raised on that facility. As discussed in the 
following paragraphs, FDA does not believe this option is legally 
viable.
    [sbull] Option 5 has the same requirements and coverage as option 
2, but does not require that facilities include information about the 
types of products they manufacture/process, pack, or hold on their 
registration.
    [sbull] Option 6 has the same requirements and coverage as option 
2, but mixed-type facilities are required to register if they pack or 
hold food not harvested on that facility or manufacture/process food 
not for consumption on that facility. However, facilities that 
manufacture/process food are exempted as retail facilities if they sell 
the food directly to consumers from that facility.
    [sbull] Option 7, the proposed option, requires the same coverage 
of facilities as option 6. Under this option, the U.S. agent can 
register on behalf of the foreign facility.
    [sbull] Option 8 is to allow the registration requirement of the 
Bioterrorism Act to be implemented without issuing a regulation. The 
Bioterrorism Act requires facilities to register by December 12, 2003, 
regardless of whether FDA issues a regulation. Due to uncertainty about 
how this option would be implemented, FDA does not attempt to estimate 
costs or benefits for this option.
1. Option One: Do Not Require Facilities to Register
    Option one is to maintain the status quo, i.e., no statutory or 
regulatory registration requirement. This option will serve as the 
baseline against which other options will be measured for assessing 
costs and benefits. OMB's cost-benefit analysis guidelines recommend 
discussing requirements that affect the selection of regulatory 
approaches. These guidelines also recommend analyzing the opportunity 
cost of legal constraints that prevent the selection of the regulatory 
action that best satisfies the philosophy and principles of Executive 
Order 12866.
    The Bioterrorism Act requires that FDA implement through regulation 
registration for food facilities; therefore, this is not a legally 
viable option.
2. Option Two: Comprehensive Registration of Domestic and Foreign 
Manufacturers/Processors, Packers, and Holders of Food
    Option two requires domestic facilities that manufacture/process, 
pack, or hold food for consumption in the United States to register 
with FDA, including facilities engaged in interstate and intrastate 
commerce. Farms, fishing vessels, nonprofit food facilities, facilities 
exclusively regulated by USDA, and retail facilities are exempted from 
the registration requirement. Mixed-type facilities that perform 
activities of a farm or retail facility but

[[Page 5389]]

that also manufacture/process food for consumption off that facility 
must register under this option. Registration may be electronic or by 
mail, although FDA strongly encourages all facilities to register 
electronically. The information required on the registration includes 
the facility's name, address, parent company name and address (if 
applicable), emergency contact information, trade names, general food 
product categories under Sec.  170.3, and certification by the owner, 
operator, or agent in charge of the facility as to the accuracy of the 
information and the submitter's authority to register the facility.
    Under the Bioterrorism Act, foreign establishments are required to 
register if they manufacture, process, pack, or hold food for 
consumption in the United States without the food undergoing further 
processing or packaging outside the United States. In addition to 
registering, the Bioterrorism Act requires foreign facilities to have a 
U.S. agent. The U.S. agent is a person residing in or maintaining a 
place of business in the United States, who the owner, operator, or 
agent in charge of a foreign establishment designates as its agent. 
Only one U.S. agent per foreign establishment is permitted and the U.S. 
agent must reside or maintain a place of business in the United States. 
The U.S. agent is responsible for acting as a communications link 
between FDA and the facility.
    a. Coverage--i. Domestic establishments. Consistent with the 
Bioterrorism Act, this proposed regulation's legal requirements apply 
to facilities, as opposed to firms. A firm is composed of facilities 
under common ownership. As a result, changes in behavior may occur at 
the firm- or facility-level to comply with this proposed regulation. 
However, for ease of analysis, FDA will focus on the facility as the 
unit of analysis. For a count of domestic facilities, FDA used the 2000 
County Business Patterns (CBP) (Ref. 1), 1999 Nonemployer Statistics 
(Ref. 2), the FDA Field Accomplishments and Compliance Tracking System 
(FACTS) (Ref. 3), and the Census of Agriculture (Ref. 4). The Census 
Bureau created the 2000 CBP by analyzing data from the Business 
Register, the Census Bureau's file of all known single and multi-
facility companies. These data for single-location firms are obtained 
by the Census from the Economic Censuses, the Annual Survey of 
Manufacturers, Current Business Surveys, and administrative records 
from the Internal Revenue Service, Social Security Administration, and 
the Bureau of Labor Statistics.
    Table 1 of this document provides a count of businesses in the 
relevant North American Industry Classification (NAICs) codes in the 
2000 CBP. There are 103,125 affected facilities in the 2000 CBP under 
option two. Facilities not included in the CBP are counted in the 
Nonemployer Statistics, which is also from the Census Bureau (Ref. 2). 
Nonemployer businesses are companies with no paid employees. The Census 
Bureau primarily obtains data about nonemployer businesses from annual 
business income tax returns filed with the Internal Revenue Service. 
The Nonemployer Statistics dataset is less disaggregated than the CBP 
dataset. As a result, including entire counts of facilities in some 
NAICs codes in the Nonemployer Statistics would result in an 
overestimate of the number of facilities. For example, NAICs code 4931, 
warehousing and storage, includes warehouses and storage facilities 
that store nonfood products, and so is too aggregated for this analysis 
and includes facilities that would not be required to register. To 
estimate the number of affected warehouses in NAICs 4931, FDA assumed 
that the percentage of warehouses that are refrigerated and 
nonrefrigerated warehouses that store farm products is the same for 
both the 2000 CBP and the 1999 Nonemployer Statistics, and uses this as 
an adjustment factor for the 1999 Nonemployer Statistics. With this 
adjustment, there are 68,424 facilities in the relevant NAICs codes in 
the 1999 Nonemployer Statistics. Table 2 of this document provides a 
count of businesses in the relevant NAICs codes in the 1999 Nonemployer 
Statistics. Manufacturers/processors, packers, and holders of 
substances that migrate into food from food packaging or other articles 
that contact food do not correspond to any single NAICs code. Tables 3 
and 4 of this document provide numbers of facilities in the 2000 CBP 
and 1999 Nonemployer Statistics, respectively. Broader NAICs codes, 
such as 322 and 326 that include facilities that deal only in nonfood 
products have only the number of facilities reported that could 
reasonably be expected to deal in substances that migrate into food 
from food packaging or other articles that contact food. For example, 
stationery manufacturers have been removed from the estimate. The 
Nonemployer Statistics have more aggregated counts than the 2000 CBP. 
To get a more accurate count of facilities in the Nonemployer 
Statistics, the count of facilities in each aggregated NAICs codes is 
reduced by the percentage of facilities believed to be dealing with 
substances that migrate into food from packaging in the 2000 CBP. 
However, this number may be an overestimate as for some NAICs codes, in 
which it was not clear if the facilities were producing substances for 
food or nonfood use. For example, plastic forms may be made into food 
packaging or may be used for other purposes. To further adjust the 
number of facilities to include only facilities that manufacture/
process, pack, or hold substances that migrate into food from food 
packaging or other articles that contact food, the numbers in each 
category are adjusted by data reported in The Rauch Guide to the U.S. 
Packaging Industry (Ref. 5). The Rauch guide reports that the packaging 
of consumer products accounts for 78 percent of all packaging and that 
55 percent of the total used for consumer products is used for food and 
beverages. This means 43 percent of packaging is used to package food 
and beverages. To reflect this data, the NAICs categories for end, or 
near-end use packaging were reduced by 57 percent. NAICs categories for 
explicit food use, such as kitchen utensils and cutlery were assumed to 
have 100 percent of facilities manufacturing/processing, packing, or 
holding food.
    Basic chemicals or other components incorporated into packaging may 
be intended for food or nonfood uses. FDA was unable to determine how 
many of these components are intended for food use. FDA also was not 
able to distinguish between manufacturers/processors, packers, or 
holders of immediate food packaging, which would be considered 
``substances that migrate into food from food packaging or other 
articles that contact food,'' and manufacturers/processors, packers, or 
holders of outer food packaging, which would not. Therefore, FDA 
included for purposes of this analysis: (1) Facilities manufacturing/
processing, packing, or holding basic chemicals or other components 
incorporated into packaging for both food and nonfood use, and (2) 
manufacturers/processors, packers, and holders of both immediate and 
outer food packaging. Because this approach results in an 
overestimation of the number of facilities subject to this proposed 
rule, FDA requests comments on the number of these types of facilities 
that would be required to register.
    Also covered under this proposed rule are slaughterhouses that 
process FDA regulated meats and renderers. FDA requests comments on the 
number of these facilities.
    The Census data sets do not identify facilities engaged only in 
intrastate

[[Page 5390]]

commerce (Refs. 1 and 2). To be considered a facility engaged only in 
intrastate commerce, a facility must obtain all its ingredients and 
sell all its products within a single State. FDA assumes that 
facilities that participate only in intrastate commerce will be very 
small and are unlikely to be warehouses or wholesalers. To determine 
which facilities are in interstate commerce, FDA compared the number of 
facilities in Census data sets with the number of facilities in the 
FACTS database. FACTS is a database of facilities regulated by FDA that 
includes data on operations accomplished by the field (e.g., 
inspections, investigations, sample collections, sample analyses, etc.) 
(Ref. 3). FACTS and FDA's Operation and Administration System for 
Import Support (OASIS) identify firms as workload and nonworkload 
obligations for FDA. FACTS uses different product categories for 
facilities than the Census datasets, making a direct comparison of the 
number of firms within categories with the Census datasets difficult. 
Table 5 of this document presents a count of facilities in the FACTS 
database by FDA categories. The FACTS database has some facilities that 
appear in more than one category, so a single facility may appear more 
than once in the database. This double counting is not corrected in the 
count of each type of facility, but is corrected in the total count of 
facilities. Because the FACTS database gives a count of facilities that 
FDA inspects, FDA assumes that all facilities in FACTS are in 
interstate commerce. If we take the total count of facilities from the 
CBP and Nonemployer Statistics, 171,549, and subtract the count of 
facilities in FACTS, 71,871, this gives a reasonable estimate of the 
number of facilities in intrastate commerce 99,678. This calculation is 
presented in table 6 of this document.

              Table 1.--Count of Facilities in the 2000 CBP
------------------------------------------------------------------------
          NAICs Code            Type of Industry   Number of Facilities
------------------------------------------------------------------------
3111.........................  Animal food                    1,710
                                manufacturing.
3112.........................  Grain and oilseed                913
                                milling.
3113.........................  Sugar and                      1,689
                                confectionery
                                product
                                manufacturing.
3114.........................  Fruit and                      1,796
                                vegetable
                                preserving and
                                specialty food
                                manufacturing.
3115.........................  Dairy product                  1,769
                                manufacturing.
3117.........................  Seafood product                  854
                                preparation and
                                packaging.
3118.........................  Bakeries and                  10,644
                                tortilla
                                manufacturing.
3119.........................  Other food                     2,994
                                manufacturing.
3121.........................  Beverage                       2,748
                                manufacturing.
4224.........................  Grocery and                   39,721
                                related product
                                wholesale.
4225.........................  Farm product raw               9,546
                                material
                                wholesale.
4228.........................  Beer, wine,                    4,630
                                distilled
                                alcoholic
                                beverage
                                wholesale.
49312........................  Refrigerated                     945
                                warehousing and
                                storage.
49313........................  Farm product                     516
                                warehousing and
                                storage.
  Subtotal......................................             80,475
                               Substances that               22,650
                                contact food.
  Total.........................................            103,125
------------------------------------------------------------------------


    Table 2.--Count of Facilities in the 1999 Nonemployer Statistics
------------------------------------------------------------------------
                                                           Number of
           NAICs Code              Type of Industry        Facilities
------------------------------------------------------------------------
3111...........................  Animal food                      642
                                  manufacturing.
3112...........................  Grain and oilseed                287
                                  milling.
3113...........................  Sugar and                      1,439
                                  confectionery
                                  product
                                  manufacturing.
3114...........................  Fruit and vegetable            2,000
                                  preserving and
                                  specialty food
                                  manufacturing.
3115...........................  Dairy product                    594
                                  manufacturing.
3117...........................  Seafood product                  693
                                  preparation and
                                  packaging.
3118...........................  Bakeries and                   6,271
                                  tortilla
                                  manufacturing.
3119...........................  Other food                     4,725
                                  manufacturing.
3121...........................  Beverage                       1,608
                                  manufacturing.
4224...........................  Grocery and related           32,050
                                  product wholesale.
4225...........................  Farm product raw               4,795
                                  material wholesale.
4228...........................  Beer, wine,                    2,578
                                  distilled alcoholic
                                  beverage wholesale.
4931...........................  Warehousing and                  964
                                  storage.
  Subtotal...........................................          58,646
                                 Substances that                9,778
                                  contact food.
  Total..............................................          68,424
------------------------------------------------------------------------


     Table 3.--Facilities That Manufacture/Process, Pack, or Hold Food Contact Substances in the Nonemployer
                                                   Statistics
----------------------------------------------------------------------------------------------------------------
                                                                          Total in     Adjusted by  Percent Used
           NAICs                                                            NAICs          CBP         in Food
----------------------------------------------------------------------------------------------------------------
322                         Paper manufacturing                             1,621         1,197            43
----------------------------------------------------------------------------------------------------------------
3251                        Basic chemical manufacturing                      534           385           100
----------------------------------------------------------------------------------------------------------------

[[Page 5391]]

 
3252                        Resin, synthetic rubber, artificial and           293           293           100
                             synthetic fibers manufacturing
----------------------------------------------------------------------------------------------------------------
326                         Plastics and rubber products manufacturing      5,528         1,203            43
----------------------------------------------------------------------------------------------------------------
3271                        Clay product and refractory manufacturing       4,452           448           100
----------------------------------------------------------------------------------------------------------------
3272                        Glass and glass product manufacturing           3,463         3,463            43
----------------------------------------------------------------------------------------------------------------
331                         Primary metal manufacturing                     3,447           335           100
----------------------------------------------------------------------------------------------------------------
332                         Fabricated metal product manufacturing         33,202           393           100
----------------------------------------------------------------------------------------------------------------
4226                        Chemical and allied products wholesale          5,403         5,403           100
================================================================================================================
  Total                                                                                                 9,778
----------------------------------------------------------------------------------------------------------------


    Table 4.--Facilities That Manufacture/Process, Pack, or Hold Food
                   Contact Substances in the 2000 CBP
------------------------------------------------------------------------
                                              Total Number
    NAICs                                          of       Percent Used
                                               Facilities      in Food
------------------------------------------------------------------------
322            Paper manufacturing                4,308            43
------------------------------------------------------------------------
32513          Synthetic dye and pigment            204           100
                manufacturing
------------------------------------------------------------------------
32518          Basic inorganic chemical             730           100
                manufacturing
------------------------------------------------------------------------
32519          Basic organic chemical               818           100
                manufacturing
------------------------------------------------------------------------
3252           Resin, synthetic rubber,             863           100
                artificial and synthetic
                fibers
------------------------------------------------------------------------
326            Plastics and rubber products       3,544            43
                manufacturing
------------------------------------------------------------------------
327112         Vitreous china and other             185           100
                pottery product
                manufacturing
------------------------------------------------------------------------
3272           Glass and glass product            2,340            43
                manufacturing
------------------------------------------------------------------------
3313           Alumina and aluminum                 613            43
                production and processing
------------------------------------------------------------------------
332211         Cutlery and flatware (except         166           100
                precious) manufacturing
------------------------------------------------------------------------
332214         Kitchen utensil, pot and pan          72           100
                manufacturing
------------------------------------------------------------------------
332431         Metal can manufacturing              242           100
------------------------------------------------------------------------
332439         Other metal container                437           100
                manufacturing
------------------------------------------------------------------------
4226           Chemical and allied products      15,293           100
                wholesale
========================================================================
  Adjusted total                                               22,650
------------------------------------------------------------------------


                 Table 5.--Count of Facilities in FACTS
------------------------------------------------------------------------
                Type of Facility                   Number of Facilities
------------------------------------------------------------------------
Manufacturers...................................  34,437
Repackers/packer................................  6,204
Warehouses......................................  34,760
Shippers........................................  1,519
Caterers........................................  664
Commissary......................................  705
Subtotal........................................  78,289
Collapsed to account for multiple firms.........  71,871
------------------------------------------------------------------------


  Table 6.--Number of Facilities in Interstate and Intrastate Commerce
 
2000 CBP..........................................--103,125-------------
1999 Nonemployer statistics.......................  68,424
Subtotal of facilities in inter and intrastate      171,549
 commerce.
FACTS (interstate commerce).......................  -71,871
Facilities only in intrastate commerce............  99,678
------------------------------------------------------------------------

    ii. Mixed-type facilities. Although farms and retail facilities are 
exempted from registration by the Bioterrorism Act, some mixed-type 
facilities perform activities of a farm or retail facility and 
activities of a facility that is required to register. Under this 
regulatory option, FDA would require mixed-type facilities that 
manufacture/process food that is not consumed at that facility to 
register. Examples of manufacturing/processing include canning, 
freezing, cooking, pasteurization, homogenization, irradiation, 
milling, grinding, chopping, slicing, cutting, coloring, waxing, 
shelling of nuts, peeling, labeling, and packaging. Farms that mix feed 
would be considered mixed-type facilities if they manufacture/process 
feed at the facility with ingredients obtained from

[[Page 5392]]

another source, and the feed is then sold or transferred for final use 
off-farm.
    To estimate the number of mixed-type facilities that grow crops or 
raise animals and would be subject to the proposed requirements, FDA 
used the 1997 USDA NASS Census of Agriculture (Ref. 6), and data 
obtained from various county level Cooperative Extension Service (CES) 
offices (Ref. 7). The Census of Agriculture provides the total number 
of farms producing specific commodities. To estimate the number of 
farms that are mixed-type facilities, FDA used a sample of counties 
with information from their respective CES offices. CES offices from 
Clay County, KS; Monterey, Sonoma, Marin, and San Diego counties in CA; 
Jackson County, WI; Gillespie and San Saba counties in TX; Carol 
County, MD; and Berks County, PA provide data on the percentage of 
farms producing specific commodities to be considered mixed-type 
facilities (Ref. 7). FDA assumes that farms that produce other 
commodities, including vegetables (nonorganic), other fruits, and 
wheat, plus feed mixing on poultry and other livestock farms are not 
mixed-type facilities based on CES interviews (Ref. 7). Table 7 of this 
document lists the numbers and percent of farms that are mixed-type by 
commodities. Some commodities that are not processed on mixed-type 
facilities are not included in the table. The total estimate of 
affected mixed-type facilities is 25,365. FDA requests comments on 
these assumptions and estimates.

Table 7.--Count of Mixed-Type Facilities That Engage in Farming and That
              Would Be Required To Register Under Option 2.
------------------------------------------------------------------------
                             Facility      Percent Mixed     Mixed Use
        Commodity             Number            Use           Number
------------------------------------------------------------------------
Pig farms (feed mixing)        46,353               0.5           232
------------------------------------------------------------------------
Cattle (feed mixing)          785,672               0               0
------------------------------------------------------------------------
Poultry (feed mixing)          36,944               0               0
------------------------------------------------------------------------
Other animal production       110,580               0               0
 (feed mixing)
------------------------------------------------------------------------
Dairy                          86,022               0              43
------------------------------------------------------------------------
Grain, rice, and beans        462,877               0               0
------------------------------------------------------------------------
Apples                         10,872              10           1,087
------------------------------------------------------------------------
Oranges                         9,321              10             932
------------------------------------------------------------------------
Peaches                        14,459              10           1,446
------------------------------------------------------------------------
Cherries                        8,423              10             842
------------------------------------------------------------------------
Pears                           8,062              10             806
------------------------------------------------------------------------
Other fruit                    29,413              10             806
------------------------------------------------------------------------
Nuts                           14,500              10           1,450
------------------------------------------------------------------------
Berries                         6,807              20           1,361
------------------------------------------------------------------------
Grapes                         11,043              20           2,209
------------------------------------------------------------------------
Olives                          1,363               3              41
------------------------------------------------------------------------
Vegetables and melons          31,030               0               0
------------------------------------------------------------------------
Organic vegetables              6,206              50           3,103
------------------------------------------------------------------------
Honey                           7,688              50           3,844
------------------------------------------------------------------------
Syrup                           4,850             100           4,850
------------------------------------------------------------------------
Herbs                           1,776              10             178
------------------------------------------------------------------------
  Total                                                        25,365
------------------------------------------------------------------------

    Retail facilities that manufacture/process, pack, or hold food, and 
then transfer the food offsite also would be considered mixed-type 
facilities under this option. Because FDA lacks data on the number of 
retail facilities that manufacture/process food for distribution 
offsite, FDA estimated this number using the total number of grocery 
stores and specialty food stores in the 2000 CBP and the 1999 
Nonemployer Statistics. FDA assumes that grocery and specialty food 
stores also may manufacture/process food, but that convenience stores 
do not manufacture/process food. The 1999 Nonemployer Statistics 
reports the combined number of grocery and convenience stores and, 
separately, the number of specialty food stores. To adjust for the 
grouping of grocery and convenience stores, we assume that the 
percentage of grocery stores out of the combined number of grocery 
stores and

[[Page 5393]]

convenience stores is the same in the 2000 CBP and the 1999 Nonemployer 
Statistics and reduce the number of grocery and convenience stores from 
the 1999 Nonemployer Statistics by the percentage in the 2000 CBP. FDA 
then assumes that 10 percent of these retail facilities manufacture/
process, in addition to direct selling to consumers. This gives a total 
of 10,410 affected mixed-type retail facilities. Because the number of 
retail facilities is large, the number of facilities covered is highly 
sensitive to the percentage assumed to be in mixed-type facilities. FDA 
requests comments on the number of attached retail facilities under 
Option 2.
    iii. Foreign manufacturers. FDA estimates the number of foreign 
manufacturers that would be affected by the regulation from a count in 
FDA's OASIS database (Ref. 4). OASIS is an automated FDA system for 
processing and making admissibility determinations for shipments of 
foreign-origin FDA-regulated products seeking to enter domestic 
commerce. There are 125,450 foreign manufacturers in the OASIS 
database. Table 8 presents the number of foreign manufacturers by the 
type of food they manufacture/process.

   Table 8.--Number of Foreign Facilities Exporting Food to the United
                       States in Fiscal Year 1999
 
Foods..........................................--110,392----------------
Food additives.................................  2,979
Color additives................................  378
Infant formula.................................  235
Vitamins.......................................  7,986
Animal feeds...................................  3,330
Medicated animal foods.........................  150
  Total........................................  125,450
------------------------------------------------------------------------

    iv. Foreign holders. Also covered under this regulatory option are 
the final food holders in the foreign country prior to export of the 
product. FDA does not have any information on how many foreign 
facilities hold foods that are to be exported to the United States. 
FDA, therefore, assumed that the number of foreign final holders is 
equal to the number of consignees, brokers, and importers of food 
products in the United States. The OASIS data has a count of 77,427 
U.S. importers, brokers, and consignees, so FDA assumed that there are 
also 77,427 foreign final holders (Ref. 4). FDA requests comments on 
this estimate.
    v. Foreign facilities that do de minimis processing or packaging. 
Facilities that do de minimis processing or packaging of the food, such 
as affixing a label, are also required to register. Because their 
processing is minimal, these facilities are not included in the OASIS 
count of foreign manufacturers. To estimate the number of affected 
foreign facilities, FDA takes the number of packers/repackers in the 
FACTS database, 6,204, and adjusts it by the ratio of domestic 
manufacturers in FACTS to the number of foreign manufacturers in OASIS. 
This adjustment of 3.64, (125,450 foreign facilities divided by 34,437 
domestic facilities), gives the total number of de minimis processing 
foreign facilities as 22,600. FDA requests comments on this estimate.
    vi. New and closing facilities. In addition to the facilities 
currently in existence, in future years, new businesses will open and 
some existing businesses will close. These new businesses would have to 
register and closing businesses would have to notify FDA to cancel 
their registration. According to the Small Business Administration 
(SBA) Office of Advocacy, in 2001, about 10 percent of all businesses 
were new and 10 percent of businesses closed (Ref. 8). FDA assumes that 
the rate of new and closing businesses is the same in other countries 
as in the United States. Thus, in future years 10 percent of the total 
count of facilities will be new facilities and 10 percent of the total 
count of food facilities will go out of business and will need to 
cancel their registration.
    b. Costs--i. Market reaction. It is expected that most firms will 
register correctly and on time. If most facilities do not register 
correctly and on time, then the costs will be higher than estimated. It 
is also likely that some manufacturers/processors will not register 
prior to attempting to introduce their products into U.S. interstate 
commerce, which would increase the amount of time their products are 
held at the port. In addition, some foreign facilities may determine 
that registration, in conjunction with prior notice, would make it no 
longer profitable to continue to manufacture/process and ship food to 
the United States. That is, if the expected profit from exports is 
projected to be less than the cost of a U.S. agent, the cost of 
registration, and the cost of prior notification, they would cease to 
export to the United States. The marginal costs and benefits that would 
result from these changes in manufacturer/processor behavior are 
estimated in the following paragraphs.
    ii. Wage rates. FDA uses two hourly wage rates from the Bureau of 
Labor Statistics' National Compensation Survey (Ref. 9). These wage 
rates then are doubled to include overhead costs, such as office space, 
health insurance, and retirement benefits. For an administrative 
worker, the cost per hour is $25.10, and for a manager, who would be 
the owner, operator, or agent in charge, $56.74. FDA lacks wage data 
specific to food industry workers in each of the foreign countries that 
export to the United States and thus used the wage rate for an 
administrative worker in the United States for the foreign wage rate. 
We assume that the nature of the worker and the worker's wage would be 
about the same in foreign countries as in the United States. In open 
markets where trade takes place, real wage rates tend to be equal for 
similar work and productivity across countries. However, FDA tests this 
assumption in the sensitivity analysis and re-calculates the costs if 
the foreign wage rate is lower than the domestic wage rate.
    iii. First year costs incurred by domestic facilities. Domestic 
facilities would incur administrative and form-associated costs to 
comply with the regulation. The administrative costs would be partially 
shared between the registration and recordkeeping rules. FDA estimates 
administrative costs for the recordkeeping regulation and this proposed 
rule separately, but this probably gives an overestimate of 
administrative costs. Although recordkeeping has different requirements 
than registration, it would affect many of the same facilities and FDA 
expects that the recordkeeping final rule will be published soon after 
the registration final rule. Individuals from facilities affected by 
both regulations would most likely search for information for both 
regulations at the same time and find information in the same places.
    There are four steps associated with a domestic facility complying 
with the regulation. One, the facility becomes aware of the regulation; 
two, the facility learns what the requirements are; three, an 
administrative worker fills out the form; and four, the owner, 
operator, or agent in charge certifies the form.
    First, the facility becomes aware of the regulation through normal 
business activities; reading trade press or industry news; FDA 
outreach; or conversations with other business operators. Because 
facility owners, operators, or agents-in-charge must be aware of the 
requirement to change their activity, FDA assumes that becoming aware 
of the regulations would occur as part of normal business practice and 
we thus have included no economic costs for the facility. There may be 
costs incurred, however, by FDA or trade organizations to undertake the 
outreach. FDA costs will be considered in a separate section. FDA does 
not quantify

[[Page 5394]]

the costs undertaken by trade organizations, but discusses these costs 
in the qualitative costs section.
    Second, once a representative of the facility becomes aware of the 
regulations, he or she would need to research the requirements of the 
regulation. This would require finding a copy of the requirements and 
reading and understanding them. Representatives of the facility may 
find a copy of these requirements on the Internet, in the Federal 
Register, in trade association meetings or mailings, or at a library. 
Several comments stated that many businesses might not have access to 
the Internet. Administrative costs would be higher for facilities that 
do not have access to the Internet, and would have to write to FDA or 
find other sources of information. In the United States, 59.10 percent 
of the population has accessed the Internet at least once in the three 
months prior to being surveyed (Ref. 11). An SBA report (Ref. 12) cites 
two studies that report 40 and 47 percent of small businesses had 
Internet access in 1998. An updated report from Dun and Bradstreet in 
2002 reports 71 percent of small businesses have Internet access (Ref. 
13).
    Electronic registration will allow facilities an immediate 
confirmation and registration number. FDA believes that most domestic 
facilities with Internet access will register electronically. However, 
some may register on paper forms they receive from trade organizations, 
newsletters, or other sources. However, FDA believes that this number 
of paper submissions will be offset by registrants that choose to 
register electronically who do not have Internet access at their place 
of business. These registrants may use computers with Internet access 
belonging to libraries, friends, or in an Internet caf[eacute]. 
Therefore, FDA assumes that 71 percent of domestic registrants will 
research and register electronically. FDA estimates it would take 
facilities with Internet access 1 hour to research the requirements and 
facilities without Internet access 2 hours. FDA requests comments on 
this assumption.
    Third, once the requirements are understood, the form has to be 
filled out and sent to FDA, either by mail or electronically. FDA 
estimates it would take 45 minutes of an administrative worker's time 
to find the correct information and fill out the form.
    Fourth, the owner, operator, or agent in charge must verify the 
form. This cost would be 15 minutes of the owner, operator, or agent in 
charge's time.
    iv. Domestic facilities updates, cancellations, and new 
registrations (annual costs). Facilities are required to update their 
registration when a change occurs in any information previously 
submitted on the registration form. Several comments suggested the 
requirement to update registrations might be burdensome because some 
information such as product lines and facility names change frequently 
and, therefore, could require frequent changes to registrations. FDA 
does not have any data on how often changes in product lines or other 
information included in the registration submission would occur. 
However, given that 10 percent of facilities go out of business each 
year, FDA estimates that a higher percentage, 20 percent, of all 
facilities will have to update their registration each year. FDA 
requests comments on this assumption. FDA also considers an alternative 
option (option 5) where product codes are not included on the 
registration form.
    To update a registration, a worker at the facility will have to 
find a copy of the form, look up the facility's registration number, 
fill out the form, and the owner, operator, or agent in charge will 
have to verify the form to update a submission. The cost to the 
facility of updating would be 45 minutes of an administrative worker's 
time and 15 minutes of a manager's time to certify the changed 
registration.
    New facilities would incur the same costs to learn about the 
regulation and fill out the registration form in future years as 
existing facilities experience in the first year. FDA estimates the 
number of new facilities entering each year would be equal to 10 
percent of the total current number of facilities. Thus, the annual 
cost for registering new facilities would equal 10 percent of the first 
year costs to existing facilities.
    Facilities that go out of business would need to notify FDA of the 
cancellation of their registration. Similar to updating registration, a 
worker at the facility will have to find a copy of the form, look up 
their registration number, fill out the form, and the owner, operator, 
or agent in charge will have to verify the form to cancel a 
registration. The cost to the facility of canceling the registration 
would be 45 minutes of an administrative worker's time to find and fill 
out the form and 15 minutes of a manager's time to cancel the 
registration. FDA estimates that 10 percent of the total, current 
number of facilities would go out of business each year. Table 9 
presents a summary of domestic facilities covered under option 2, and 
table 10 summarizes the data used to estimate the cost of complying 
with option 2.

     Table 9.--Number of Domestic Facilities Covered Under Option 2
2000 CBP                                       103,125
------------------------------------------------------------------------
1999 Nonemployer statistics                    68,424
------------------------------------------------------------------------
Mixed-type facilities that engage in farming   25,365
------------------------------------------------------------------------
Retail processors                              10,410
------------------------------------------------------------------------
Total domestic                                 207,324
------------------------------------------------------------------------


   Table 10.--Summary of Costs for Domestic Facilities Under Option 2
Administrative worker wage (includes           25.1
 overhead)
------------------------------------------------------------------------
Manager wage (includes overhead)               56.74
------------------------------------------------------------------------
Percent with Internet access US                71%
------------------------------------------------------------------------
Research time with Internet (hours)            1
------------------------------------------------------------------------
Research time without Internet (hours)         2
------------------------------------------------------------------------
Research cost with Internet                    $3,695,000
------------------------------------------------------------------------
Research cost without Internet                 $3,018,000
------------------------------------------------------------------------
Administrative time for form (hours)           0.75
------------------------------------------------------------------------
Manager time for form (hours)                  0.25
------------------------------------------------------------------------
Form costs                                     $6,844,000
------------------------------------------------------------------------
Percent of businesses going out of business    10%
------------------------------------------------------------------------
Percent of businesses entering                 10%
------------------------------------------------------------------------
Percent of businesses with changes             20%
------------------------------------------------------------------------
Annual facility costs                          $3,409,000
------------------------------------------------------------------------
Total domestic costs                           $13,557,000
------------------------------------------------------------------------

    v. Foreign facility first year costs. FDA expects foreign 
facilities to go through the same four steps to comply with the 
regulation as domestic facilities: a worker must become aware of the 
regulation, learn the requirements, and fill out the form; the owner, 
operator, or agent in charge then must verify the form. There are 
additional fifth and sixth steps for foreign facilities to find, and 
then hire a U.S. agent. To estimate the cost of registration for 
foreign facilities, FDA assumes that they would incur the same per 
facility costs as

[[Page 5395]]

domestic facilities, plus additional costs.
    Costs would be higher for many foreign facilities than for domestic 
facilities at each step due to distance, language difficulties, and 
lack of Internet access. For some foreign facilities, it may be so 
difficult to become informed about the regulation, that rather than 
become informed about the requirements before shipping, some are likely 
to learn about the requirements at the U.S. port. For these foreign 
facilities, the cost of learning about the registration requirement 
would be a possible loss of value to their product due to a delay at 
the port, storage costs, and transaction costs associated with the 
delay.
    Foreign facilities may learn about the requirements through trade 
press, importers, U.S. business or trading partners, distributors, or 
their governments. Foreign facilities, like domestic facilities, then 
would have to find the requirements of the regulation, obtain the 
registration form either electronically or in hard copy, and fill out 
and verify the form. Costs for foreign facilities would vary depending 
on whether the worker entering the registration information or the 
owner, operator, or agent in charge of the foreign facility can read 
and write in English. Comments suggest that many foreign manufacturers 
are limited in their ability to read and write in English. Estimates of 
the number of people outside of countries where English is the primary 
language, who are able to speak English fluently vary widely, ranging 
from 300 to 750 million (Ref. 14).
    To find the number of English speakers outside of the United 
States, FDA adds the number of English speakers in countries where 
English is the primary language, excluding the United States, 151 
million, the number of English speakers in countries where English is a 
secondary language, 300 million, and the midpoint, 525 million, of the 
range of the estimate of the number of speakers of English as a foreign 
language. FDA then divides this total number of English speakers by the 
world population minus the U.S. population, 5.9 billion (Ref. 15). 
Therefore, FDA assumes that 16 percent of foreign manufacturers read 
and write English well enough to research the registration requirement 
and fill out the form. FDA requests comments on this assumption. 
Registrants who do not read and write English would have to hire a 
translator to aid them in registering and understanding the 
registration requirements. Alternatively, trade groups, distributors, 
or the Government may provide translation services. Regardless of 
whether the translation is paid for directly by the registrant or a 
third party, for ease of computation, we assume there is a cost per 
registration for translation for 84 percent of foreign facilities. FDA 
assumes it would take facility operators who do not understand English 
one additional hour to fill out the form, 5 additional hours to find an 
agent, and 5 additional hours to read and understand the registration 
requirements. FDA requests comments on these assumptions.
    Whether a foreign facility has access to the Internet will 
determine, in part, the cost of learning about and complying with the 
registration requirements. Although 71 percent of the small businesses 
in the United States have Internet access, only 3 percent of the 
population of China, the country that has the largest number of 
manufacturers that export to the United States, has access to the 
Internet (Ref. 11). To get an idea of how many manufacturers that 
export to the United States have access to the Internet, FDA looked at 
Internet access for the 26 countries that represent 80 percent of the 
manufacturers that export to the United States (Ref. 4) and the percent 
of the population that has access to the Internet worldwide for the 
remaining 20 percent. A weighted average of these 26 countries by the 
number of manufacturers suggests that 26 percent of the population that 
exports to the United States has Internet access. FDA lacks data on the 
percent of businesses in other countries with Internet access. Because 
businesses are more likely to have Internet access than individuals, 
FDA adjusts the percent of the populations of other countries with 
Internet access upward by the percent difference in Internet access 
between individuals and small businesses in the United States. Seventy-
one percent of small businesses in the United States have Internet 
access versus 59 percent of the population, or the percent of 
businesses with Internet access represents a 20 percent increase over 
the population. Applying this adjustment to Internet access in foreign 
countries increases the percent of businesses with Internet access from 
26 to 31 percent. FDA therefore assumes that 31 percent of foreign 
manufacturers would register electronically. In option 7, FDA considers 
how many facilities will be registered electronically if the U.S. agent 
is able to register on behalf of the foreign facility. Table 11 
provides a summary of the 26 countries and the percentage of their 
population with Internet access. The remaining 69 percent would either 
register by mail or would be aided in registering electronically.
    Regardless of whether the cost of obtaining Internet access is 
borne by the facility, or by a third party, for ease of computation, 
FDA estimates the cost per facility. FDA expects it will be more 
difficult for foreign facilities that do not have Internet access at 
their place of business than domestic facilities to access the Internet 
elsewhere due to the overall lower level of Internet access in foreign 
countries. FDA assumes it would take facility operators that do not 
have access to the Internet, one additional hour to fill out the form, 
5 additional hours to find an agent, and 5 additional hours to find, 
read, and understand the registration requirements. FDA requests 
comments on these assumptions.

  Table 11.--Percent of the Population With Internet Access For the 26
  Countries That Are Home to 80 Percent of Food Exporters to the United
                                 States
------------------------------------------------------------------------
                                                          Percent of
            Country               Percent of Total      Population With
                                    Manufacturers       Internet Access
------------------------------------------------------------------------
China (mainland)..............  9.05................  2.92
France........................  8.61................  28.39
Italy.........................  7.96................  33.37
Canada........................  7.78................  52.79
Japan.........................  7.69................  40.43
Mexico........................  6.24................  3.38
United Kingdom................  3.80................  59.88
Germany, Federal Republic of..  3.30................  36.37
Taiwan, Republic Of China.....  2.96................  51.85
Korea, Republic Of (South)....  2.95................  46.40
India.........................  2.76................  0.67
Spain.........................  2.56................  19.69
Thailand......................  2.39................  1.96
Netherlands...................  1.40................  58.07
Australia.....................  1.30................  54.38
Philippines...................  1.29................  2.46
Hong Kong.....................  1.26................  59.58
Chile.........................  1.21................  20.02
Poland........................  1.19................  16.57
Brazil........................  1.18................  7.74
Indonesia.....................  1.06................  1.93
Belgium.......................  0.89................  33.14
Switzerland...................  0.86................  46.82
Portugal......................  0.85................  34.37
Vietnam.......................  0.83................  0.49
Rest of the world.............  20.00...............  9.57
========================================================================
Weighted average....................................  25.50
Business adjustment.................................  20.34
Percent of foreign facilities with Internet access..  30.69
------------------------------------------------------------------------


[[Page 5396]]

    vi. Foreign facility costs to hire a U.S. agent. The U.S. agent is 
a person residing or maintaining a place of business in the United 
States, whom the owner, operator, or agent in charge of a foreign 
facility designates as its agent. Only one U.S. agent per foreign 
facility is permitted. The U.S. agent acts as a communications link 
between the FDA and the facility and FDA would consider providing 
information to the U.S. agent the same as providing information 
directly to the foreign facility.
    In option 7, facilities can designate their U.S. agent as their 
agent in charge of the facility for purposes of registration and the 
agent can register in behalf of the facility. The costs and benefits of 
permitting the U.S. agent to register on behalf of the facility are 
considered in option 7.
    FDA has little information on how many foreign facilities already 
have a U.S. agent. Comments stated that many exporters do not currently 
have a U.S. agent; they would have to hire an agent in response to the 
regulation. FDA expects, however, that some foreign facilities already 
have a U.S. representative that can function as a U.S. agent. The U.S. 
representative may be a business partner, broker, U.S. lawyer, or 
parent company. FDA assumes that the likelihood that a foreign facility 
has an existing U.S. agent is related directly to the quantity of 
product the foreign facility exports to the United States.
    To estimate the number of foreign facilities that already have a 
U.S. agent, FDA assumes that manufacturers/processors that do more 
business in the United States are more likely to have an existing U.S. 
agent. To estimate the amount of product a foreign manufacturer/
processor exports to the United States, FDA estimates the number of 
line entries exported to the United States by foreign manufacturers. 
The term ``line entry'' refers to a group of products that are subject 
to the same FDA admissibility decision because they have the same FDA 
product code, brand name, size or packaging, manufacturer/processor, 
shipper, consignee, importer's product description, and country of 
production. One shipment may contain multiple line entries.
    FDA used data from OASIS on the average number of line entries and 
the average number of manufacturers/processors (listed in OASIS under 
the category ``manufacturers'') by country and product code to estimate 
the number of line entries for foreign manufacturers/processors. A 
shortcoming of these data is that entries are by product code; thus, 
manufacturers/processors that are exporting products in more than one 
product code are in the count of manufacturers/processors for every 
product code in which they export. A product code designates a category 
of product, such as cheese and cheese products. The OASIS data 
consequently have approximately twice as many manufacturers/processors 
as actually exist. To adjust for this double-counting, FDA assumed the 
average foreign manufacturer/processor exports in two product 
categories. To find an approximate number of line entries per 
manufacturer, FDA divided the total number of manufacturers/processors 
into the total number of line entries for each country and applied the 
average number of line entries per manufacturer/processor to all the 
manufacturers/processors from that country. This method will 
underestimate the number of very small and very large manufacturers/
processors, because it removes the variation in number of line entries 
exported from countries with a large number of manufacturers/processors 
exporting to the United States.
    To estimate the number of foreign facilities that would have to 
hire a U.S. agent, FDA assumed that foreign facilities that export more 
than 100 line entries each year into the United States, or 10 percent 
of foreign manufacturers/processors, already have a U.S. representative 
who can function as a U.S. agent. FDA also assumed that the 16 percent 
of manufacturers/processors that are exporting 10 or fewer line entries 
to the United States would stop exporting to the United States, rather 
than incur the expense of registering, hiring a U.S. agent, and 
providing prior notice under 21 CFR part 1, subpart I. FDA requests 
comments on these assumptions. Table 12 presents average numbers of 
line entries and the percent of foreign manufacturers/processors that 
export that number.

  Table 12.--Average Number of Line Entries From Foreign Manufacturers/
                               Processors
------------------------------------------------------------------------
                             Percent of Total
 Average  Number of Line     Number of Foreign     Cumulative Percent of
         Entries              Manufacturers/          Manufacturers/
                                Processors              Processors
------------------------------------------------------------------------
<=10....................  15.81.................  15.81
11-20...................  25.43.................  41.24
21-40...................  32.27.................  73.51
41-60...................  7.30..................  80.81
61-80...................  5.88..................  86.69
81-100..................  3.64..................  90.33
101-120.................  1.78..................  92.11
121-140.................  0.72..................  92.83
141-160.................  1.59..................  94.42
161-180.................  0.48..................  94.90
181-200.................  0.83..................  95.73
200..........  4.27..................  100.00
------------------------------------------------------------------------

    FDA anticipates that foreign facilities would find U.S. agents 
through the Internet or business contacts. Finding and hiring an agent 
would result in labor costs for the facility. FDA requests comments on 
these assumptions.
    FDA bases the estimated cost of hiring a U.S. agent on the fees 
charged by U.S. agents for foreign drug, biologic, and device 
manufacturers. The requirements for a U.S. agent for drugs, biologics, 
and devices (parts 207, 607, and 807, respectively) are very similar to 
the requirements for a U.S. agent for foods in this proposed 
regulation, and many of the U.S. agents began working as a response to 
the drug, biologic, and device foreign facility registration 
regulations. FDA contacted some active U.S. agents, whose annual cost 
estimates for their services ranged from $700 to $2,000 (Refs. 16 and 
17).
    vii. Annual costs for foreign facilities. Foreign facilities have 
to retain a U.S. agent. In the first year, the facility would incur 
costs to hire and retain an agent. In future years, the facility would 
have to pay an annual fee of approximately one thousand dollars to the 
agent.
    Like domestic facilities, foreign facilities are required to update 
their registration when a change occurs in any of the information 
previously submitted. FDA estimates the frequency of registration 
updates for foreign facilities as 20 percent per year. FDA requests 
comments on this assumption. The cost to the facility of updating would 
be 1 hour to find and fill out the form, including translation if 
necessary, and to certify the changed registration.
    New facilities would incur the same costs to learn about the 
regulation, hire a U.S. agent, and fill out the registration 
information in future years as existing facilities would incur in the 
first year.

[[Page 5397]]

 FDA estimates the number of new facilities entering each year would be 
equal to 10 percent of the total current number of facilities. Thus, 
the annual cost for registration of new foreign facilities would equal 
10 percent of the first year cost to facilities.
    Facilities that go out of business would need to notify FDA of the 
cancellation of their registration. The cost to the facility of 
canceling the registration would be the wage rate times 1 hour to 
cancel the registration. FDA estimates that 10 percent of the total, 
current number of facilities would go out of business each year. Table 
13 presents a summary of the data used to estimate the cost to foreign 
facilities to comply with option 2.

     Table 13.--Number of Foreign Facilities Covered Under Option 2
Foreign holders and packagers                  100,027
------------------------------------------------------------------------
Foreign manufacturers/processors               125,450
------------------------------------------------------------------------
Stops exporting                                16%
------------------------------------------------------------------------
Total facilities                               205,405
------------------------------------------------------------------------


 Table 14.--Summary of Costs Incurred By Foreign Facilities Under Option
                                    2
Speaks English                                 16%
------------------------------------------------------------------------
Has Internet access                            31%
------------------------------------------------------------------------
Has U.S. agent                                 10%
------------------------------------------------------------------------
Cost of U.S. agent (annual)                    $1,000
------------------------------------------------------------------------
Hourly wage rate                               $25
------------------------------------------------------------------------
Time to find agent (hours)                     5
------------------------------------------------------------------------
Additional time language (hours)               5
------------------------------------------------------------------------
Additional time Internet (hours)               5
------------------------------------------------------------------------
First year agent cost                          $67,340,000
------------------------------------------------------------------------
Agent fee (annual cost)                        $194,868,000
------------------------------------------------------------------------
Administrative time (hours)                    1
------------------------------------------------------------------------
Additional time language (hours)               5
------------------------------------------------------------------------
Additional time Internet (hours)               5
------------------------------------------------------------------------
First year administrative costs                $44,418,929
------------------------------------------------------------------------
Time to fill out form (hours)                  1
------------------------------------------------------------------------
Additional time language (hours)               1
------------------------------------------------------------------------
Additional time Internet (hours)               1
------------------------------------------------------------------------
Percent of businesses going out of business    10%
------------------------------------------------------------------------
Percent of businesses entering                 10%
------------------------------------------------------------------------
Percent of businesses with changes             20%
------------------------------------------------------------------------
First year form cost                           $12,992,000
------------------------------------------------------------------------
Total first year costs                         $319,619,000
------------------------------------------------------------------------
Total annual costs                             $228,370,000
------------------------------------------------------------------------

    viii. Cost due to port delays. FDA anticipates that some foreign 
facilities would not learn of the requirements before shipping their 
products to the United States. The administrative costs of learning 
about the registration requirements for these foreign facilities would 
be the cost of finding out at the port of entry. FDA requests comment 
on the percentage of foreign facilities that would become aware of the 
registration requirement at the U.S. port of entry. For these 
facilities, the cost of complying would be the possible one-time loss 
of value of their shipment and other costs of delay, in addition to the 
cost of registering and finding and hiring a U.S. agent. FDA estimates 
the cost to foreign facilities of becoming informed about the 
regulatory requirement is the number of foreign facilities multiplied 
by either the cost of information, re-exporting the shipment, or a 
delayed shipment at the U.S. port, whichever is lower.
    FDA must hold shipments at the U.S. port for as long as it takes 
the foreign facility to register with FDA. To register, a foreign 
facility first must be informed of the delay at the port by the 
importer, consignee, owner, or transporter. This may happen very 
quickly via a phone call or e-mail message, or take hours if there is a 
large difference in time zones. Next, the foreign facility must find 
and hire a U.S. agent, if it does not already have one. If the foreign 
facility is open during U.S. business hours and has access to the 
Internet and a fax machine to find an agent and sign a contract, it may 
find an agent quickly. If the foreign facility is not in a time zone 
compatible with customary business hours in the United States or does 
not have easy access to the Internet or fax machine, finding and hiring 
an agent may take longer. The cost of the delay to the foreign facility 
is the cost of storing the shipment and loss of value of the shipment 
due to the delay. For perishable products, a delay may reduce the value 
of the shipment significantly, perhaps even to zero. For nonperishable 
products, there may be transaction costs due to cancellation of a 
contract and finding a new buyer. FDA expects that to the extent there 
are significant port delays, they typically will occur with food 
manufactured/processed, packed or held at facilities that ship 
infrequently to the United States. Delays also will be longer and more 
likely for shipments from facilities that are more distant from the 
United States or have difficulty communicating with the United States. 
Perishables, due to their short shelf life, are more likely to be 
shipped from countries that are geographically close to the United 
States. For these reasons, FDA expects that costs arising from delays 
for non-perishable products may be as high or higher than costs arising 
from perishable products. FDA requests comments on the length of delay 
for shipments held while waiting for the foreign facility to register 
and on the costs of the delay, such as loss of product value, storage 
costs, and transaction costs.
    ix. FDA costs. FDA's costs include creating and maintaining a 
database, processing paper submissions, and sending annual mailings to 
registrants. Developing and maintaining a database includes 
automatically entering registrations into the database that arrive 
electronically and sending an electronic receipt and facility 
registration number back to the registrant. FDA estimates that four 
full time employees (FTEs) would be needed to oversee the database. An 
employee's wage is estimated to be equal to a GS-12, step one, in the 
Washington, DC metro area, which is $55,924 per year (Ref. 10). To get 
the cost of the labor to FDA, FDA doubles the wage rate to include 
overhead costs, such as health insurance, office space, and retirement 
benefits. Additionally, paper submissions would have to be entered 
manually, at an estimated cost of $10 per submission. FDA estimates 
that facilities that do not have access to the Internet would submit 
paper registrations. FDA also estimates a 10 percent error rate for 
paper submissions based on estimates of error rates for another FDA 
database (Ref. 18). Each paper submission with an error will result in 
an additional cost for mailing and re-processing. FDA intends to send 
an annual e-mail or mailing to all

[[Page 5398]]

registrants reminding them to keep their registrations up-to-date and 
verifying the mailing addresses of the registrants. FDA presents costs 
for the first 5 years in table 15 of this document. Wage rates and 
paper submission costs are increased by 3 percent each year to account 
for inflation. Annual costs are discounted at 7 percent.

                                                 Table 15.--Yearly Cost Estimate For FDA Under Option 2
--------------------------------------------------------------------------------------------------------------------------------------------------------
                      FDA Costs                              2003                2004                2005                2006                2007
--------------------------------------------------------------------------------------------------------------------------------------------------------
Development/modification/enhancement                         $8,200,000          $3,000,000          $3,300,000          $2,300,000          $2,300,000
--------------------------------------------------------------------------------------------------------------------------------------------------------
Maintenance/steady state                                     $1,560,000          $3,500,000          $4,300,000          $4,300,000          $4,300,000
--------------------------------------------------------------------------------------------------------------------------------------------------------
Number of FTEs                                                        4                   4                   4                   2                   2
--------------------------------------------------------------------------------------------------------------------------------------------------------
Cost per FTE                                                   $110,588            $110,588            $110,588            $110,588            $110,588
--------------------------------------------------------------------------------------------------------------------------------------------------------
Cost per paper submission                                           $10              $10.00              $10.00              $10.00              $10.00
--------------------------------------------------------------------------------------------------------------------------------------------------------
Number of domestic paper submissions                             60,124              24,050              24,050              24,050              24,050
--------------------------------------------------------------------------------------------------------------------------------------------------------
Number of foreign paper submissions                              22,677               9,071               9,071               9,071               9,071
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total number of domestic registrations in database              207,324             207,324             207,324             207,324             207,324
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total number of foreign registrations in database               205,405             205,405             205,405             205,405             205,405
--------------------------------------------------------------------------------------------------------------------------------------------------------
Mailings to domestic facilities                                      $1               $1.00               $1.00               $1.00               $1.00
--------------------------------------------------------------------------------------------------------------------------------------------------------
Mailings to foreign facilities                                       $1               $1.00               $1.00               $1.00               $1.00
--------------------------------------------------------------------------------------------------------------------------------------------------------
Error rate for paper submissions                                    10%                 10%                 10%                 10%                 10%
--------------------------------------------------------------------------------------------------------------------------------------------------------
Number of errors                                                  8,280               3,312               3,312               3,312               3,312
--------------------------------------------------------------------------------------------------------------------------------------------------------
Cost per error                                                      $15              $15.00              $15.00              $15.00              $15.00
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total costs                                                 $11,279,000          $7,398,000          $8,498,000          $7,276,000          $7,276,000
--------------------------------------------------------------------------------------------------------------------------------------------------------
Discounted total costs                                      $11,279,000          $6,914,000          $7,422,000          $5,939,000          $5,551,000
--------------------------------------------------------------------------------------------------------------------------------------------------------

3. Option Three: Require Registration of Domestic and Foreign 
Facilities That Manufacture/Process, Pack, or Hold Food That Sell Their 
Products in Interstate Commerce, Including Mixed-Type Facilities
    Option three has the same requirements as option two, but does not 
require domestic facilities that participate only in intrastate 
commerce to register. FDA tentatively concludes that this option is not 
legally viable. The Bioterrorism Act does not seem to limit the scope 
of the statute to facilities that engage only in interstate commerce. 
Tables 16, 17, 18, 19, and 20 of this document provide a summary of the 
data for cost estimates under option 3 for domestic facilities, foreign 
facilities, and FDA, respectively.
    Excluding intrastate facilities would lower the number of affected, 
domestic facilities from 207,324 affected facilities under option two 
to 107,646. This would lower the first year cost for domestic 
facilities from $13.6 to $7.0 million dollars. The annual cost would be 
lowered from $3.4 to $1.8 million dollars. Total first year costs would 
be lowered from $344.5 to $337.6 million dollars.

     Table 16.--Number of Domestic Facilities Covered Under Option 3
FACTS data                                     71,871
------------------------------------------------------------------------
Mixed-type farms                               25,365
------------------------------------------------------------------------
Retail processors                              10,410
------------------------------------------------------------------------
Total domestic                                 107,646
------------------------------------------------------------------------


Table 17.--Summary of Costs Incurred By Domestic Facilities Under Option
                                    3
Administrative worker wage (includes           25.1
 overhead)
------------------------------------------------------------------------
Manager wage (includes overhead)               56.74
------------------------------------------------------------------------
Percent with Internet access US                71%
------------------------------------------------------------------------
Research time with Internet (hours)            1
------------------------------------------------------------------------
Research time without Internet (hours)         2
------------------------------------------------------------------------
Research cost with Internet                    $1,918,000
------------------------------------------------------------------------
Research cost without Internet                 $1,567,000
------------------------------------------------------------------------
Administrative time for form (hours)           0.75
------------------------------------------------------------------------
Manager time for form (hours)                  0.25
------------------------------------------------------------------------
Form costs                                     $3,553,000
------------------------------------------------------------------------
Percent of businesses going out of business    10%
------------------------------------------------------------------------
Percent of businesses entering                 10%
------------------------------------------------------------------------
Percent of businesses with changes             20%
------------------------------------------------------------------------
Annual facility costs                          $1,770,000
------------------------------------------------------------------------
Total domestic costs                           $7,038,000
------------------------------------------------------------------------


[[Page 5399]]


     Table 18.--Number of Foreign Facilities Covered Under Option 3
Foreign holders and packagers                  100,027
------------------------------------------------------------------------
Foreign manufacturers/processors               125,450
------------------------------------------------------------------------
Stops exporting                                16%
------------------------------------------------------------------------
Total facilities                               205,405
------------------------------------------------------------------------


 Table 19.--Summary of Costs Incurred By Foreign Facilities Under Option
                                    3
Speaks English                                 16%
------------------------------------------------------------------------
Has Internet access                            31%
------------------------------------------------------------------------
Has U.S. agent                                 10%
------------------------------------------------------------------------
Cost of U.S. agent (annual)                    $1,000
------------------------------------------------------------------------
Hourly wage rate                               $25
------------------------------------------------------------------------
Time to find agent (hours)                     5
------------------------------------------------------------------------
Additional time language (hours)               5
------------------------------------------------------------------------
Additional time Internet (hours)               5
------------------------------------------------------------------------
First year agent cost                          $67,340,000
------------------------------------------------------------------------
Agent fee (annual cost)                        $194,868,000
------------------------------------------------------------------------
Administrative time (hours)                    1
------------------------------------------------------------------------
Additional time language (hours)               5
------------------------------------------------------------------------
Additional time Internet (hours)               5
------------------------------------------------------------------------
First year administrative costs                $44,418,929
------------------------------------------------------------------------
Time to fill out form (hours)                  1
------------------------------------------------------------------------
Additional time language (hours)               1
------------------------------------------------------------------------
Additional time Internet (hours)               1
------------------------------------------------------------------------
Percent of businesses going out of business    10%
------------------------------------------------------------------------
Percent of businesses entering                 10%
------------------------------------------------------------------------
Percent of businesses with changes             20%
------------------------------------------------------------------------
First year form cost                           $12,992,000
------------------------------------------------------------------------
Total first year costs                         $319,619,000
------------------------------------------------------------------------
Total annual costs                             $228,370,000
------------------------------------------------------------------------


                                                     Table 20.--Costs Incurred By FDA Under Option 3
--------------------------------------------------------------------------------------------------------------------------------------------------------
                      FDA Costs                              2003                2004                2005                2006                2007
--------------------------------------------------------------------------------------------------------------------------------------------------------
Development/modification/enhancement                         $8,200,000          $3,000,000          $3,300,000          $2,300,000          $2,300,000
--------------------------------------------------------------------------------------------------------------------------------------------------------
Maintenance/steady state                                     $1,560,000          $3,500,000          $4,300,000          $4,300,000          $4,300,000
--------------------------------------------------------------------------------------------------------------------------------------------------------
Number of FTEs                                                        4                   4                   4                   2                   2
--------------------------------------------------------------------------------------------------------------------------------------------------------
Cost per FTE                                                   $110,588            $110,588            $110,588            $110,588            $110,588
--------------------------------------------------------------------------------------------------------------------------------------------------------
Cost per paper submission                                           $10                 $10                 $10                 $10                 $10
--------------------------------------------------------------------------------------------------------------------------------------------------------
Number of domestic paper submissions                             31,217              12,487              12,487              12,487              12,487
--------------------------------------------------------------------------------------------------------------------------------------------------------
Number of foreign paper submissions                              22,677               9,071               9,071               9,071               9,071
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total number of domestic registrations in database              107,646             107,646             107,646             107,646             107,646
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total number of foreign registrations in database               205,405             205,405             205,405             205,405             205,405
--------------------------------------------------------------------------------------------------------------------------------------------------------
Mailings to domestic facilities                                      $1                  $1                  $1                  $1                  $1
--------------------------------------------------------------------------------------------------------------------------------------------------------
Mailings to foreign facilities                                       $1                  $1                  $1                  $1                  $1
--------------------------------------------------------------------------------------------------------------------------------------------------------
Error rate for paper submissions                                    10%                 10%                 10%                 10%                 10%
--------------------------------------------------------------------------------------------------------------------------------------------------------
Number of errors                                                  5,389               2,156               2,156               2,156               2,156
--------------------------------------------------------------------------------------------------------------------------------------------------------
Cost per error                                                      $15                 $15                 $15                 $15                 $15
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total costs                                                 $10,907,000          $7,243,000          $8,343,000          $7,122,000          $7,122,000
--------------------------------------------------------------------------------------------------------------------------------------------------------
Discounted total costs                                      $10,907,000          $6,769,000          $7,287,000          $5,814,000          $5,433,000
--------------------------------------------------------------------------------------------------------------------------------------------------------


[[Page 5400]]

4. Option Four: Require Registration of Domestic and Foreign Facilities 
That Manufacture/Process, Pack, or Hold Food That Sell Their Products 
in Interstate and Intrastate Commerce, Not Including Mixed-Type 
Facilities
    Option four has the same registration and U.S. agent requirements 
as option two, but does not require mixed-type facilities to register. 
Tables 21, 22, 23, 24, and 25 provide a summary of the data for cost 
estimates under option 4 for domestic facilities, foreign facilities, 
and FDA, respectively.
    FDA does not believe this option is legally viable, since some 
mixed-type facilities engage in activities (such as manufacturing/
processing for commercial distribution) that are clearly within the 
scope of the registration requirement as enacted by Congress. 
Nevertheless, we are including a discussion of this option for 
comparison purposes.
    Excluding mixed-type facilities lowers the number of affected 
domestic facilities, from 207,324 affected facilities under option 2 to 
171,549. This would lower the first year cost for domestic facilities 
from $13.6 to $11.2 million dollars. The annual cost for domestic 
facilities would be lowered from $3.4 to $2.8 million. Total first year 
costs would be lowered from $344.5 to $342.0 million dollars.

     Table 21.--Number of Domestic Facilities Covered Under Option 4
2000 CBP                                       103,125
------------------------------------------------------------------------
1999 Nonemployer statistics                    68,424
------------------------------------------------------------------------
Total domestic                                 171,549
------------------------------------------------------------------------


Table 22.--Summary of Costs Incurred By Domestic Facilities Under Option
                                    4
Administrative worker wage (includes           25.1
 overhead)
------------------------------------------------------------------------
Manager wage (includes overhead)               56.74
------------------------------------------------------------------------
Percent with Internet access US                71%
------------------------------------------------------------------------
Research time with Internet (hours)            1
------------------------------------------------------------------------
Research time without Internet (hours)         2
------------------------------------------------------------------------
Research cost with Internet                    $3,057,000
------------------------------------------------------------------------
Research cost without Internet                 $2,497,000
------------------------------------------------------------------------
Administrative time for form (hours)           0.75
------------------------------------------------------------------------
Manager time for form (hours)                  0.25
------------------------------------------------------------------------
Form costs                                     $5,663,000
------------------------------------------------------------------------
Percent of businesses going out of business    10%
------------------------------------------------------------------------
Percent of businesses entering                 10%
------------------------------------------------------------------------
Percent of businesses with changes             20%
------------------------------------------------------------------------
Annual facility costs                          $2,821,000
------------------------------------------------------------------------
Total domestic costs                           $11,217,000
------------------------------------------------------------------------


     Table 23.--Number of Foreign Facilities Covered Under Option 4
Foreign holders and packagers                  100,027
------------------------------------------------------------------------
Foreign manufacturers/processors               125,450
------------------------------------------------------------------------
Stops exporting                                16%
------------------------------------------------------------------------
Total facilities                               205,405
------------------------------------------------------------------------


 Table 24.--Summary of Costs Incurred By Foreign Facilities Under Option
                                    4
Speaks English                                 16%
------------------------------------------------------------------------
Has Internet access                            31%
------------------------------------------------------------------------
Has U.S. agent                                 10%
------------------------------------------------------------------------
Cost of U.S. agent (annual)                    $1,000
------------------------------------------------------------------------
Hourly wage rate                               $25
------------------------------------------------------------------------
Time to find agent (hours)                     5
------------------------------------------------------------------------
Additional time language (hours)               5
------------------------------------------------------------------------
Additional time Internet (hours)               5
------------------------------------------------------------------------
First year agent cost                          $67,340,000
------------------------------------------------------------------------
Agent fee (annual cost)                        $194,868,000
------------------------------------------------------------------------
Administrative time (hours)                    1
------------------------------------------------------------------------
Additional time language (hours)               5
------------------------------------------------------------------------
Additional time Internet (hours)               5
------------------------------------------------------------------------
First year administrative costs                $44,418,929
------------------------------------------------------------------------
Time to fill out form (hours)                  1
------------------------------------------------------------------------
Additional time language (hours)               1
------------------------------------------------------------------------
Additional time Internet (hours)               1
------------------------------------------------------------------------
Percent of businesses going out of business    10%
------------------------------------------------------------------------
Percent of businesses entering                 10%
------------------------------------------------------------------------
Percent of businesses with changes             20%
------------------------------------------------------------------------
First year form cost                           $12,992,000
------------------------------------------------------------------------
Total first year costs                         $319,619,000
------------------------------------------------------------------------
Total annual costs                             $228,370,000
------------------------------------------------------------------------


                                                     Table 25.--Costs Incurred By FDA Under Option 4
--------------------------------------------------------------------------------------------------------------------------------------------------------
                      FDA Costs                              2003                2004                2005                2006                2007
--------------------------------------------------------------------------------------------------------------------------------------------------------
Development/modification/enhancement                         $8,200,000          $3,000,000          $3,300,000          $2,300,000          $2,300,000
--------------------------------------------------------------------------------------------------------------------------------------------------------
Maintenance/steady state                                     $1,560,000          $3,500,000          $4,300,000          $4,300,000          $4,300,000
--------------------------------------------------------------------------------------------------------------------------------------------------------
Number of FTEs                                                        4                   4                   4                   2                   2
--------------------------------------------------------------------------------------------------------------------------------------------------------
Cost per FTE                                                   $110,588            $110,588            $110,588            $110,588            $110,588
--------------------------------------------------------------------------------------------------------------------------------------------------------
Cost per paper submission                                           $10                 $10                 $10                 $10                 $10
--------------------------------------------------------------------------------------------------------------------------------------------------------
Number of domestic paper submissions                             49,749              19,900              19,900              19,900              19,900
--------------------------------------------------------------------------------------------------------------------------------------------------------

[[Page 5401]]

 
Number of foreign paper submissions                              22,677               9,071               9,071               9,071               9,071
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total number of domestic registrations in database              171,549             171,549             171,549             171,549             171,549
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total number of foreign registrations in database               205,405             205,405             205,405             205,405             205,405
--------------------------------------------------------------------------------------------------------------------------------------------------------
Mailings to domestic facilities                                      $1                  $1                  $1                  $1                  $1
--------------------------------------------------------------------------------------------------------------------------------------------------------
Mailings to foreign facilities                                       $1                  $1                  $1                  $1                  $1
--------------------------------------------------------------------------------------------------------------------------------------------------------
Error rate for paper submissions                                    10%                 10%                 10%                 10%                 10%
--------------------------------------------------------------------------------------------------------------------------------------------------------
Number of errors                                                  7,243               2,897               2,897               2,897               2,897
--------------------------------------------------------------------------------------------------------------------------------------------------------
Cost per error                                                      $15                 $15                 $15                 $15                 $15
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total costs                                                 $11,145,000          $7,342,000          $8,442,000          $7,221,000          $7,221,000
--------------------------------------------------------------------------------------------------------------------------------------------------------
Discounted total costs                                      $11,145,000          $6,862,000          $7,374,000          $5,894,000          $5,509,000
--------------------------------------------------------------------------------------------------------------------------------------------------------

5. Option Five: Require Registration of Domestic and Foreign Facilities 
That Manufacture/Process, Pack, or Hold Food That Sell Their Products 
in Interstate and Intrastate Commerce for Consumption in the United 
States, Including Mixed-Type Facilities as Defined in Option 2, but Not 
Including Product Categories on the Registration Form
    Option five covers the same facilities as option two, but requires 
less information from the registrants. Registrants still would be 
required to submit the facility's name, address, emergency contact 
information, name and address of the parent company, trade names, U.S. 
agent information (if a foreign facility), and the name of the owner, 
operator, or agent in charge of the facility, but would not be required 
to submit the general food product categories under Sec.  170.3. Tables 
26, 27, 28, 29, and 30 of this document provide a summary of the data 
for cost estimates under option 5 for domestic facilities, foreign 
facilities, and FDA, respectively.
    Removing the product categories from the registration would 
decrease the frequency with which facilities have to update their 
registrations and reduce the amount of time required to register by 15 
minutes. FDA requests comment on this estimate. FDA estimates that 
removing the product categories would reduce the percentage of 
facilities that have to update their registration from 20 percent each 
year to 10 percent. First year costs would be lower for foreign and 
domestic facilities due to facilities needing less time to fill out the 
form. Total first year domestic costs would be lowered from $13.6 to 
$12.3 million. Annual costs for domestic firms would be lowered from 
$3.4 to $2.3 million due to less frequent updates. Total first year 
foreign costs would be lowered from $319.6 to $318.3 million and total 
costs would be raised from $334.5 to $341.9 million.

     Table 26.--Number of Domestic Facilities Covered Under Option 5
2000 CBP                                       103,125
------------------------------------------------------------------------
1999 Nonemployer statistics                    68,424
------------------------------------------------------------------------
Mixed-type facilities that engage in farming   25,365
------------------------------------------------------------------------
Retail processors                              10,410
------------------------------------------------------------------------
Total domestic                                 207,324
------------------------------------------------------------------------


Table 27.--Summary of Costs Incurred By Domestic Facilities Under Option
                                    5
Administrative worker wage (includes           25.1
 overhead)
------------------------------------------------------------------------
Manager wage (includes overhead)               56.74
------------------------------------------------------------------------
Percent with Internet access US                71%
------------------------------------------------------------------------
Research time with Internet (hours)            1
------------------------------------------------------------------------
Research time without Internet (hours)         2
------------------------------------------------------------------------
Research cost with Internet                    $3,695,000
------------------------------------------------------------------------
Research cost without Internet                 $3,018,000
------------------------------------------------------------------------
Administrative time for form (hours)           0.5
------------------------------------------------------------------------
Manager time for form (hours)                  0.25
------------------------------------------------------------------------
Form costs                                     $5,543,000
------------------------------------------------------------------------
Percent of businesses going out of business    10%
------------------------------------------------------------------------
Percent of businesses entering                 10%
------------------------------------------------------------------------
Percent of businesses with changes             10%
------------------------------------------------------------------------
Annual facility costs                          $2,334,000
------------------------------------------------------------------------
Total domestic costs                           $12,256,000
------------------------------------------------------------------------


     Table 28.--Number of Foreign Facilities Covered Under Option 5
Foreign holders and packagers                  100,027
------------------------------------------------------------------------
Foreign manufacturers/processors               125,450
------------------------------------------------------------------------
Stops exporting                                16%
------------------------------------------------------------------------
Total facilities                               205,405
------------------------------------------------------------------------


       Table 29.--Summary of Costs Incurred By Foreign Facilities
Speaks English                                 16%
------------------------------------------------------------------------
Has Internet access                            31%
------------------------------------------------------------------------
Has U.S. agent                                 10%
------------------------------------------------------------------------

[[Page 5402]]

 
Cost of U.S. agent (annual)                    $1,000
------------------------------------------------------------------------
Hourly wage rate                               $25
------------------------------------------------------------------------
Time to find agent (hours)                     5
------------------------------------------------------------------------
Additional time language (hours)               5
------------------------------------------------------------------------
Additional time Internet (hours)               5
------------------------------------------------------------------------
First year agent cost                          $67,340,000
------------------------------------------------------------------------
Agent fee (annual cost)                        $194,868,000
------------------------------------------------------------------------
Administrative time (hours)                    1
------------------------------------------------------------------------
Additional time language (hours)               5
------------------------------------------------------------------------
Additional time Internet (hours)               5
------------------------------------------------------------------------
First year administrative costs                $44,418,929
------------------------------------------------------------------------
Time to fill out form (hours)                  0.75
------------------------------------------------------------------------
Additional time language (hours)               1
------------------------------------------------------------------------
Additional time Internet (hours)               1
------------------------------------------------------------------------
Percent of businesses going out of business    10%
------------------------------------------------------------------------
Percent of businesses entering                 10%
------------------------------------------------------------------------
Percent of businesses with changes             10%
------------------------------------------------------------------------
First year form cost                           $11,708,000
------------------------------------------------------------------------
Total first year costs                         $318,335,000
------------------------------------------------------------------------
Total annual costs                             $227,729,000
------------------------------------------------------------------------


                                                     Table 30.--Costs Incurred By FDA Under Option 5
--------------------------------------------------------------------------------------------------------------------------------------------------------
                      FDA Costs                              2003                2004                2005                2006                2007
--------------------------------------------------------------------------------------------------------------------------------------------------------
Development/modification/enhancement                         $8,200,000          $3,000,000          $3,300,000          $2,300,000          $2,300,000
--------------------------------------------------------------------------------------------------------------------------------------------------------
Maintenance/steady state                                     $1,560,000          $3,500,000          $4,300,000          $4,300,000          $4,300,000
--------------------------------------------------------------------------------------------------------------------------------------------------------
Number of FTEs                                                        4                   4                   4                   2                   2
--------------------------------------------------------------------------------------------------------------------------------------------------------
Cost per FTE                                                   $110,588            $110,588            $110,588            $110,588            $110,588
--------------------------------------------------------------------------------------------------------------------------------------------------------
Cost per paper submission                                           $10                 $10                 $10                 $10                 $10
--------------------------------------------------------------------------------------------------------------------------------------------------------
Number of domestic paper submissions                             60,124              18,037              18,037              18,037              18,037
--------------------------------------------------------------------------------------------------------------------------------------------------------
Number of foreign paper submissions                              22,677               6,803               6,803               6,803               6,803
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total number of domestic registrations in database              207,324             207,324             207,324             207,324             207,324
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total number of foreign registrations in database               205,405             205,405             205,405             205,405             205,405
--------------------------------------------------------------------------------------------------------------------------------------------------------
Mailings to domestic facilities                                      $1                  $1                  $1                  $1                  $1
--------------------------------------------------------------------------------------------------------------------------------------------------------
Mailings to foreign facilities                                       $1                  $1                  $1                  $1                  $1
--------------------------------------------------------------------------------------------------------------------------------------------------------
Error rate for paper submissions                                    10%                 10%                 10%                 10%                 10%
--------------------------------------------------------------------------------------------------------------------------------------------------------
Number of errors                                                  8,280               2,484               2,484               2,484               2,484
--------------------------------------------------------------------------------------------------------------------------------------------------------
Cost per error                                                      $15                 $15                 $15                 $15                 $15
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total costs                                                 $11,279,000          $7,294,000          $8,394,000          $7,173,000          $7,173,000
--------------------------------------------------------------------------------------------------------------------------------------------------------
Discounted total costs                                      $11,279,000          $6,817,000          $7,332,000          $5,855,000          $5,472,000
--------------------------------------------------------------------------------------------------------------------------------------------------------

6. Option Six: Require Registration of Domestic and Foreign Facilities 
That Manufacture/Process, Pack, or Hold Food That Sell Their Products 
in Interstate and Intrastate Commerce, Including Mixed-Type Facilities.
    Mixed-type facilities that engage in farming are covered if they 
pack or hold food not grown or raised on that facility or manufacture/
process food not for consumption on that facility. However, facilities 
of these types that manufacture/process food solely for direct sale to 
consumers from that same facility are exempt.
    A mixed-type facility performs activities of a facility that is 
ordinarily required to register and activities of a facility that is 
ordinarily exempt, such as a farm or retail facility. Mixed-type 
facilities that are required to register differ under options 2 and 6. 
In option 2, mixed-type facilities that manufacture/process food for 
consumption offsite, where offsite includes both distribution directly 
to consumers and distribution to nonconsumers, must register. In option 
6, facilities that manufacture/process food and distribute it directly 
to consumers would not be included in the registration requirement. 
Option 6 requires registration for mixed-type facilities that pack or 
hold food that was not grown or raised at that facility; these 
facilities are not included in the option 2 definition. These changes 
in coverage raise the total number of affected mixed-

[[Page 5403]]

type facilities from 25,365 to 30,497. Facilities that engage in the 
activities of a retail facility but also manufacture/process food and 
distribute it to nonconsumers are considered as manufacturers/
processors in the count of facilities in this analysis. FDA requests 
comment on this categorization. Table 31 of this document shows the 
number of affected mixed-type facilities by category of product.

   Table 31.--Number of Affected Mixed-Type Facilities Under Option 6
------------------------------------------------------------------------
                                 Number of       Percent       Percent
            Type                   Farms        Mixed Use     Mixed Use
------------------------------------------------------------------------
Pig farms (feed mixing)            46,353             1.5         695
------------------------------------------------------------------------
Cattle (feed mixing)              785,672             1         7,857
------------------------------------------------------------------------
Poultry (feed mixing)              36,944             1           369
------------------------------------------------------------------------
Other animal production           110,580             1         1,106
 (feed mixing)
------------------------------------------------------------------------
Dairy                              86,022             1.1         903
------------------------------------------------------------------------
Grain, rice, and beans            462,877             1         4,629
------------------------------------------------------------------------
Apples                             10,872             1.5         163
------------------------------------------------------------------------
Oranges                             9,321             1.5         140
------------------------------------------------------------------------
Peaches                            14,459             1.5         217
------------------------------------------------------------------------
Cherries                            8,423             1.5         126
------------------------------------------------------------------------
Pears                               8,062             1.5         121
------------------------------------------------------------------------
Other fruit                        29,413             1.5         441
------------------------------------------------------------------------
Nuts                               14,500             2           290
------------------------------------------------------------------------
Berries                             6,807             1.5         102
------------------------------------------------------------------------
Grapes                             11,043            10.5       1,160
------------------------------------------------------------------------
Olives                              1,363             3.5          48
------------------------------------------------------------------------
Vegetables and melons              31,030             0.5         155
------------------------------------------------------------------------
Organic vegetables                  6,206            50         3,103
------------------------------------------------------------------------
Honey                               7,688            50         3,844
------------------------------------------------------------------------
Syrup                               4,850           100         4,850
------------------------------------------------------------------------
Herbs                               1,776            10           178
------------------------------------------------------------------------
Total                                                          30,497
------------------------------------------------------------------------

    Tables 32, 33, 34, 35, and 36 of this document provide a summary of 
the data for cost estimates under option 6 for domestic facilities, 
foreign facilities, and FDA, respectively. The total number of affected 
domestic facilities under this option is 202,046. The total first year 
cost for domestic facilities is reduced from $13.6 to $13.2 million, 
annual cost is reduced from $3.4 to $3.2 million. Total first year cost 
is reduced from $344.5 to $344.1 million. The greater total cost for 
foreign facilities is primarily attributable to the costs associated 
with hiring and retaining a U.S. agent.

     Table 32.--Number of Domestic Facilities Covered Under Option 6
2000 CBP                                       103,125
------------------------------------------------------------------------
1999 Nonemployer statistics                    68,424
------------------------------------------------------------------------
Mixed-type facilities that engage in farming   30,497
------------------------------------------------------------------------
Total domestic                                 202,046
------------------------------------------------------------------------


Table 33.--Summary of Costs Incurred By Domestic Facilities Under Option
                                    6
Administrative worker wage (includes           25.1
 overhead)
------------------------------------------------------------------------
Manager wage (includes overhead)               56.74
------------------------------------------------------------------------
Percent with Internet access US                71
------------------------------------------------------------------------
Research time with Internet (hours)            1
------------------------------------------------------------------------
Research time without Internet (hours)         2
------------------------------------------------------------------------
Research cost with Internet                    $3,601,000
------------------------------------------------------------------------

[[Page 5404]]

 
Research cost without Internet                 $2,941,000
------------------------------------------------------------------------
Administrative time for form (hours)           0.75
------------------------------------------------------------------------
Manager time for form (hours)                  0.25
------------------------------------------------------------------------
Form costs                                     $6,670,000
------------------------------------------------------------------------
Percent of businesses going out of business    10%
------------------------------------------------------------------------
Percent of businesses entering                 10%
------------------------------------------------------------------------
Percent of businesses with changes             20%
------------------------------------------------------------------------
Annual facility costs                          $3,322,000
------------------------------------------------------------------------
Total domestic costs                           $13,212,000
------------------------------------------------------------------------


     Table 34.--Number of Foreign Facilities Covered Under Option 6
Foreign holders and packagers                  100,027
------------------------------------------------------------------------
Foreign manufacturers/processors               125,450
------------------------------------------------------------------------
Stops exporting                                16%
------------------------------------------------------------------------
Total facilities                               205,405
------------------------------------------------------------------------


 Table 35.--Summary of Costs Incurred By Foreign Facilities Under Option
                                    6
Speaks English                                 16%
------------------------------------------------------------------------
Has Internet access                            31%
------------------------------------------------------------------------
Has U.S. agent                                 10%
------------------------------------------------------------------------
Cost of U.S. agent (annual)                    $1,000
------------------------------------------------------------------------
Hourly wage rate                               $25
------------------------------------------------------------------------
Time to find agent (hours)                     5
------------------------------------------------------------------------
Additional time language (hours)               5
------------------------------------------------------------------------
Additional time Internet (hours)               5
------------------------------------------------------------------------
First year agent cost                          $67,340,000
------------------------------------------------------------------------
Agent fee (annual cost)                        $194,868,000
------------------------------------------------------------------------
Administrative time (hours)                    1
------------------------------------------------------------------------
Additional time language (hours)               5
------------------------------------------------------------------------
Additional time Internet (hours)               5
------------------------------------------------------------------------
First year administrative costs                $44,418,929
------------------------------------------------------------------------
Time to fill out form (hours)                  1
------------------------------------------------------------------------
Additional time language (hours)               1
------------------------------------------------------------------------
Additional time Internet (hours)               1
------------------------------------------------------------------------
Percent of businesses going out of business    10%
------------------------------------------------------------------------
Percent of businesses entering                 10%
------------------------------------------------------------------------
Percent of businesses with changes             20%
------------------------------------------------------------------------
First year form cost                           $12,992,000
------------------------------------------------------------------------
Total first year costs                         $319,619,000
------------------------------------------------------------------------
Total annual costs                             $228,370,000
------------------------------------------------------------------------


                                                     Table 36.--Costs Incurred By FDA Under Option 6
--------------------------------------------------------------------------------------------------------------------------------------------------------
                      FDA Costs                              2003                2004                2005                2006                2007
--------------------------------------------------------------------------------------------------------------------------------------------------------
Development/modification/enhancement                         $8,200,000          $3,000,000          $3,300,000          $2,300,000          $2,300,000
--------------------------------------------------------------------------------------------------------------------------------------------------------
Maintenance/steady state                                     $1,560,000          $3,500,000          $4,300,000          $4,300,000          $4,300,000
--------------------------------------------------------------------------------------------------------------------------------------------------------
Number of FTEs                                                        4                   4                   4                   2                   2
--------------------------------------------------------------------------------------------------------------------------------------------------------
Cost per FTE                                                   $110,588            $110,588            $110,588            $110,588            $110,588
--------------------------------------------------------------------------------------------------------------------------------------------------------
Cost per paper submission                                           $10                 $10                 $10                 $10                 $10
--------------------------------------------------------------------------------------------------------------------------------------------------------
Number of domestic paper submissions                             58,593              23,437              23,437              23,437              23,437
--------------------------------------------------------------------------------------------------------------------------------------------------------
Number of foreign paper submissions                              22,677               9,071               9,071               9,071               9,071
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total number of domestic registrations in database              202,046             202,046             202,046             202,046             202,046
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total number of foreign registrations in database               205,405             205,405             205,405             205,405             205,405
--------------------------------------------------------------------------------------------------------------------------------------------------------
Mailings to domestic facilities                                      $1                  $1                  $1                  $1                  $1
--------------------------------------------------------------------------------------------------------------------------------------------------------
Mailings to foreign facilities                                       $1                  $1                  $1                  $1                  $1
--------------------------------------------------------------------------------------------------------------------------------------------------------
Error rate for paper submissions                                    10%                 10%                 10%                 10%                 10%
--------------------------------------------------------------------------------------------------------------------------------------------------------
Number of errors                                                  5,860               2,345               2,345               2,345               2,345
--------------------------------------------------------------------------------------------------------------------------------------------------------
Cost per error                                                      $15                 $15                 $15                 $15                 $15
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total costs                                                 $11,225,000          $7,376,000          $8,476,000          $7,255,000          $7,255,000
--------------------------------------------------------------------------------------------------------------------------------------------------------
Discounted total costs                                      $11,225,000          $6,893,000          $7,403,000          $5,922,000          $5,535,000
--------------------------------------------------------------------------------------------------------------------------------------------------------


[[Page 5405]]

7. Option Seven: Require Registration of Domestic and Foreign 
Facilities That Manufacture/Process, Pack, or Hold Food That Sell Their 
Products in Intrastate and Interstate Commerce, Including Mixed-Type 
Facilities, as Defined in Option 6. Permits the U.S. Agent to Register 
on Behalf of the Foreign Facility
    Permitting the U.S. agent to register on behalf of the foreign 
facility would reduce the number of paper registrations significantly. 
Foreign facilities still would have to go through administrative steps 
to learn about the regulation and to find and hire a U.S. agent. 
However, foreign facilities now would have a third option for 
registering. In addition to electronic and paper registration by a 
representative at the facility, the foreign facility can authorize its 
U.S. agent to register the facility. FDA assumes that U.S. agents who 
register on behalf of foreign facilities will register electronically. 
Characteristics of foreign facilities, such as access to the Internet, 
fluency in English, and whether they are informed about the 
registration requirement before their product reaches the U.S. port, 
determine whether foreign facilities would be registered by themselves 
electronically, registered by mail, or registered by their U.S. agent.
    FDA assumes that foreign facilities with Internet access would 
register directly via the Internet. Registration via the Internet would 
be the fastest, most reliable method for these facilities, and they 
would receive their confirmation of registration and facility 
registration number automatically.
    Foreign facilities that do not have Internet access or 
representatives who read or write in English would register through 
their U.S. agent. The inability to read and write in English increases 
the cost for foreign facilities that register directly. U.S. agents 
operating in response to FDA registration requirements for other FDA-
regulated products market themselves to certain regions of the world. 
FDA anticipates these agents would speak the language of the 
representative of the foreign facility, as well as English, and so 
could register in English for the facility.
    Foreign facilities that do not have Internet access and do not 
learn of the registration requirements until their product reaches the 
U.S. border also are likely to register through their U.S. agent. For 
electronic registrations, the facility is considered registered once 
FDA enters the registration data into the registration system and the 
system generates a registration number. For paper registrations, the 
facility is considered registered when FDA sends the registration 
number to the facility. For electronic registrations, confirmation 
should happen almost instantly. The electronic submission would be 
automatically entered into the database, undergo consistency checks, 
and if the information is entered correctly, the confirmation of 
registration and the facility's registration number would be sent out 
electronically.
    Paper submissions are subject to longer lag times at several 
points. First, the facility may have to mail or phone in a request for 
a registration form. Second, the facility may have to wait to receive 
the form. Third, the registration takes time to travel through the mail 
from the facility to FDA. Fourth, FDA would require more time to 
process paper submissions, because the information has to be entered 
manually into the system. Fifth, FDA has to mail out a copy of the 
registration as entered, the registration confirmation, and the 
registration number if the facility's information is complete and 
legible. Sixth, the registration confirmation has to travel through the 
mail to the facility. At this time, the facility would know it is 
registered and have its registration number.
    Because time will be important to foreign facilities bringing 
products into the United States, FDA assumes that they will choose to 
be registered by their U.S. agent, because the registration process 
will be much faster. Facilities that do not have Internet access, that 
have representatives who can read and write in English, and learn about 
the registration requirements before exporting their product to the 
United States are most likely to register by a paper submission. These 
facilities already would have invested the time to learn about the 
registration requirements and thus are likely to have a hard copy of 
the form. If time were not a major consideration, a facility is likely 
to prefer to fill out the registration form onsite. FDA plans to 
conduct extensive outreach efforts to communicate the registration 
requirements to affected facilities both domestically and abroad, both 
at the proposed rule stage and at the final rule stage to minimize the 
number of facilities that find out about the requirements at the port. 
FDA does not have the information to estimate how many foreign 
facilities would not learn about the registration requirements until 
their goods are at the port. FDA instead estimates the number of 
foreign paper submissions to FDA as the percent of foreign facilities 
that do not have Internet access and whose managers are able to read 
and write in English. FDA requests comments on this assumption.
    Under this option, U.S. agents would have a larger role than under 
other options. U.S. agents may charge a higher fee if they register for 
the facility. A higher U.S. agent fee is considered in the sensitivity 
analysis.
    Port delays would be shorter under this option than under 
alternative options. Foreign facilities still would have delays 
associated with communication and finding a U.S. agent, but the process 
would be shortened by allowing the U.S. agent to register on behalf of 
the foreign facility. This would shorten the time that the product sits 
in storage and lower the loss of value of the product.
    Tables 37, 38, 39, 40, and 41 of this document provide a summary of 
the data for cost estimates under option 7 for domestic facilities, 
foreign facilities, and FDA, respectively. The first year costs to 
foreign facilities would be reduced from $319.6 to $311.8 million, 
annual costs would be reduced from $228.4 to $227.6 million. Total 
costs for the first year would be reduced from $344.5 to $336.2 
million.

     Table 37.--Number of Domestic Facilities Covered Under Option 7
2000 CBP                                       103,125
------------------------------------------------------------------------
1999 Nonemployer statistics                    68,424
------------------------------------------------------------------------
Mixed-type facilities that engage in farming   30,497
------------------------------------------------------------------------
Total domestic                                 202,046
------------------------------------------------------------------------


Table 38.--Summary of Costs Incurred By Domestic Facilities Under Option
                                    7
Administrative worker wage (includes           25.1
 overhead)
------------------------------------------------------------------------
Manager wage (includes overhead)               56.74
------------------------------------------------------------------------
Percent with Internet access US                71%
------------------------------------------------------------------------
Research time with Internet (hours)            1
------------------------------------------------------------------------
Research time without Internet (hours)         2
------------------------------------------------------------------------
Research cost with Internet                    $3,601,000
------------------------------------------------------------------------
Research cost without Internet                 $2,941,000
------------------------------------------------------------------------
Administrative time for form (hours)           0.75
------------------------------------------------------------------------

[[Page 5406]]

 
Manager time for form (hours)                  0.25
------------------------------------------------------------------------
Form costs                                     $6,670,000
------------------------------------------------------------------------
Percent of businesses going out of business    10%
------------------------------------------------------------------------
Percent of businesses entering                 10%
------------------------------------------------------------------------
Percent of businesses with changes             20%
------------------------------------------------------------------------
Annual facility costs                          $3,322,000
------------------------------------------------------------------------
Total domestic costs                           $13,212,000
------------------------------------------------------------------------


     Table 39.--Number of Foreign Facilities Covered Under Option 7
Foreign holders and packagers                  100,027
------------------------------------------------------------------------
Foreign manufacturers/processors               125,450
------------------------------------------------------------------------
Stops exporting                                16%
------------------------------------------------------------------------
Total facilities                               205,405
------------------------------------------------------------------------


       Table 40.--Summary of Costs Incurred By Foreign Facilities
Speaks English                                 16%
------------------------------------------------------------------------
Has Internet access                            31%
------------------------------------------------------------------------
Has U.S. agent                                 10%
------------------------------------------------------------------------
Cost of U.S. agent (annual)                    $1,000
------------------------------------------------------------------------
Hourly wage rate                               $25
------------------------------------------------------------------------
Time to find agent (hours)                     5
------------------------------------------------------------------------
Additional time language (hours)               5
------------------------------------------------------------------------
Additional time Internet (hours)               5
------------------------------------------------------------------------
First year agent cost                          $67,340,000
------------------------------------------------------------------------
Agent fee (annual cost)                        $194,868,000
------------------------------------------------------------------------
Administrative time (hours)                    1
------------------------------------------------------------------------
Additional time language (hours)               5
------------------------------------------------------------------------
Additional time Internet (hours)               5
------------------------------------------------------------------------
First year administrative costs                $44,418,929
------------------------------------------------------------------------
Time to fill out form (hours)                  1
------------------------------------------------------------------------
Additional time language (hours)               0
------------------------------------------------------------------------
Additional time Internet (hours)               0
------------------------------------------------------------------------
Percent of businesses going out of business    10%
------------------------------------------------------------------------
Percent of businesses entering                 10%
------------------------------------------------------------------------
Percent of businesses with changes             20%
------------------------------------------------------------------------
First year form cost                           $5,135,000
------------------------------------------------------------------------
Total first year costs                         $311,762,000
------------------------------------------------------------------------
Total annual costs                             $227,585,000
------------------------------------------------------------------------


                                                     Table 41.--Costs Incurred By FDA Under Option 7
--------------------------------------------------------------------------------------------------------------------------------------------------------
                      FDA Costs                              2003                2004                2005                2006                2007
--------------------------------------------------------------------------------------------------------------------------------------------------------
Development/modification/enhancement                         $8,200,000          $3,000,000          $3,300,000          $2,300,000          $2,300,000
--------------------------------------------------------------------------------------------------------------------------------------------------------
Maintenance/steady state                                     $1,560,000          $3,500,000          $4,300,000          $4,300,000          $4,300,000
--------------------------------------------------------------------------------------------------------------------------------------------------------
Number of FTEs                                                        4                   4                   4                   2                   2
--------------------------------------------------------------------------------------------------------------------------------------------------------
Cost per FTE                                                   $110,588            $110,588            $110,588            $110,588            $110,588
--------------------------------------------------------------------------------------------------------------------------------------------------------
Cost per paper submission                                           $10                 $10                 $10                 $10                 $10
--------------------------------------------------------------------------------------------------------------------------------------------------------
Number of domestic paper submissions                             58,593              23,437              23,437              23,437              23,437
--------------------------------------------------------------------------------------------------------------------------------------------------------
Number of foreign paper submissions                              22,677               9,071               9,071               9,071               9,071
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total number of domestic registrations in database              202,046             202,046             202,046             202,046             202,046
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total number of foreign registrations in database               205,405             205,405             205,405             205,405             205,405
--------------------------------------------------------------------------------------------------------------------------------------------------------
Mailings to domestic facilities                                      $1                  $1                  $1                  $1                  $1
--------------------------------------------------------------------------------------------------------------------------------------------------------
Mailings to foreign facilities                                       $1                  $1                  $1                  $1                  $1
--------------------------------------------------------------------------------------------------------------------------------------------------------
Error rate for paper submissions                                    10%                 10%                 10%                 10%                 10%
--------------------------------------------------------------------------------------------------------------------------------------------------------
Number of errors                                                  5,860               2,345               2,345               2,345               2,345
--------------------------------------------------------------------------------------------------------------------------------------------------------
Cost per error                                                      $15                 $15                 $15                 $15                 $15
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total costs                                                 $11,225,000          $7,376,000          $8,476,000          $7,255,000          $7,255,000
--------------------------------------------------------------------------------------------------------------------------------------------------------
Discounted total costs                                      $11,225,000          $6,893,000          $7,403,000          $5,922,000          $5,535,000
--------------------------------------------------------------------------------------------------------------------------------------------------------


[[Page 5407]]

8. Option Eight: Issue No New Regulation and Allow the Bioterrorism 
Act's Default Registration Requirements to Take Effect
    The Bioterrorism Act requires facilities to register with FDA by 
December 12, 2003, even if FDA has not issued final regulations by this 
date. Failure to do so for both foreign and domestic facilities is a 
prohibited act, and FDA must hold food from unregistered foreign 
facilities at the port of entry until they are registered. Thus, 
facilities have an incentive to register with FDA. Failure to issue a 
final regulation would result in an unworkable, chaotic system. The 
Bioterrorism Act also requires facilities that register in the absence 
of a final rule to re-register with FDA as specified in the final rule 
once it is issued.
    It is not possible to predict the costs or benefits of this option 
because the statute is not specific enough to predict how it would be 
implemented. It seems likely that many facilities will attempt to 
register, given the penalties for failure to register. However, if FDA 
receives all paper, non-standardized registrations, it will be 
extremely difficult for FDA to process the registrations and to use the 
information provided. It would also be a slow process for FDA to issue 
registration numbers.
9. Summary of Costs
    Table 42 of this document presents a summary of costs for options 2 
through 7 for domestic facilities, foreign facilities, and FDA. Costs 
in future years are discounted at 7 percent.

                           Table 42.--Total Cost of Options 2 Through 7 For Domestic Facilities, Foreign Facilities, and FDA.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                       Option 2            Option 3            Option 4            Option 5            Option 6            Option 7
--------------------------------------------------------------------------------------------------------------------------------------------------------
Domestic first year costs               $13,557,000          $7,038,000         $11,217,000         $12,256,000         $13,212,000         $13,212,000
--------------------------------------------------------------------------------------------------------------------------------------------------------
Foreign first year costs               $319,619,000        $319,619,000        $319,619,000        $318,335,000        $319,619,000        $311,762,000
--------------------------------------------------------------------------------------------------------------------------------------------------------
FDA first year costs                    $11,279,000         $10,907,000         $11,145,000         $11,279,000         $11,225,000         $11,225,000
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total first year costs                 $344,455,000        $337,564,000        $341,981,000        $341,870,000        $344,056,000        $336,199,000
--------------------------------------------------------------------------------------------------------------------------------------------------------
Domestic second year costs               $3,186,000          $1,654,000          $2,636,000          $2,181,000          $3,105,000          $3,105,000
--------------------------------------------------------------------------------------------------------------------------------------------------------
Foreign second year costs              $213,430,000        $213,430,000        $213,430,000        $212,831,000        $213,430,000        $212,696,000
--------------------------------------------------------------------------------------------------------------------------------------------------------
FDA second year costs                    $6,914,000          $6,769,000          $6,862,000          $6,817,000          $6,893,000          $6,893,000
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total second year costs                $223,530,000        $221,853,000        $222,928,000        $221,829,000        $223,428,000        $222,694,000
--------------------------------------------------------------------------------------------------------------------------------------------------------
Domestic third year costs                $2,978,000          $1,546,000          $2,464,000          $2,039,000          $2,902,000          $2,902,000
--------------------------------------------------------------------------------------------------------------------------------------------------------
Foreign third year costs               $199,467,000        $199,467,000        $199,467,000        $198,907,000        $199,467,000        $198,782,000
--------------------------------------------------------------------------------------------------------------------------------------------------------
FDA third year costs                     $7,422,000          $7,287,000          $7,374,000          $7,332,000          $7,403,000          $7,403,000
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total third year costs                 $209,867,000        $208,300,000        $209,305,000        $208,278,000        $209,772,000        $209,087,000
--------------------------------------------------------------------------------------------------------------------------------------------------------
Domestic fourth year costs               $2,783,000          $1,445,000          $2,303,000          $1,905,000          $2,712,000          $2,712,000
--------------------------------------------------------------------------------------------------------------------------------------------------------
Foreign fourth year costs              $186,418,000        $186,418,000        $186,418,000        $185,895,000        $186,418,000        $185,777,000
--------------------------------------------------------------------------------------------------------------------------------------------------------
FDA fourth year costs                    $5,939,000          $5,814,000          $5,894,000          $5,855,000          $5,922,000          $5,922,000
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total fourth year costs                $195,140,000        $193,677,000        $194,615,000        $193,655,000        $195,052,000        $194,411,000
--------------------------------------------------------------------------------------------------------------------------------------------------------

    a. Sensitivity to assumptions. A number of assumptions in the 
analysis significantly affect the cost estimates. To understand how 
these assumptions affect the cost estimates, FDA re-estimates the total 
costs under alternative assumptions. FDA uses option 7, the proposed 
option, to compare across assumptions. Table 43 summarizes the results 
of the sensitivity analysis.
    FDA looked at the number of mixed-type facilities. In option 6, FDA 
estimated that there are approximately 30,497 mixed-type facilities 
that manufacture/process food for distribution to nonconsumers or pack 
or

[[Page 5408]]

hold food received from off the facility based on data from the Census 
of Agriculture and information from CES (Ref. 7). Because there are 
over 2 million farms in the United States, small changes in assumptions 
about the percentage of farms that are mixed-type facilities would 
result in a large change in the total number of affected farms. If the 
total number of farms that are mixed-type facilities were 100,000, the 
total, first year, domestic costs increase from $13.2 to $17.8 million.
    Another significant source of uncertainty is the amount of time it 
would take facility employees to read and understand the requirements 
and for foreign facilities to find a U.S. agent. To test the time 
assumptions, FDA estimated the costs assuming all the time estimates 
for administrative activities were doubled. This increases the cost 
estimates for domestic facilities from $13.2 to $19.8 million and 
increases the cost estimates for foreign facilities from $311.8 to 
$423.5 million.
    Hiring and retaining a U.S. agent is a significant cost for foreign 
facilities. FDA tested how this affects total cost estimates by 
doubling the percent of foreign manufacturers that have U.S. agents 
from 10 percent to 20 percent. This lowers the first year cost for 
foreign facilities from $311.8 to $297.3 million.
    Also subject to a great deal of uncertainty is the number of 
foreign manufacturers/processors who can read and write in English. 
Research on the topic shows widely ranging estimates of the number of 
English speakers in countries where English is not the primary 
language. Even in countries where English is a primary or secondary 
language, many inhabitants may not be fluent in English (Ref. 14). 
However, more than one individual may work in a facility in an 
appropriate position to fill out the registration form. This increases 
the probability that an individual with English skills sufficient to 
fill out the registration form may be available. FDA estimated that 16 
percent of foreign facilities had employees that were fluent in 
English. To test our assumption about the percentage of foreign 
facilities with employees who are fluent in English, FDA looked at the 
alternate assumption that 32 percent of foreign facilities would have a 
worker with the capability to research and fill out the form in 
English. This change decreases the total cost to foreign facilities 
from $311.8 to $303.4 million.
    FDA assumed that the number of foreign facilities that hold food 
products before exporting them to the United States is equal to the 
number of domestic brokers and consignees, because of the lack of data 
about foreign facilities holding and doing de minimis processing of 
food. To test this assumption, FDA looked at the costs if the number of 
foreign holders and de minimis processors is 160,000. Changing this 
assumption has a large effect on the foreign and total cost, increasing 
the foreign cost from $311.8 to $405.2 million and the total cost from 
$336.2 to $429.7 million.
    FDA tested the effect of changing the annual U.S. agent fee. If the 
average U.S. agent fee is $1,500, instead of $1,000, the costs to 
foreign facilities will be increased from $311.8 to $409.2 million.
    Finally, FDA tested the assumption that the foreign wage rate is 
the same as the domestic wage rate and re-estimated the costs for a 
foreign wage rate of $15 per hour. The total cost to foreign facilities 
was reduced from $311.8 to $265.0 million under this assumption.

                             Table 43.--Sensitivity Analysis (relative to option 7)
----------------------------------------------------------------------------------------------------------------
                           Total Domestic Cost   Total Foreign Cost      Total FDA Cost
    First Year Costs            (dollars)             (dollars)             (dollars)       Total Cost (dollars)
----------------------------------------------------------------------------------------------------------------
Under current                    13,212,000           311,762,000            11,225,000           336,199,000
 assumptions\1\
----------------------------------------------------------------------------------------------------------------
Percentage change from                   0%                    0%                    0%                    0%
 baseline
----------------------------------------------------------------------------------------------------------------
100,000 mixed-type               17,756,000           311,762,000            11,484,000           341,002,000
 facilities that engage
 in farming
----------------------------------------------------------------------------------------------------------------
Percentage change from                  34%                    0%                    2%                    1%
 baseline
----------------------------------------------------------------------------------------------------------------
Time costs are doubled           19,754,000           423,521,000            11,225,000           454,500,000
----------------------------------------------------------------------------------------------------------------
Percentage change from                  50%                   36%                    0%                   35%
 baseline
----------------------------------------------------------------------------------------------------------------
20 percent of foreign            13,212,000           297,257,000            11,225,000          $321,694,000
 manufacturers have U.S.
 agents
----------------------------------------------------------------------------------------------------------------
Percentage change from                   0%                   -5%                    0%                   -4%
 baseline
----------------------------------------------------------------------------------------------------------------
32 percent of foreign            13,212,000           303,395,000            11,474,000          $328,081,000
 facilities are fluent
 in English
----------------------------------------------------------------------------------------------------------------
Percentage change from                   0%                   -3%                    2%                   -2%
 baseline
----------------------------------------------------------------------------------------------------------------
160,000 foreign holders          13,212,000           405,168,000            11,304,000           429,684,000
----------------------------------------------------------------------------------------------------------------
Percentage change from                   0%                   30%                    1%                   28%
 baseline
----------------------------------------------------------------------------------------------------------------
U.S. agent fee $1,500            13,212,000           409,195,000            11,225,000           433,632,000
----------------------------------------------------------------------------------------------------------------
Percentage change from                   0%                   31%                    0%                   29%
 baseline
----------------------------------------------------------------------------------------------------------------
Foreign wage rate $15            13,212,000           265,004,000            11,225,000           289,441,000
----------------------------------------------------------------------------------------------------------------

[[Page 5409]]

 
Percentage change from                   0%                  -15%                    0%                  -14%
 baseline
----------------------------------------------------------------------------------------------------------------
\1\ 30,497 mixed-type facilities, time costs under option 7, 10 percent of foreign manufacturers/processors have
  U.S. agents, 16 percent of foreign facilities are fluent in English, 100,027 foreign holders and packagers,
  and U.S. agent fee of $1,000.

    b. Qualitative costs. For all of the options, except option one, 
there are a number of costs that FDA was unable to quantify. Loss of 
products from small exporters who would choose to stop exporting to the 
United States due to the increased cost of business may represent 
significant costs. Earlier in the analysis, we estimated that about 16 
percent of foreign manufacturers export 10 or fewer line entries per 
year, and that these manufacturers would cease exporting to the United 
States. This could result in the elimination of some specialty products 
that market to very small niche markets in the United States, which 
would represent a loss to consumers who use these products.
    The cost of port delays for facilities that do not learn of the 
requirements before exporting is another cost FDA was unable to 
quantify. FDA is unable to estimate how many foreign facilities would 
not learn about the new requirements before exporting. For this 
analysis, we estimate the expected cost of learning about registration 
as the number of hours a worker in a foreign facility needs to learn 
about the requirements. However, we expect that for some facilities, 
the cost of learning about the requirements would be much higher than 
the expected cost. Facilities that do not learn about the registration 
requirements before reaching the United States port would still have 
their shipment held at the port. The loss of value may be as low as the 
cost of storage, or as high as the value of the shipment, if 
perishable.
    Under option 7, FDA expects this cost to be lower. If the U.S. 
agent registers the foreign facility, this will speed up the 
registration process and the product would be released into U.S. 
commerce faster.
    FDA also was unable to quantify the costs incurred by FDA, trade 
associations, and others for outreach about the registration 
requirements. FDA will undertake outreach to notify domestic and 
foreign facilities about registration through public meetings, 
satellite downlink to five continents, and providing help desk support. 
FDA also anticipates that trade organizations and others, such as 
brokers, foreign governments, and U.S. businesses, will undertake to 
notify facilities of the registration requirements. FDA requests 
comments on the size and the basis for estimating these costs.
10. Benefits
    These provisions would improve FDA's ability to respond to 
outbreaks from accidental and deliberate contamination from food and 
deter deliberate contamination. Based on historical evidence, a strike 
on the food supply has a very low probability, but would be a 
potentially high cost event. FDA lacks data to estimate the likelihood 
and resulting costs of a strike occurring. Without knowing the 
likelihood or cost of an event, we cannot quantitatively measure the 
reduction in probability of an event occurring or the possible 
reduction in cost of an event, associated with each regulatory option. 
Further hindering any quantification of benefits is the interactive 
effect of the other regulations that are being developed to implement 
title III of the Bioterrorism Act. Prior notice for imported shipments 
(section 307 of the Bioterrorism Act) would aid in the enforcement of 
registration, and in turn, registration would aid in the verification 
of prior notice submissions. Registration and recordkeeping also would 
work cooperatively.
    These regulations also improve FDA's ability to prevent and respond 
to accidental foodborne outbreaks. FDA lacks data on the number of 
accidental outbreaks that will be prevented or shortened from this 
proposed rule, as well as from registration working in conjunction with 
the other regulations being developed to implement title III of the 
Bioterrorism Act. To understand possible costs of inadvertent foodborne 
illness and from an intentional strike on the food supply, FDA presents 
five outbreaks resulting from accidental and deliberate contamination, 
involving both domestic and imported foods in table 44. Registration 
will aid FDA in preventing and shortening foodborne outbreaks, but we 
do not know how frequently an outbreak would occur or the size and 
severity of the outbreak in the absence of registration. These 
foodborne outbreaks also do not represent the form a terrorist attack 
might undertake, but merely illustrate the public health costs of 
foodborne disasters. It is possible that an intentional attack on the 
food supply that sought to disrupt the food supply and sicken many U.S. 
citizens would be much larger. However, the probability of an attack 
occurring and the exact reduction in risk resulting from registration 
is unknown. Therefore, FDA is unable to quantify the benefits of 
registration arising from preventing or lessening the impact of a 
foodborne outbreak. Instead, we examine four mechanisms through which 
each regulatory option might act and analyze how each of the options 
affects these mechanisms.

                                 Table 44.--Summary of five foodborne outbreaks
----------------------------------------------------------------------------------------------------------------
                                                            Confirmed or     Estimated Number    Total Illness
     Pathogen      Location and Year       Vehicle         Reported Cases        of Cases       Cost  (dollars)
----------------------------------------------------------------------------------------------------------------
Salmonella         Minnesota 1994     Ice cream          150 cases; 30      29,100 in MN;      3,187,744,000 to
 enteritidis                                              hospitalized       224,00             5,629,792,000
                                                                             nationwide
----------------------------------------------------------------------------------------------------------------
Shigella sonnei    Michigan 1988      Tofu salad         3,175 cases        Not available      45,183,000 to
                                                                                                79,797,000
----------------------------------------------------------------------------------------------------------------

[[Page 5410]]

 
Outbreaks resulting from deliberate contamination
----------------------------------------------------------------------------------------------------------------
Salmonella         Dalles, Oregon     Salad bars         751 cases; 45      Not available      10,687,000 to
 Typhimurium        1984                                  hospitalized                          18,875,000
----------------------------------------------------------------------------------------------------------------
Shigella           Texas 1996         Muffins and        12 cases; 4        All cases          83,000
 dysentreriae                          doughnuts          hospitalized       identified
 type 2
----------------------------------------------------------------------------------------------------------------
Outbreaks resulting from imported foods
----------------------------------------------------------------------------------------------------------------
Cyclospora         United States and  Raspberries        1465 cases         Not available      3,941,000
 cayaetanensis      Canada 1996        (probably          identified, less
                                       imported from      than 20
                                       Guatemala)         hospitalized
----------------------------------------------------------------------------------------------------------------

    a. Salmonella enteritidis in ice cream. In 1994, approximately 
224,000 people were sickened by ice cream contaminated with Salmonella 
enteritidis. The source of the contamination appeared to be pasteurized 
pre-mix that had been contaminated during transport in tanker trailers 
that carried nonpasteurized eggs. There were 150 confirmed cases of 
salmonellosis associated with the outbreak in Minnesota. However, ice 
cream produced during the contamination period was distributed to 48 
States. To calculate the total number of illnesses associated with the 
outbreak, researchers calculated an attack rate of 6.6 percent. This 
attack rate was extrapolated to the population that consumed the ice 
cream, giving a total number sickened of 224,000 (Ref. 19).
    Salmonellosis most commonly causes gastrointestinal symptoms. 
Almost 91 percent of cases are mild and cause 1 to 3 days of illness 
with symptoms including diarrhea, abdominal cramps, and fever. Moderate 
cases, defined as cases that require a trip to a physician, account for 
8 percent of the cases. These cases typically have a duration of 2 to 
12 days. Severe cases require hospitalization and last 11 to 21 days. 
In addition to causing gastroenteritis, salmonellosis also can cause 
reactive arthritis in a small percentage of cases. Reactive arthritis 
may be short or long term and is characterized by joint pain. Just over 
1 percent of cases develop short-term reactive arthritis and 2 percent 
of cases develop chronic, reactive arthritis.
    FDA estimated the costs associated with salmonellosis, including 
medical treatment costs and pain and suffering. Table 45 of this 
document provides a summary of these estimates. Pain and suffering is 
measured by lost quality adjusted life days (QALDs). QALDs measure the 
loss of utility associated with an illness. A QALD is measured between 
zero and one, with one being a day in perfect health. The total loss of 
a quality adjusted life year (QALY), or the loss of a year of life is 
valued at $100,000, based on economic studies of how consumers value 
risks to life (Ref. 20). Thus, an entire lost QALD would be valued at 
$274 and fractions of QALDs are a fraction of the day's value. FDA 
presents two estimates of values of pain and suffering associated with 
arthritis, one based on physician estimates (Ref. 21) and another based 
on a regression analysis approach (Ref. 22). This gives a range of 
costs for the average case of salmonellosis between $14,231 and 
$25,133.

                                                 Table 45.--The cost of a typical case of salmonellosis
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                               Medical
                                                                                       Total QALDs         Health Loss          Costs        Weighted
                             Severity                                Case Breakdown      Lost per      (dollars) per Case     (dollars)     Dollar Loss
                                                                       (percent)         Illness          (Discounted)        per Case       per Case
                                                                                                                            (Discounted)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Illness.................................................................................................................................................
  Mild............................................................         90.7              1.05                   660             0             599
  Moderate........................................................          8.1              3.68                 2,310           283             209
  Severe..........................................................          1.2              9.99                 6,266         9,250             188
--------------------------------------------------------------------------------------------------------------------------------------------------------
Arthritis...............................................................................................................................................
Regression approach...............................................  ...............  ...............  ....................  ............  ..............
  Short-term......................................................          1.26             5.41                 3,391           100              44
  Long-term.......................................................          2.40         2,613.12               452,554         7,322          11,048
Direct survey approach............................................  ...............  ...............  ....................  ............  ..............
  Short-term......................................................          1.26            10.81                 6,778           100              87
  Long-term.......................................................          2.40         5,223.15               904,573         7,322          21,906
--------------------------------------------------------------------------------------------------------------------------------------------------------
Death.............................................................          0.04     ...............          5,000,000     ............        2,143
========================================================================================================================================================
Total expected loss per case............................................................................................................................
  Regression approach...................................................................................................................       14,231
  Direct survey approach................................................................................................................       25,133
--------------------------------------------------------------------------------------------------------------------------------------------------------


[[Page 5411]]

    To estimate the economic cost due to illness associated with this 
outbreak, FDA used the range for the average cost per case. For 224,000 
people, this is a total cost of between $3,187,744,000 and 
$5,629,792,000 from this accidental food disaster.
    b. Shigella sonnei in tofu salad. In 1988, a tofu salad at an 
outdoor music festival was contaminated with Shigella sonnei and 
sickened an estimated 3,175 people. Over 2,000 volunteer food handlers 
served communal meals at the festival (Ref. 23). Shigellosis causes 
similar symptoms and is of similar duration to salmonellosis. It also 
is associated with short term and chronic reactive arthritis; thus FDA 
assumed the average case of shigellosis has the same cost as 
salmonellosis. This gives a total cost of $45,183,000 to $79,797,000.
    c. Salmonella typhimirium in salad bars. During September and 
October of 1984, two outbreaks of Salmonella typhimirium occurred in 
association with salad bars in restaurants in The Dalles, OR. At least 
751 people were affected. Members of the local Rajneeshpuram commune 
intentionally caused the outbreak by spraying Salmonella typhimirium on 
the salad bars in local restaurants. Their apparent motivation was to 
influence a local election by decreasing voter turnout. Intentional 
contamination was not suspected immediately and no charges were brought 
until a year after the attacks (Ref. 24).
    The 751 people affected primarily were identified through passive 
surveillance; thus the true number of people actually sickened is 
undoubtedly much higher. The Dalles is located on Interstate 84 in 
Oregon and is a frequent stop for travelers who were unlikely to be 
identified by passive or active surveillance for salmonellosis. 
However, since we do not have any estimates of the true size of the 
outbreak, we estimated the costs associated with known cases, 
recognizing this is an underestimate of the true cost of the outbreak. 
We use the cost estimates for salmonellosis as ranging from $14,231 to 
$25,133. This gives an estimated cost of known cases for the outbreak 
of $10,687,000 to $18,875,000.
    d. Shigella dysenteriae type 2 among laboratory workers. Twelve 
people working in a laboratory who consumed muffins left in the 
laboratory break room contracted shigellosis. Affected workers had 
diarrhea, nausea, and abdominal discomfort. Investigators concluded 
that the outbreak likely was the result of deliberate contamination. 
All twelve affected workers were treated by, or consulted with, a 
physician. Nine affected workers went to the emergency room, four of 
whom were hospitalized (Ref. 25).
    To estimate the cost of this outbreak, FDA assumed that the eight 
cases requiring consultation with a doctor, but not requiring 
hospitalization, had the same cost as a moderate case of salmonellosis. 
The four cases requiring hospitalization were estimated to have the 
same cost as a severe case of gastroenteritis resulting from 
salmonellosis. This gives a cost of $83,000 for illnesses associated 
with the event. Table 46 summarizes the costs associated with this 
outbreak.

          Table 46.--Summary of costs for cases of shigellosis
------------------------------------------------------------------------
                               Number of   Cost per case    Total cost
           Severity              cases       (dollars)       (dollars)
------------------------------------------------------------------------
Mild                                0               0               0
------------------------------------------------------------------------
Moderate                            8           2,593          21,000
------------------------------------------------------------------------
Severe                              4          15,516          62,000
------------------------------------------------------------------------
Grand total                                                    83,000
------------------------------------------------------------------------

    e. Cyclospora cayatanensis in imported raspberries. In 1996, 1,465 
cases of cyclosporiasis were linked to consumption of raspberries 
imported from Guatemala. Nine hundred and seventy eight of these cases 
were laboratory confirmed. No deaths were confirmed and less than 20 
hospitalizations were reported (Ref. 26). Case control studies 
indicated that raspberries imported from Guatemala were the source of 
the illnesses. Fifty-five clusters of cases were reported in 20 states, 
two Canadian provinces, and the District of Columbia (Ref. 27).
    Cyclosporiasis typically causes watery diarrhea, loss of appetite, 
weight loss, and fatigue. Less common symptoms include fever, chills, 
nausea, and headache. The median duration of illness associated with 
the outbreak was more than 14 days and the median duration of diarrheal 
illness was 10 days (Ref. 27). We estimated the cost of a mild case of 
cyclosporiasis as two and a half times higher than the cost of a mild 
case of gastroenteritis from salmonellosis due to the longer duration. 
The reports of cyclosporiasis outbreaks did not include information on 
the number of physician visits. We assumed that the percentage of total 
cases that result in physician visits would be larger than the 
corresponding percentage for salmonellosis illnesses, due to the longer 
duration of illnesses. We assumed, therefore, that 40 percent of those 
infected with cyclosporiasis visited a physician. Less than 20 
hospitalizations were reported from the cyclosporiasis outbreak (Ref. 
26). No deaths were confirmed. Table 47 summarizes the costs associated 
with this outbreak.

         Table 47.--Summary of costs for cases of cyclosporiasis
------------------------------------------------------------------------
                         Number of   Cost per case
        Severity           cases       (dollars)    Total cost (dollars)
------------------------------------------------------------------------
Mild                        879           1,650             1,450,000
------------------------------------------------------------------------
Moderate                    586           3,748             2,196,000
------------------------------------------------------------------------
Severe                       19          15,516               295,000
------------------------------------------------------------------------
Grand total                                                $3,941,000
------------------------------------------------------------------------


[[Page 5412]]

    f. Mechanisms. Requiring registration of manufacturers/processors, 
packers, and holders of food would aid in deterring and limiting the 
effects of foodborne outbreaks in four ways: (1) By requiring 
registration, persons who might intentionally contaminate the food 
supply would be deterred from entering the food production chain; (2) 
if FDA is aware of a specific food threat, then it would be able to 
inform the facilities potentially affected by the threat; (3) FDA would 
be able to deploy more efficiently its domestic compliance and 
regulatory resources and better able to identify facilities affected by 
future FDA actions (including possible regulations); and (4) FDA 
inspectors, using prior notice and registration, can better identify 
shipments for inspection.
    Registering with FDA creates a paper trail, which would, even if 
the information in the registration were falsified, provide evidence 
that could link the registration to the false registrant. By creating 
this paper trail, persons who might intentionally contaminate the food 
supply and are considering starting a business in the food supply chain 
would be deterred by the creation of additional evidence that might be 
used against them. Persons who might intentionally contaminate the food 
supply that refuse to register, if foreign, would risk having their 
product held at the port and, if foreign or domestic, would be subject 
to criminal sanctions.
    With correct contact information and product categories, FDA can 
quickly contact domestic and foreign facilities that may be targeted by 
a specific food threat. This quick communication would allow facilities 
to respond quickly to a threat and possibly limit the effect of a 
deliberate strike on the food supply, as well as public health 
emergencies due to accidental contamination.
    A complete list of facilities in the food supply chain would aid 
FDA in scheduling inspections and undertaking compliance activities. 
Domestically, a complete list of facilities with correct contact 
information would aid inspectors in contacting facilities, and with 
product information would aid in identifying facilities for 
inspections. Because of the turnover in the food industry and the ratio 
of inspectors to food facilities, FDA never has had a complete list of 
foreign or domestic facilities that provide food for consumption in the 
United States. Also, a complete list of facilities would aid FDA in 
understanding which facilities would be affected by future FDA actions 
(including possible regulations), which would result in targeting 
communication and outreach to these facilities.
    In conjunction with the prior notification requirements in 21 CFR 
part 1, subpart I, FDA can better identify imported food shipments for 
inspection at the port. The registration would identify the country of 
the manufacturer, which may not be the same as the country from which 
the product has been shipped. This information would assist FDA in 
identifying specific shipments to inspect, if we have information that 
a particular type of food or shipments from a particular country may be 
adulterated. Additionally, the database of registrants and products 
also would aid FDA in verifying that a product is correctly identified 
by where and by whom it was produced. For example, if the registration 
information identifies a facility as producing only dairy products and 
FDA receives a prior notice purportedly from the facility for the 
shipment indicating that the facility is shipping nuts, FDA can target 
that shipment for verification based on the discrepancy.
    Because we cannot quantify the benefits, we cannot differentiate 
the benefits of each option in dollar terms. Instead, we look at how 
effectively each of the mechanisms would operate under each of the 
options relative to no regulation (option one).

i. Registration would deter persons who might intentionally contaminate 
the food supply from entering the food production chain.

Option 1: No impact.
Option 2: This option is the most comprehensive in the registration 
requirements and thus would have the largest impact on deterring 
persons who might intentionally contaminate the food supply.
Option 3: If FDA does not require intrastate facilities to register, 
then persons who might intentionally contaminate the food supply might 
be more likely to choose an intrastate facility for carrying out an 
attack on the food supply. However, intrastate facilities are more 
likely to be small, and generally do not distribute product widely or 
in large quantities. These are all characteristics that would make 
intrastate facilities less attractive to a person who would 
intentionally contaminate the food supply. Therefore, FDA expects that 
excluding intrastate facilities would reduce the function of the first 
mechanism, but not to a great extent.
Option 4: Option four still would cover many of the same facilities as 
option 2. However, if mixed-type facilities are not required to 
register, then these types of facilities may be more vulnerable. 
However, many state and local agencies have registration requirements 
for mixed-type facilities. Some of these facilities would be covered 
under these State or local agencies. Persons who might intentionally 
contaminate the food supply might be more likely to choose a mixed-type 
facility that is not required to register for carrying out an attack on 
the food supply.
Option 5: This option provides the same coverage of facilities as 
option 2. It does not require the inclusion of food product categories 
on the registration form. FDA anticipates that excluding product 
categories, by reducing the amount of information required by the 
registrant, would reduce slightly this regulation's ability to deter 
persons who might intentionally contaminate the food supply.
Option 6: This option provides coverage of the food production chain 
similar to option two, and so will have a similar effect in deterring 
persons who might intentionally contaminate the food supply from 
entering the food production chain.
Option 7: Option 7 would provide the same coverage of the food 
production chain as option 6, and so would be equally as effective in 
preventing persons who might intentionally contaminate the food supply 
from entering the food production chain.

ii. FDA would be better able to inform facilities if they are affected 
by a threat.

Option 1: No impact.
Option 2: This option is the most comprehensive in its coverage and 
thus would have the largest effect.
Option 3: Excluding intrastate facilities from registering would reduce 
FDA's ability to inform intrastate facilities of a specific threat. 
However, intrastate facilities are less likely to be the focus of a 
threat because of their small size and small distribution range.
Option 4: FDA's ability to inform facilities would be better than 
without a registration system, but excluding mixed-type facilities from 
registering would reduce FDA's ability to inform mixed-type facilities 
of a specific threat.
Option 5: FDA's ability to inform facilities would be better than 
without a registration system, but not including product categories on 
the registration form would significantly limit FDA's ability to inform 
facilities of threats related to specific foods. For example, if FDA 
receives credible information that persons who might intentionally 
contaminate the food supply have threatened foreign or domestic 
cheeses,

[[Page 5413]]

inclusion of product categories would allow FDA to communicate quickly 
with only those facilities impacted by this threat.
Option 6: This option provides coverage of food production chain 
similar to option 2, and so would have a similar effect in aiding FDA 
in contacting facilities in response to a threat.
Option 7: Option 7 would provide the same coverage of the food 
production chain as option 6, and thus would be as effective in aiding 
FDA in contacting facilities in response to a threat.

iii. FDA would be more efficient in deploying its enforcement resources 
and better able to identify facilities affected by future FDA actions 
(including possible regulations).

Option 1: No impact.
Option 2: This option is the most comprehensive in its coverage and 
thus would have the largest beneficial effect of the options.
Option 3: Because FDA exercises less regulatory authority over 
facilities that operate only in intrastate commerce, and thus seldom 
inspects these facilities, not requiring facilities that operate only 
in intrastate commerce to register will have a small effect on FDA's 
ability to deploy enforcement resources and identify facilities that 
are affected by future regulations.
Option 4: FDA shares enforcement responsibilities for a number of 
mixed-type facilities with other Federal, State, and local agencies. 
Therefore, option 4 would aid FDA in its enforcement activities, though 
not as fully as option 2. However, FDA would be less able to identify 
mixed-type facilities that are affected by future regulations for 
outreach and other activities.
Option 5: Excluding product categories would limit FDA's ability to use 
the registration database to deploy its enforcement resources. Although 
FDA still would be aided by the registration requirements under option 
5, our efforts would not be as efficient as under option 2. Information 
from registration makes enforcement more efficient; thus, the more 
information provided, the greater the increase in efficiency.
Option 6: This option provides similar coverage of the food production 
chain as option 2 and so will have a similar effect in aiding FDA in 
deploying enforcement resources and identifying facilities that are 
affected by future regulations.
Option 7: Option 7 would provide the same coverage of the food 
production chain as option 6, and thus would be as effective in aiding 
FDA in deploying resources as option 6.

iv. Registration, in conjunction with prior notice, would give FDA 
information that will aid FDA in determining which shipments to 
inspect.

Option 1: No impact.
Option 2: This option is the most comprehensive in its coverage and 
thus would have the largest effect.
Option 3: FDA's ability to target imported foods would be unaffected by 
excluding intrastate facilities. Option 3 would be as effective as 
option 2.
Option 4: FDA's ability to target imported foods would be lessened 
slightly by excluding mixed-type facilities.
Option 5: Not including food product categories would limit FDA's 
ability to target specific products and country product combinations at 
the ports. Excluding food categories also would limit FDA's ability to 
evaluate as thoroughly as possible prior notifications of food imports 
we receive under 21 CFR part 1, subpart I. For example, if a facility 
registers as manufacturing/processing only canned goods and we receive 
a prior notice purportedly from this facility for fresh seafood, FDA 
would have critical information indicating that the shipment may 
warrant examination.
Option 6: this option provides similar coverage of the food production 
chain as option 2, and so would have a similar effect in aiding FDA in 
determining which shipments to inspect.
Option 7: Option 7 would be as effective as option 2 in aiding FDA in 
targeting import inspections.

V. Initial Regulatory Flexibility Analysis

A. Introduction

    FDA has examined the economic implications of this proposed 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 is unsure whether or not this proposed rule would 
have a significant economic impact on a substantial number of small 
entities, but has analyzed various regulatory options to examine the 
impact on small entities. The following analysis, together with other 
relevant sections of this document, serves as the agency's initial 
regulatory flexibility analysis under the Regulatory Flexibility Act.

B. Economic Effect on Small Entities

    Of the 202,046 domestic entities covered by option 7, the proposed 
option, 99 percent are small according to the definitions of the Small 
Business Administration. Because such a large percentage of the 
domestic entities are small, all options considered in the Benefit-Cost 
Analysis in section IV.A of this document are regulatory relief 
options. The expected burden for most small entities is low, between 
$58 and $83. However, over 200,000 entities are affected by this rule. 
If a small percentage of these entities incur costs significantly 
higher than the expected cost, then a substantial number of small 
entities may be significantly affected. FDA requests comment on the 
effect of this proposed rule on small entities.

C. Additional Flexibility Considered

    Because of the requirements of the Bioterrorism Act, FDA is 
precluded from selecting some of the options that typically would be 
considered to lessen the economic effect of the rule on small entities, 
including granting an exemption to small entities. FDA tentatively 
concludes that it would be inconsistent with section 305 of the 
Bioterrorism Act to allow small entities more time to register, since 
the Bioterrorism Act established a registration deadline that applies 
to all covered facilities. Although the recordkeeping provision of the 
Bioterrorism Act directs FDA to take into account the size of a 
business when issuing implementing regulations, the registration 
provision contains no such language. Thus, it appears that Congress 
intended for all facilities to be subject to the deadline established 
in the Bioterrorism Act. Nonetheless, the agency recognizes that the 
registration requirement may cause an economic burden to some small 
businesses; therefore, we are seeking comment on whether it would be 
consistent with section 305 of the Bioterrorism Act for the agency to 
set staggered compliance dates that would give small businesses more 
time to comply.
    However, the Bioterrorism Act does have considerable flexibility 
for small businesses built into the statute. First, retail facilities 
and farms are both exempt from registration. Many of these are small 
entities. Second, the economic impact on small entities is lessened by 
allowing entities to register either electronically or by mail. Small 
entities that do not have reasonable access to a computer or the 
Internet can submit their registration by mail.

[[Page 5414]]

VI. Unfunded Mandates

    Title II of the Unfunded Mandates Reform Act of 1995 (Public Law 
104-4) requires cost-benefit and other analyses before any rule making 
if the rule would include 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 or more (adjusted annually 
for inflation) in any 1 year.'' The current inflation-adjusted 
statutory threshold is $112.3 million. Because the total cost to the 
domestic private sector would be $13 million, FDA has determined that 
this proposed rule does not constitute a significant rule under the 
Unfunded Mandates Reform Act.

VII. Small Business Regulatory Enforcement Fairness Act Major Rule

    The Small Business Regulatory Enforcement Fairness Act (SBREFA) 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 adverse effects on 
competition, employment, productivity, or innovation; or significant 
adverse effects on the ability of United States-based enterprises to 
compete with foreign-based enterprises in domestic or export markets. 
In accordance with the Small Business Regulatory Enforcement Fairness 
Act, OMB has determined that this proposed rule, when final, will be a 
major rule for the purpose of congressional review.

VIII. Paperwork Reduction Act of 1995

    This proposed rule contains information collection provisions that 
are subject to review by the Office of Management and Budget (OMB) 
under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520). A 
description of these provisions is given in the following paragraphs 
with an estimate of the annual reporting burden. Included in the 
estimate is the time for reviewing instructions, searching existing 
data sources, gathering and maintaining the data needed, and completing 
and reviewing each collection of information.
    FDA invites comments on: (1) Whether the proposed collection of 
information is necessary for the proper performance of FDA's functions, 
including whether the information would have practical utility; (2) the 
accuracy of FDA's estimate of the burden of the proposed collection of 
information, including the validity of the methodology and assumptions 
used; (3) ways to enhance the quality, utility, and clarity of the 
information to be collected; and (4) ways to minimize the burden of the 
collection of information on respondents, including through the use of 
automated collection techniques, when appropriate, and other forms of 
information technology.
    Title: Registration of food facilities
    Description: The Bioterrorism Act contains a provision requiring 
the Secretary to issue a regulation requiring that domestic and foreign 
facilities that manufacture/process, pack, or hold food intended for 
consumption in the United States register with FDA by December 12, 
2003. The Bioterrorism Act defines foreign facilities as those that 
manufacture/process, pack, or hold food for export to the United States 
without further processing or packaging outside the United States 
before export. Information FDA proposes to require on the form includes 
the name and full address of the facility; emergency contact 
information, including an individual's name, title, office phone, home 
phone, cell phone (if available) and e-mail address; all trade names 
the facility uses; general food product categories under Sec.  170.3; 
and a certification statement that includes the name, title/position, 
and phone number (e-mail address and fax number if available) of the 
registrant. Additionally, under the proposed rule, facilities would be 
encouraged to submit their preferred mailing address; type of activity 
conducted at the facility; food categories not included under Sec.  
170.3, but which are helpful to FDA for responding to an incident; type 
of storage, if the facility is solely a warehouse/holding facility, and 
approximate dates of operation if the facility's business is seasonal. 
Under the proposed rule, facilities would also be required to submit 
timely updates when any information on their registration form changes, 
including cancellation of the registration on a separate form.
    Description of Respondents: Domestic facilities that manufacture/
process, pack, or hold food for consumption in the United States are 
required to register. This includes facilities engaged in both 
interstate and intrastate commerce and mixed-type facilities as 
described in option 6. Foreign facilities are required to register if 
they are manufacture/process, pack, or hold food that is not further 
processed or packaged outside the United States. The number of 
respondents is shown in table 48.

                         Table 48.--Respondents
Foreign                                 205,405
------------------------------------------------------------------------
Domestic                                202,046
------------------------------------------------------------------------
Total                                   407,451
------------------------------------------------------------------------

Burden:

Hour Burden Estimate
    FDA estimates that initially it would take an administrative worker 
with Internet access one hour to read and understand the registration 
requirements; this time is doubled to two hours of an administrative 
worker's time for those facilities without Internet access. Foreign 
facilities' workers would need one hour to read and understand the 
registration requirements, if they have access to the Internet and can 
read and write in English. An additional 5 hours would be needed if 
they do not have Internet access, and an additional 5 hours would be 
needed if they do not read or understand English. In subsequent years, 
facilities that enter the industry would have to register, facilities 
that close would have to notify FDA of their closure, and facilities 
that have changes in the registration information would have to provide 
updates to FDA. FDA estimates that annually 10 percent of covered 
facilities would close, 10 percent would open (Ref. 9) and 20 percent 
of registered facilities would have changes to their registration 
information.
    Next, FDA estimates that filling out a registration form would take 
a total of 1 hour: 45 minutes of an administrative worker's time and 15 
minutes of a owner, operator, or agent in charge's time to certify the 
registration before submitting the form to FDA. Foreign facilities' 
workers would need 1 hour to fill out the form, if they have access to 
the Internet and can read and write in English. An additional 1 hour 
would be needed if they do not have Internet access and an additional 1 
hour would be needed if they do not read or understand English. Table 
49 of this document shows the burden by domestic and foreign 
facilities, availability of the Internet, and fluency in English. For 
foreign facilities, FDA only had data on the percentage of facilities 
with Internet access and percentage fluent in English, but no 
information on what percentages of facilities are both fluent in 
English and have Internet access. To calculate the total number of 
burden hours, FDA assigned the correct percentages of fluent facilities 
and facilities with Internet access to the total number of

[[Page 5415]]

facilities, but for ease of computation excluded a category of 
facilities that are not fluent in English and have Internet access. FDA 
requests comments on the number of facilities not fluent in English and 
without Internet access.

                           Table 49.--Estimated Annual Reporting Burden--First Year\1\
----------------------------------------------------------------------------------------------------------------
                                                      Annual
                       FDA Form       Number of      Frequency    Total Annual     Hours per
    21 CFR Part         Number       Respondents        per         Responses      Response       Total Hours
                                                    Respondent
----------------------------------------------------------------------------------------------------------------
1.241(a)\2\           FDA 3537         143,453             1         143,453             2            286,906
----------------------------------------------------------------------------------------------------------------
1.241(b)\3\           FDA 3537          58,593             1          58,593             3            175,779
----------------------------------------------------------------------------------------------------------------
1.241(a)\4\           FDA 3537          32,864             1          32,864             2             65,728
----------------------------------------------------------------------------------------------------------------
1.241(b)\5\           FDA 3537          30,811             1          30,811             7            215,677
----------------------------------------------------------------------------------------------------------------
1.241(b)\6\           FDA 3537         141,730             1         141,730            12          1,700,760
----------------------------------------------------------------------------------------------------------------
  Total hours                                                                                       2,444,850
----------------------------------------------------------------------------------------------------------------
\1\ There are no capital costs or operating and maintenance costs associated with this collection of
  information.
\2\ Domestic facilities with Internet access
\3\ Domestic facilities without Internet access
\4\ Foreign facilities with Internet access and fluent in English
\5\ Foreign facilities without Internet access and fluent in English
\6\ Foreign facilities without Internet access and not fluent in English

    In the following years, new facilities will have to register with 
FDA. These new facilities will bear the same burden to register that 
facilities incurred in the first year. Based on estimates by SBA that 
10 percent of all businesses are new (Ref. 8), FDA estimates that the 
number of new facilities each year will be equal to 10 percent of the 
total number of facilities. Also, facilities that go out of business 
will have to notify FDA to cancel their registration. FDA estimates 
that 10 percent of the total number of facilities will go out of 
business each year, also based on SBA statistics. Facilities exiting 
the business will have to send FDA a cancellation of their 
registration. FDA estimates that it will take these facilities 
approximately 1 hour to locate the correct form, enter their 
information, and send it to FDA. Finally, facilities that have a 
material change of information submitted in their registration will 
have to notify FDA of the new information. FDA estimates 20 percent of 
facilities will have a material change in the information submitted in 
their registration each year. It will take these facilities 
approximately 1 hour to locate the correct form, enter their 
information, and send it to FDA. Table 50 presents an estimate of the 
burden hours for new facilities, and updates and cancellations for 
existing facilities in future years.

                        Table 50.--Estimated Annual Reporting Burden--Subsequent Years\1\
----------------------------------------------------------------------------------------------------------------
                                                      Annual
                       FDA Form       Number of      Frequency    Total Annual     Hours per
   21 CFR Part 1        Number       Respondents        per         Responses      Response       Total Hours
                                                    Respondent
----------------------------------------------------------------------------------------------------------------
New facilities
----------------------------------------------------------------------------------------------------------------
1.241(a)\2\           FDA 3537          14,345             1          14,345             2             28,690
----------------------------------------------------------------------------------------------------------------
1.241(b)\3\           FDA 3537           5,859             1           5,859             3             17,577
----------------------------------------------------------------------------------------------------------------
1.241(a)\4\           FDA 3537           3,286             1           3,286             2              6,572
----------------------------------------------------------------------------------------------------------------
1.241(b)\5\           FDA 3537           3,081             1           3,081             7             21,567
----------------------------------------------------------------------------------------------------------------
1.241(b)\6\           FDA 3537          14,173             1          14,173            12            170,076
----------------------------------------------------------------------------------------------------------------
Previously registered facilities
----------------------------------------------------------------------------------------------------------------
1.244(a)\2\          FDA 3537/          43,036             1          43,036             1             43,036
                         3537a
----------------------------------------------------------------------------------------------------------------
1.244(b)\3\          FDA 3537/          17,578             1          17,578             1             17,578
                         3537a
----------------------------------------------------------------------------------------------------------------
1.244(a)\4\          FDA 3537/           9,859             1           9,859             1              9,859
                         3537a
----------------------------------------------------------------------------------------------------------------
1.244(b)\5\          FDA 3537/           9,243             1           9,243             1              9,243
                         3537a
----------------------------------------------------------------------------------------------------------------

[[Page 5416]]

 
1.244(b)\6\          FDA 3537/          42,519             1          42,519             1             42,519
                         3537a
----------------------------------------------------------------------------------------------------------------
  Grand total                                                                                         366,717
----------------------------------------------------------------------------------------------------------------
\1\ There are no capital costs or operating and maintenance costs associated with this collection of
  information.
\2\ Domestic facilities with Internet access
\3\ Domestic facilities without Internet access
\4\ Foreign facilities with Internet access and fluent in English
\5\ Foreign facilities without Internet access and fluent in English
\6\ Foreign facilities without Internet access and not fluent in English

    In compliance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
3507(d)), the agency has submitted the information collection 
provisions of this proposed rule to OMB for review. Interested persons 
are requested to send comments regarding information collection to the 
Office of Information and Regulatory Affairs, OMB, New Executive Office 
Bldg., 725 17th St. NW., rm. 10235, Washington, DC 20503, Attn: Stuart 
Shapiro, FDA Desk Officer.

IX. Analysis of Environmental Impact

    The agency has carefully considered the potential environmental 
effects of this action. FDA has concluded under 21 CFR 25.30(h) that 
this action is of a type that does not individually or cumulatively 
have a significant effect on the human environment. Therefore, neither 
an environmental assessment nor an environmental impact statement is 
required.

X. Federalism

    FDA has analyzed this proposed rule in accordance with the 
principles set forth in Executive Order 13132. FDA has determined that 
the proposed 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, 
the agency tentatively concludes that the proposed rule does not 
contain policies that have federalism implications as defined in the 
Executive order and, consequently, a federalism summary impact 
statement has not been prepared.

XI. Comments

    Interested persons may submit to the Dockets Management Branch (see 
ADDRESSES) written or electronic comments regarding this document. Two 
copies of any mailed comments are to be submitted, except that 
individuals may submit one copy. Comments are to be identified with the 
docket number found in brackets in the heading of this document. FDA 
cannot be responsible for addressing comments submitted to the wrong 
docket or that do not contain a docket number. Received comments may be 
seen in the Dockets Management Branch between 9 a.m. and 4 p.m., Monday 
through Friday.
    FDA notes that the comment period for this document is shorter than 
the 75-day period that the agency customarily provides for proposed 
rules that are technical or sanitary or phytosanitary (SPS) measures. 
FDA believes that a 60-day comment period is appropriate in this 
instance. Executive Order 12889, ``Implementation of the North American 
Free Trade Agreement'' (58 FR 69681, December 30, 1993), states that 
any agency subject to the Administrative Procedure Act must provide a 
75-day comment period for any proposed Federal technical regulation or 
any Federal SPS measure of general application. Executive Order 12889 
provides an exception to the 75-day comment period where the United 
States considers a technical regulation or SPS measures of general 
application necessary to address an urgent problem related to the 
protection of human, plant, or animal health or sanitary or 
phytosanitary protection. FDA has concluded that this proposed rule is 
subject to the exception in Executive Order 12889.
    The Bioterrorism Act states that it is intended ``[t]o improve the 
ability of the United States to prevent, prepare for, and respond to 
bioterrorism and other public health emergencies.'' In order to meet 
these objectives, section 305 of the Bioterrorism Act requires FDA to 
propose and issue final regulations requiring the registration of food 
facilities within 18 months of the Bioterrorism Act's enactment, which 
is by December 12, 2003. Section 305 of the Bioterrorism Act also 
provides that if FDA does not issue final regulations by this date, 
facilities still must register with FDA by December 12, 2003, subject 
to compliance with the final regulations when the final regulations are 
made effective. This expedited timeframe reflects the urgency of the 
U.S. Government's need to prepare to respond to bioterrorism and other 
food-related emergencies. In addition, section 801 of SBREFA (5 U.S.C. 
801), states that a major final rule may not take effect until 60 days 
after the agency has published the rule and submitted it to Congress 
for review. A major rule for this purpose is defined in 5 U.S.C. 804 as 
one that the Administrator of the Office of Information and Regulatory 
Affairs of OMB has determined has resulted in or is likely to result 
in: (a) An annual effect on the economy of $100 million or more; or (b) 
a major increase in costs or prices for consumers, individual 
industries, Federal, State, or local government agencies, or geographic 
regions; or (c) significant adverse effects on competition, employment, 
investment, productivity, innovation, or on the ability of U.S.-based 
enterprises to compete with foreign-based enterprises in domestic or 
export markets.
    OMB has determined that this proposed rule, when finalized, will be 
a major rule. Accordingly, FDA must publish the final registration rule 
no later than October 12, 2003, for it to be effective by the statutory 
deadline of December 12, 2003. For these reasons, FDA has concluded 
that the urgency of this matter is sufficient justification for 
shortening the public comment period for this proposal to 60 days, 
consistent with Executive Order 12889.
    FDA will not consider any comments submitted after the 60-day 
comment period closes and does not intend to grant any requests for 
extension of the comment period due to the Bioterrorism Act's 
requirement to have a final regulation in effect by December 12, 2003, 
which requires publication on or before October 12, 2003.

[[Page 5417]]

XII. References

    The following references have been placed on display in the Dockets 
Management Branch (see ADDRESSES) and may be seen by interested persons 
between 9 a.m. and 4 p.m. Monday through Friday. FDA has verified the 
Web site addresses in this document, but is not responsible for 
subsequent changes to the Web sites after this document publishes in 
the Federal Register.
    1. U.S. Census Bureau, 2000 County Business Patterns, available 
at http://www.census.gov/epcd/cbp/view/cbpview.html.
    2. U.S. Census Bureau, 1999 Nonemployer Statistics, available at 
http://www.census.gov/epcd/nonemployer/index.html.
    3. U.S. Food and Drug Administration, Field Accomplishments and 
Compliance Tracking System (FACTS), Fiscal year 2002.
    4. U.S. Food and Drug Administration, Operational and 
Administrative System for Import Support (OASIS), Fiscal year 2002.
    5. Impact Marketing Consultants, The Rauch Packaging Guide to 
the U.S. Packaging Industry, the fourth edition, 2002.
    6. U.S. Department of Agriculture, National Agriculture 
Statistics Service, 1997 Census of Agriculture-U.S. Data, available 
at http://www.nass.usda.gov/census/.
    7. Brown, Bradley, Memorandum to the file, November 22, 2002.
    8. U.S. Small Business Administration, Office of Advocacy, Small 
Business by the Numbers, May, 2002, available at http://www.sba.gov/advo/stats/sbfaq.html.
    9. U.S. Department of Labor, Bureau of Labor Statistics, 
National Compensation Survey: Occupation Wages in the United States, 
2000, summary 01-04, available at http://www.bls.gov/ncs/ocs/sp/ncbl0354.pdf.
    10. U.S. Office of Personnel Management, Salary table 2002-DCB, 
available at http://www.opm.gov/oca/02tables/02DCB.pdf, accessed on 
9/24/2002.
    11. NUA, How Many Online? available at http://www.nua.com/surveys/how_many_online/index.html, accessed on 9/4/2002.
    12. Williams, V., U.S. Small Business Administration, Office of 
Advocacy, E-commerce, Small Businesses Venture Online, July, 1999, 
available at http://www.sba.gov/advo/stats/e_comm.pdf, accessed on 
9/31/2002.
    13. Dun and Bradstreet, D&B, 21st Annual Small Business Survey 
Summary Report, available at http://sbs.dnb.com/?referrer=sbsnavcenter, accessed on 9/31/2002.
    14. The English Speaking Union, Frequently Asked Questions, 
available at www.esu.org/faqs.html, accessed 9/4/2002.
    15. U.S. Census Bureau, Popclock, available at http://www.census.gov/main/www/popclock.html, accessed on 11/22/2002.
    16. Estrin, A., Memorandum to the file, 10/04/2002.
    17. Jessup, A., Memorandum to the file, 11/21/2002.
    18. Pope, Angela, Memorandum to the file, 10/7/2002.
    19. Hennessy, T. W., C. W. Hedberg, L. Slutsker, et al., ``A 
National Outbreak of Salmonella enteritidis Infections From Ice 
Cream,'' The New England Journal of Medicine, May 16, 1996, 1281-
1286.
    20. Cutler, D. and E. Richardson, 1999, ``Your Money and Your 
Life: The Value of Health and What Affects It,'' Working Paper 6895, 
National Bureau of Economic Research.
    21. Zorn, D. and K. Klontz, 1998, Appendix: The Value of 
Consumer Loss to Foodborne Reactive Arthritis,'' 63 FR 24292-24299, 
63, May 1, 1998.
    22. Scharff, R. and A. Jessup, ``Valuing Chronic Disease for 
Heterogeneous Populations: the Case of Arthritis,'' 2002, Mimeo.
    23. Lee, L. A., S. M. Ostroff, H. B. McGee, et al., ``An 
Outbreak of Shigellosis at an Outdoor Music Festival,'' American 
Journal of Epidemiology, 133:6:608-615.
    24. Trook, T. J., R. V. Tauxe, R. P. Wise, et al., ``A Large 
Community Outbreak of Salmonellosis Caused by Intentional 
Contamination of Restaurant Salad Bars,'' The Journal of the 
American Medical Association, 278:5:389-397.
    25. Kolavic S. A., A. Kimura, S. L. Simons, et al., ``An 
Outbreak of Shigella dysenteriae Type 2 Among Laboratory Workers Due 
to Intentional Food Contamination,'' The Journal of the American 
Medical Association, 278:5:396-403.
    26. Colley D. G., Widespread Foodborne Cyclosporiasis Outbreaks 
Present Major Challenges (letter), Emerging Infectious Diseases, 
2:4:354-356.
    27. Herwaldt, B. L., M. L. Ackers, and Cyclospora Working Group, 
``An Outbreak in 1996 of Cyclosporiasis Associated With Imported 
Raspberries,'' New England Journal of Medicine, May 29, 1997, 1548-
1556.

List of Subjects in 21 CFR Part 1

    Cosmetics, Drugs, Exports, Food labeling, Imports, Labeling, 
Reporting and recordkeeping requirements.

    Therefore, under the Federal Food, Drug, and Cosmetic Act and under 
authority delegated to the Commissioner of Food and Drugs, it is 
proposed that 21 CFR part 1 be amended as follows:

PART 1--GENERAL ENFORCEMENT REGULATIONS

    1. The authority citation for 21 CFR part 1 is revised to read as 
follows:

    Authority: 15 U.S.C. 1453, 1454, 1455; 21 U.S.C. 304, 321, 331, 
334, 343, 350c, 350d, 352, 355, 360b, 362, 371, 374, 381, 382, 393; 
42 U.S.C. 216, 241, 243, 262, 264.

    2. Subpart H is added to part 1 to read as follows (subparts F and 
G are reserved):
Subparts F-G [Reserved]
Subpart H--Registration of Food Facilities
General Provisions
Sec.
1.225 Who must register under this subpart?
1.226 Who is exempt from this subpart?
1.227 What definitions apply to this subpart?
Procedures for Registration of Food Facilities
1.230 When must you register?
1.231 How and where do you register?
1.232 What information is required in the registration?
1.233 What optional items are included in the registration form?
1.234 How and when do you update your registration information?
Additional Provisions
1.240 What other registration requirements apply?
1.241 What happens if you fail to register?
1.242 What does assignment of a registration number mean?
1.243 Is food registration information available to the public?

General Provisions


Sec.  1.225  Who must register under this subpart?

    (a) You must register under this subpart if you are the owner, 
operator, or agent in charge of either a domestic or foreign facility, 
as defined in this subpart, and your facility is engaged in the 
manufacturing/processing, packing, or holding of food for consumption 
in the United States, unless you qualify for one of the exemptions in 
Sec.  1.226.
    (b) An owner, operator, or agent in charge of a domestic facility 
must register whether or not the food from the facility enters 
interstate commerce.
    (c) An owner, operator, or agent in charge of a foreign facility 
must register the facility. A foreign facility may designate its U.S. 
agent as its agent in charge for purposes of registering the facility.


Sec.  1.226  Who is exempt from this subpart?

    This subpart does not apply to the following facilities:
    (a) Foreign facilities, if food from such facilities undergoes 
further manufacturing/processing (including packaging) by another 
foreign facility outside the United States. This exemption does not 
apply to a facility if the further manufacturing/processing (including 
packaging) conducted by the subsequent facility consists of adding 
labeling or any similar activity of a de minimis nature;
    (b) Farms;
    (c) Retail facilities;
    (d) Restaurants;
    (e) Nonprofit food facilities in which food is prepared for, or 
served directly to, the consumer;
    (f) Fishing vessels, including those that not only harvest and 
transport fish but also engage in practices such as heading, 
eviscerating, or freezing

[[Page 5418]]

intended solely to prepare fish for holding on board a harvest vessel. 
However, those fishing vessels otherwise engaged in processing fish, 
which for purposes of this section means handling, storing, preparing, 
heading, eviscerating, shucking, freezing, changing into different 
market forms, manufacturing, preserving, packing, labeling, dockside 
unloading, or holding are subject to all of the regulations in this 
subpart; and
    (g) Facilities that are regulated exclusively, throughout the 
entire facility, by the U.S. Department of Agriculture under the 
Federal Meat Inspection Act (21 U.S.C. 601 et seq.), the Poultry 
Products Inspection Act (21 U.S.C. 451 et seq.), or the Egg Products 
Inspection Act (21 U.S.C. 1031 et seq.).


Sec.  1.227  What definitions apply to this subpart?

    (a) The act means the Federal Food, Drug, and Cosmetic Act.
    (b) The definitions of terms in section 201 of the act (21 U.S.C. 
321) apply to such terms when used in this subpart.
    (c) In addition, for the purposes of this subpart:
    (1) Calendar day means every day shown on the calendar.
    (2) Facility means any establishment, structure or structures under 
one management at one general physical location or, in the case of a 
mobile facility traveling to multiple locations, that manufactures/
processes, packs, or holds food for consumption in the United States. 
Individual homes are not facilities if the food that is manufactured/
processed, packed, or held in the home does not enter commerce. A 
facility may consist of one or more contiguous structures. A single 
building may house distinct facilities if they are under separate 
management.
    (i) Domestic facility means any facility located in any State or 
Territory of the United States, the District of Columbia, or the 
Commonwealth of Puerto Rico.
    (ii) Foreign facility means a facility other than a domestic 
facility that manufactures/processes, packs, or holds food for 
consumption in the United States.
    (3) Farm means a facility in one general physical location devoted 
to the growing of crops for food, the raising of animals for food 
(including seafood), or both. The term ``farm'' includes:
    (i) Facilities that pack or hold food, provided that all food used 
in such activities is grown or raised on that farm or is consumed on 
that farm; and
    (ii) Facilities that manufacture/process food, provided that all 
food used in such activities is consumed on that farm or another farm 
under the same ownership.
    (4) Food has the meaning given in section 201(f) of the act. 
Examples of food include, but are not limited to, fruits, vegetables, 
fish, dairy products, eggs, raw agricultural commodities for use as 
food or components of food, animal feed, including pet food, food and 
feed ingredients and additives, including substances that migrate into 
food from food packaging and other articles that contact food, dietary 
supplements and dietary ingredients; infant formula, beverages, 
including alcoholic beverages and bottled water, live food animals, 
bakery goods, snack foods, candy, and canned foods.
    (5) Holding means storage of food. Holding facilities include, but 
are not limited to, warehouses, cold storage facilities, storage silos, 
grain elevators, or liquid storage tanks.
    (6) Manufacturing/processing means making food from one or more 
ingredients, or synthesizing, preparing, treating, modifying or 
manipulating food, including food crops or ingredients. Examples 
include, but are not limited to: Cutting, peeling, trimming, washing, 
waxing, eviscerating, rendering, cooking, baking, freezing, cooling, 
pasteurizing, homogenizing, mixing, formulating, bottling, milling, 
grinding, extracting juice, distilling, labeling, or packaging.
    (7) Nonprofit food facility means a charitable entity that 
prepares, serves, or otherwise provides food to the public. The term 
includes, but is not limited to, food banks, soup kitchens, and 
nonprofit food delivery services. To qualify as a nonprofit food 
facility, the entity must be exempt from paying federal income tax 
under the U.S. Internal Revenue Code.
    (8) Packing means placing, putting, or repacking food into 
different containers without making any change to the form of the food.
    (9) Port of entry means the water, air, or land port at which the 
article of food is imported or offered for import into the United 
States, i.e., the port where food first arrives in the United States. 
This port may be different than the port where the article of food is 
entered for U.S. Customs Service purposes.
    (10) Restaurant means a facility that prepares and sells food 
directly to consumers for immediate consumption. Restaurants include, 
but are not limited to, cafeterias, lunchrooms, cafes, bistros, fast 
food establishments, food stands, saloons, taverns, bars, lounges, 
catering facilities, hospital kitchens, day care kitchens, and nursing 
home kitchens. Facilities that provide food to interstate conveyances, 
rather than directly to consumers, are not restaurants.
    (11) Retail facility means a facility that sells food products 
directly to consumers only. The term includes, but is not limited to, 
grocery and convenience stores, vending machine locations, and 
commissaries. The term includes facilities that not only sell food 
directly to consumers, but that also manufacture/process food in that 
facility solely for direct sale to consumers from that same facility.
    (12) U.S. agent means a person residing or maintaining a place of 
business in the United States whom a foreign facility designates as its 
agent. A U.S. agent cannot be in the form of a mailbox, answering 
machine, or service, or other place where an individual acting as the 
foreign facility's agent is not physically present. The U.S. agent acts 
as a communications link between FDA and the facility. FDA will treat 
representations provided by the U.S. agent as those of the foreign 
facility, and consider information provided to the U.S. agent as the 
equivalent of providing the same information or documents to the 
foreign food facility.
    (13) You or registrant means the owner, operator, or agent in 
charge of a facility that manufactures/processes, packs, or holds food 
for consumption in the United States.

Procedures for Registration of Food Facilities


Sec.  1.230  When must you register?

    The owner, operator, or agent in charge of a facility that 
manufactures/processes, holds, or packs food for consumption in the 
United States must be registered no later than December 12, 2003. 
Facilities that begin to manufacture/process, pack, or hold food for 
consumption in the United States on or after December 12, 2003, must be 
registered before they begin such activities.


Sec.  1.231  How and where do you register?

    (a) Electronic registration: To register electronically, you must 
register at [a Web site that will be provided in the final rule], which 
will be available for registration 24 hours a day, 7 days a week. This 
Web site will be available wherever the Internet is accessible, 
including libraries, copy centers, schools, and Internet cafes, as well 
as a foreign facility's U.S. agent if the facility makes such 
arrangements. FDA strongly encourages electronic registration for the 
benefit of both FDA and the registrant. Once you complete your 
registration, FDA will provide you with an automatic electronic 
confirmation of

[[Page 5419]]

registration and a permanent registration number. You will be 
considered registered once FDA electronically transmits your 
confirmation and registration number unless notified otherwise.
    (b) Registration by mail: (1) If you do not have reasonable access 
to the Internet through any of the methods provided under paragraph (a) 
of this section, you must register by obtaining a copy of the 
registration from (Office name or mail code), the Center for Food 
Safety and Applied Nutrition, Food and Drug Administration, 5100 Paint 
Branch Pkwy., College Park, MD 20740, or by phone at [toll-free number 
that will be provided in the final rule].
    (2) When you receive the form in the mail, you must fill it out 
completely and legibly and mail it to the address in paragraph (b) of 
this section.
    (3) If any required information on the form is incomplete or 
illegible when FDA receives it, FDA will send the form back to you for 
completion, provided that your mailing address is legible and valid.
    (4) FDA will enter completed registration submissions into the 
system as soon as practicable, in the order received.
    (5) FDA will then mail to the mailing address shown on the 
registration form a copy of the registration as entered, confirmation 
of registration, and your registration number.
    (6) If any information you previously submitted is incorrect as 
entered into the system, you must update your registration as specified 
in Sec.  1.234.
    (7) You will be considered registered once FDA enters your 
registration data into the registration system and the system generates 
a registration number.
    (c) No registration fee is required.
    (d) You must submit all registration information in the English 
language.


Sec.  1.232  What information is required in the registration?

    Each registrant must submit the following information through 
either of the methods described in Sec.  1.231:
    (a) The name, full address, phone number, fax number, and e-mail 
address of the facility;
    (b) The name and address of the parent company, if the facility is 
a subsidiary of the parent company;
    (c) Emergency contact information, including an individual's name, 
title, office phone, home phone, cell phone (if available), and e-mail 
address (if available);
    (d) All trade names the facility uses;
    (e) Product categories as identified in Sec.  170.3 of this 
chapter;
    (f) For a foreign facility, the name, address, phone number, fax 
number (if available), and e-mail address (if available) of its U.S. 
agent; and
    (g) A statement certifying that the information submitted is true 
and accurate, and that the person submitting the registration is 
authorized by the facility to register on its behalf. The statement 
requires the name of the person registering the facility. This 
statement also requires the phone number, e-mail address (if 
available), and fax number (if available) of the person submitting the 
registration.


Sec.  1.233  What optional items are included in the registration form?

    FDA encourages, but does not require, you to submit the following 
optional items in your registration. These data will enable FDA to 
communicate more quickly with facilities that may be the target of a 
terrorist threat or attack, or otherwise affected by, an outbreak of 
foodborne illness. This information includes:
    (a) Preferred mailing address, if different from that of the 
facility;
    (b) Type of activity conducted at the facility (e.g., 
manufacturing/processing or holding);
    (c) Food categories not included under Sec.  170.3 of this chapter, 
but which are helpful to FDA for responding to an incident (e.g., 
infant formula, dietary supplements, and food for animal consumption);
    (d) Type of storage, if the facility is solely a holding facility;
    (e) A food product category of ``most/all food product 
categories'', if the facility manufactures/processes, packs, or holds 
foods in most or all of the categories under Sec.  170.3 of this 
chapter; and
    (f) Approximate dates of operation, if the facility's business is 
seasonal.


Sec.  1.234  How and when do you update your registration information?

    (a) The owner, operator, or agent in charge must submit an update 
to the registration within 30 calendar days of any change to any of the 
information previously submitted, including, but not limited to, the 
name of the owner, operator, or agent in charge of a facility.
    (b) A facility canceling its registration must do so on the 
cancellation of registration form.
    (c) The cancellation of a facility's registration must include the 
following information:
    (1) The facility's registration number;
    (2) Whether the facility is domestic or foreign;
    (3) The facility name and address;
    (4) The name, address, and e-mail address (if available) of the 
individual submitting the cancellation; and
    (5) A statement in which the individual submitting the cancellation 
will certify that the information submitted is true and accurate and 
the submitter is authorized by the facility to cancel its registration.

Additional Provisions


Sec.  1.240  What other registration requirements apply?

    In addition to these regulations, you must comply with the 
registration regulations found in part 108 of this chapter, related to 
emergency permit control, and any other registration requirements that 
apply to the facility.


Sec.  1.241  What happens if you fail to register?

    (a) Failure of a domestic or foreign facility to register in 
accordance with this regulation is a prohibited act under section 301 
of the act (21 U.S.C. 331).
    (b) Any person who imports or offers for import an article of food 
without complying with the requirements of section 801(l) of the act 
(21 U.S.C. 381(l)) as set out in this subpart, or otherwise violates 
any requirement under section 801(l) of the act, or any person who 
causes such an act, commits a prohibited act within the meaning of 
section 301(dd) of the act.
    (c) Under section 302 of the act (21 U.S.C. 332), the United States 
can bring a civil action in Federal court to enjoin persons who commit 
prohibited acts. Under section 303 of the act (21 U.S.C. 333), the 
United States can bring a criminal action in Federal court to prosecute 
persons who commit prohibited acts. Under section 306 of the act (21 
U.S.C. 335a), FDA can seek debarment of any person who has been 
convicted of a felony relating to importation of food into the United 
States.
    (d) If an article of food is imported or offered for import and a 
foreign facility that manufactured/processed, packed, or held that food 
has not registered in accordance with this subpart, the food must be 
held at the port of entry unless FDA directs its removal to a secure 
facility in accordance with paragraph (e) of this section.
    (e) Under paragraph (d) of this section, if FDA determines that 
removal to a secure facility is appropriate (e.g., due to a concern 
with the security of the article of food or due to space limitations in 
the port of entry), FDA may direct that the article of food be removed 
to a bonded warehouse, container freight station, centralized 
examination station, or another appropriate secure facility approved by 
FDA.

[[Page 5420]]

    (f) Under paragraph (d) of this section, the owner, purchaser, 
importer or consignee must arrange for storage of the article of food 
in an FDA-designated secure facility and must promptly notify FDA of 
the location. Any movement of the article to the facility must be 
accomplished under bond. Transportation and storage expenses shall be 
borne by the owner, purchaser, importer, or consignee.
    (g)(1) Under paragraph (d) of this section, the article of food 
must be held at the port of entry or in the secure facility until the 
owner, operator, or agent in charge of the foreign facility has 
submitted its registration information to FDA, FDA has registered the 
facility in accordance with Sec.  1.231, and FDA has notified the U.S. 
Customs Service and the person who submitted the registration that the 
article of food no longer is subject to a hold under section 801(l) of 
the act.
    (2) Under paragraph (d) of this section, notwithstanding section 
801(b) of the act (21 U.S.C. 381(b)), while any article of food is held 
at its port of entry or in a secure facility under section 801(l) of 
the act, it may not be delivered to any of its importers, owners, or 
consignees.
    (h) Under paragraph (d) of this section, a determination that an 
article of food is no longer subject to hold under section 801(l) of 
the act is different than, and may come before, determinations of 
admissibility under other provisions of the act or other U.S. laws. A 
determination that an article of food is no longer subject to hold 
under section 801(l) does not mean that it will be granted admission 
under other provisions of the act or other U.S. laws.


Sec.  1.242  What does assignment of a registration number mean?

    Assignment of a registration number to a facility means that the 
facility is registered with FDA. Assignment of a registration number 
does not in any way denote FDA's approval or endorsement of a facility 
or its products.


Sec.  1.243  Is food registration information available to the public?

    (a) Registration forms submitted under this subpart, and any 
information contained in those forms that would disclose the identity 
or location of a specific registered person, is not subject to 
disclosure under 5 U.S.C. 552 (the Freedom of Information Act).
    (b) Paragraph (a) does not apply to any information obtained by 
other means or that has previously been disclosed to the public as 
defined in Sec.  20.81 of this chapter.

    Dated: January 27, 2003.
Tommy G. Thompson,
Secretary of Health and Human Services.

    Dated: January 27, 2003.
Kenneth W. Dam,
Acting Secretary of the Treasury.
    Note: The following appendix will not appear in the Code of Federal 
Regulations.
BILLING CODE 4160-01-C

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[FR Doc. 03-2443 Filed 1-29-03; 1:47 pm]
BILLING CODE 4160-01-C