[Federal Register Volume 69, Number 105 (Tuesday, June 1, 2004)]
[Proposed Rules]
[Pages 30842-30845]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-12271]


 ========================================================================
 Proposed Rules
                                                 Federal Register
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 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
 
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 

  Federal Register / Vol. 69, No. 105 / Tuesday, June 1, 2004 / 
Proposed Rules  

[[Page 30842]]



DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

21 CFR Part 1

[Docket No. 1998N-0583]


Exports; Notification and Recordkeeping Requirements

AGENCY: Food and Drug Administration, HHS.

ACTION: Advance notice of proposed rulemaking.

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SUMMARY: The Food and Drug Administration (FDA) is considering whether 
to revise its regulations pertaining to export notification and 
recordkeeping. FDA has received a petition for reconsideration claiming 
that the agency lacks legal authority to inspect export records held by 
food and cosmetic companies. The petition also claimed that the 
regulations describing the types of records that should be kept to 
demonstrate that an exported product does not conflict with the foreign 
country's laws are overly burdensome. FDA is inviting comment on the 
issues raised by the petition.

DATES: Submit written or electronic comments by August 16, 2004.

ADDRESSES: You may submit comments, identified by Docket No. 1998N-
0583, by any of the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     Agency Web site: http://www.fda.gov/dockets/ecomments. 
Follow the instructions for submitting comments on the agency Web site.
     E-mail: [email protected]. Include Docket No. 1998N-
0583 in the subject line of your e-mail message.
     FAX: 301-827-6870.
     Mail/Hand delivery/Courier [For paper, disk, or CD-ROM 
submissions]: Division of Dockets Management, 5630 Fishers Lane, rm. 
1061, Rockville, MD 20852.
    Instructions: All submissions received must include the agency name 
and Docket No. or Regulatory Information Number (RIN) for this 
rulemaking. All comments received will be posted without change to 
http://www.fda.gov/dockets/ecomments, including any personal 
information provided. For detailed instructions on submitting comments 
and additional information on the rulemaking process, see section IV of 
the SUPPLEMENTARY INFORMATION section of this document.
    Docket: For access to the docket to read background documents or 
comments received, go to http://www.fda.gov/dockets/ecomments and/or 
the Division of Dockets Management, 5630 Fishers Lane, rm. 1061, 
Rockville, MD 20852.

FOR FURTHER INFORMATION CONTACT: Philip L. Chao, Office of Policy and 
Planning (HF-23), Food and Drug Administration, 5600 Fishers Lane, 
Rockville, MD 20857, 301-827-0587.

SUPPLEMENTARY INFORMATION:

I. Introduction

    In the Federal Register of December 19, 2001 (66 FR 65429), we 
published a final rule to establish notification and recordkeeping 
requirements for products exported under section 801(e) or 802 of the 
Federal Food, Drug, and Cosmetic Act (the act) (21 U.S.C. 381(e) or 
382), as amended by the FDA Export Reform and Enhancement Act (Public 
Law 104-134, as amended by Public Law 104-180).
    The FDA Export Reform and Enhancement Act significantly changed and 
simplified the export requirements for unapproved human drugs, 
biological products, devices, and animal drugs. For example, before the 
law was enacted, most exports of unapproved new drug products could 
only be made to the 21 countries then identified in section 802 of the 
act, and these exports were subject to numerous restrictions. The FDA 
Export Reform and Enhancement Act amended section 802 of the act to 
allow, among other things, the export of unapproved new human drugs to 
any country in the world if the drug complies with the laws of the 
importing country and has valid marketing authorization from any of the 
following countries: Australia, Canada, Israel, Japan, New Zealand, 
Switzerland, South Africa, and the countries in the European Union (EU) 
and the European Economic Area (EEA) and certain other requirements are 
met (see section 802(b)(1)(A) of the act). Currently, the EU countries 
are Austria, Belgium, Cyprus, the Czech Republic, Denmark, Estonia, 
Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, 
Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal, 
Slovakia, Slovenia, Spain, Sweden, and the United Kingdom. The EEA 
countries are the EU countries, Iceland, Liechtenstein, and Norway. 
(The list of countries under section 802(b)(1)(A) of the act will 
expand automatically if any country accedes to the EU or becomes a 
member of the EEA.) This provision of section 802 of the act also 
applies to the export of certain devices that cannot be sold or 
marketed in the United States.
    The FDA Export Reform and Enhancement Act also established 
recordkeeping and notification requirements. Section 802(g) of the act 
requires an exporter of a drug or device under section 802(b)(1)(A) of 
the act to provide a ``simple notification'' to the agency 
``identifying the drug or device when the exporter first begins to 
export such drug or device'' to any of the countries identified in 
section 802(b)(1)(A). For exports to other, nonlisted countries, 
section 802(g) of the act requires the exporter to provide a simple 
notification ``identifying the drug or device and the country to which 
such drug or device is being exported.'' This section also requires 
persons exporting under any provision of section 802 of the act to 
``maintain records of all drugs or devices exported and the countries 
to which they were exported.''
    The final rule was originally scheduled to become effective on 
March 19, 2002. However, within days of the effective date, four 
different parties (the law firm of Sandler, Travis and Rosenberg; the 
Consumer Healthcare Products Association; INDA; and the Cosmetic, 
Toiletry, and Fragrance Association) requested a 180-day stay in the 
rule's effective date. In general, the parties acknowledged that they 
had not submitted comments during the rulemaking process, but stated 
that they did not realize the rule's applicability to their products. 
Consequently, the parties claimed they needed additional time to comply 
with the final rule, and they raised other questions regarding the 
rule. In response, on March 18, 2002, we notified the parties that we 
would stay the rule's effective date for

[[Page 30843]]

90 days, and we published a notice in the Federal Register on May 14, 
2002 (67 FR 34387), announcing that the rule's new effective date was 
June 19, 2002. We also issued separate letters responding to the 
parties' questions on May 7, 2002.
    On June 17, 2002, 2 days before the final rule was to become 
effective, the law firm of Covington and Burling, on behalf of the 
Grocery Manufacturers of America and the Cosmetic, Toiletry, and 
Fragrance Association, submitted a petition for reconsideration and 
stay of action. The petition challenged two specific provisions in the 
final rule.
    The first provision involved the last sentence in Sec.  1.101(b) 
(21 CFR 1.101(b)), which states that export records must be made 
available to FDA upon request during an inspection for review and 
copying. We included such records access in the final rule because most 
exports under sections 801(e)(1) and 802 of the act do not involve any 
prior FDA oversight. Therefore, we depend on records access during 
inspections to evaluate compliance with the export provisions. In the 
preamble to the final rule, we explained that records enable a person 
to show, and for us to verify, that a person has complied with its 
legal obligations. Nevertheless, the firm asserted that we lack the 
authority to require food or cosmetic companies to disclose records 
because our inspection authority does not extend to the mandatory 
examination of records maintained by food and cosmetic manufacturers, 
and asked us to revoke the sentence in Sec.  1.101(b) as it pertains to 
access to food and cosmetic records.
    The second provision involved Sec.  1.101(b)(2) which describes the 
records that could be used to demonstrate that an exported product does 
not conflict with a foreign country's laws. Section 801(e)(1)(B) of the 
act requires exported products to not be in conflict with ``the laws of 
the country to which it is intended for export.'' In the preamble to 
the proposed rule (April 2, 1999, 64 FR 15994), we stated that the 
records demonstrating compliance with section 801(e)(1)(B) of the act 
would normally consist of a letter from the appropriate foreign 
government agency, department, or other authorized body. We received 
many comments that opposed our interpretation, and so, in response to 
the comments, we revised the final rule to state that the records:
    may consist of either a letter from an appropriate foreign 
government agency, department, or other authorized body stating that 
the product has marketing approval from the foreign government or 
does not conflict with that country's laws, or a notarized 
certification by a responsible company official in the United States 
that the product does not conflict with the laws of the importing 
country and that includes a statement acknowledging that he or she 
is subject to the provisions of 18 U.S.C. 1001.
    The preamble to the final rule did not specify who would be a 
``responsible company official in the United States,'' but it did 
explain that 18 U.S.C. 1001 makes it a criminal offense to knowingly 
and willfully make a false or fraudulent statement, or make or use a 
false document, in any matter within the jurisdiction of a department 
or agency of the United States (see 66 FR 65429 at 65436).
    The petition for reconsideration, however, asserted that exporters 
do not have to demonstrate compliance with foreign law; instead, it 
asserted that FDA had the burden to show that the exporter violated 
foreign law. The petition added that Sec.  1.101(b)(2) would, if 
enforced, have ``serious practical and economic impacts on food and 
cosmetic companies'' because it would ``require the preparation of tens 
of thousands of affidavits just for shipping products to our neighbors 
in Mexico * * * and Canada * * *, and new affidavits would be required 
for every product variation and every label change'' (Ref. 1). Later, 
after meeting with FDA, the petitioners stated in correspondence to the 
agency that ``there can be no objection from a policy standpoint to a 
general requirement that every company must have adequate documentation 
in its files to support its conclusion that the product does not 
violate the laws of the foreign country to which it is exported'' (Ref. 
2). The firm continued to advocate eliminating ``the need for an 
affidavit by a high-ranking company official,'' but suggested ``the 
possibility of continuing the requirement of an affidavit in the unique 
and limited situation where FDA has established a specific requirement 
for a food or cosmetic in order to prevent a serious health hazard and 
the product to be exported does not meet that requirement'' (id.). The 
firm explained that the ``affidavit'' requirement would arise in two 
instances:
    The first instance would be where FDA has established a label 
warning for a product. An example would be the warning for aspartame 
in 21 CFR 172.804. The second instance would be where FDA has 
established a specific limit on the presence of an ingredient or 
substance because of substantial safety concerns. Examples would be 
Compliance Policy Guides 555.300 for salmonella and 555.400 for 
afflatoxin [sic] in food and the limit on mercury in cosmetics in 21 
CFR 700.13. This would not, however, include the limits customarily 
established in food additive, GRAS, and color additive regulations 
because these are set simply at the level requested by the 
manufacturer and are not because of a specific determination by FDA 
that any higher limit is a serious health hazard. It also would not 
apply to a food ingredient or a color ingredient which FDA has not 
reviewed and therefore has taken no action. It is common industry 
practice to manufacture products in the United States that contain 
ingredients or levels of ingredients approved or permitted by 
foreign countries but not by FDA. If affidavits were required for 
all of these types of situations, it would simply drive food and 
cosmetic manufacturers abroad.
Id. at pages 1-2.
    In response to the petition for reconsideration, we decided to 
exercise enforcement discretion regarding access to records of food and 
cosmetic exporters under Sec.  1.101(b) and to exercise enforcement 
discretion regarding all exporters and the requirement for specific 
types of records under Sec.  1.101(b)(2) demonstrating that the 
exported product is not in conflict with the foreign country's laws 
(Ref. 3). We stated that affected parties must still comply with the 
statutory requirements pertaining to exports, and added that we would 
evaluate whether to issue an advance notice of proposed rulemaking ``to 
obtain public comment on questions related to the issues raised in your 
petition'' (id. at page 2).

II. Issues For Discussion

    We invite comment on the following issues.
    1. What is our ability to inspect export records held by food and 
cosmetic firms?
    The petition for reconsideration asserted that we lack legal 
authority to inspect records related to food and cosmetic exports. 
Given that food and cosmetic exports under section 801(e)(1) of the act 
do not require any prior FDA review or even notice to FDA before a firm 
exports a food or cosmetic, it could be extremely difficult for us to 
determine a food or cosmetic company's compliance with the act's export 
provisions if we could not inspect export records. Without access to 
such records, our enforcement of section 801(e)(1) of the act would 
likely depend on information submitted voluntarily to us, and it is 
hard to rely on a company to provide information about itself that 
would indicate a possible violation of Federal law. It also would be 
unlikely that third parties would have or provide information showing 
that a food or cosmetic firm failed to meet the act's export 
requirements. At best, outside parties might be able to provide 
information to suggest a failure to comply, but we would still need 
additional information before pursuing regulatory action.

[[Page 30844]]

    Additionally, if we could not inspect export records in a food or 
cosmetic company, then an unscrupulous food or cosmetic firm might be 
tempted to not comply with the export requirements at all because it 
would know that, without access to export records, our ability to 
evaluate compliance with those export requirements would be severely 
limited. Noncompliance with export requirements could expose 
populations in foreign countries to unsafe products.
    Complicating our situation further is the fact that section 
801(d)(3) of the act allows certain unapproved or otherwise 
noncompliant articles to be imported into the United States as long as 
those articles are further processed or incorporated into a product 
that is then exported. Section 801(d)(3) of the act is commonly known 
as the ``import for export'' authority in the act, and it applies to 
food additives, color additives, and dietary supplements. Section 
801(d)(3)(A)(iv) of the act expressly requires the initial owner or 
consignee to maintain ``records on the use or destruction'' of the 
imported article and to submit to the Secretary of Health and Human 
Services (the Secretary) ``any such records requested by the 
Secretary.'' Thus, if a food company imported a food additive under 
section 801(d)(3) of the act, section 801(d)(3)(A)(iv) requires the 
food company to maintain certain records, including those pertaining to 
any exports involving the article, and also requires the food company 
to submit ``any such records.'' Accordingly, the petitioners' request 
to revoke Sec.  1.101(b), as it relates to access to food records, is 
in tension with section 801(d)(3)(A)(iv) of the act.
    Consequently, we seek comment on:
     Our ability to access or inspect food and cosmetic export 
records; and
     Whether we need to provide alternative methods for 
determining whether a food or cosmetic firm has complied with the act's 
export requirements. For example, one might argue that a certification 
should be satisfactory, but a certification would be contrary to the 
petitioners' claim that ``affidavits'' are burdensome.
    2. What records should an exporter have to show that the export 
does not conflict with the foreign country's laws?
    Although Sec.  1.101(b)(2) states that the records demonstrating 
that the export does not conflict with the foreign country's laws 
``may'' consist of either a letter from the appropriate foreign 
government entity or a certification from a ``responsible company 
official'' in the United States, the petitioners apparently interpret 
Sec.  1.101(b)(2) as requiring the record to be either a letter from a 
foreign government entity or a certification from a ``high-ranking 
company official'' (Ref. 2). In other words, the petitioners appear to 
interpret the word ``may'' in Sec.  1.101(b)(2) as ``must.''
    Therefore, we invite comment on the following issues:
     Should FDA amend the rule?
     Does the word ``may'' provide sufficient flexibility to 
give affected parties the ability to keep whatever records they wish to 
demonstrate that the export does not conflict with the foreign 
country's laws?
     Given that the petitioners focused on the certification, 
would a clarification that the ``responsible company official'' does 
not necessarily mean a ``high-ranking company official'' be sufficient? 
For example, if a company's regulatory affairs director determined that 
the export did not conflict with the foreign country's laws, the 
regulatory affairs director could provide the certification (unless 
company policy dictated a different result). We do not necessarily 
equate ``responsible'' with ``high-ranking.''
     What are the advantages and disadvantages in the 
petitioners' suggestion of a certification in some, but not all, food 
export situations? The petitioners identified two scenarios in which 
such certifications would be provided: Cases where FDA has established 
a label warning for a product and cases where FDA has established a 
specific limit on the presence of an ingredient or substance because of 
substantial safety concerns. The petitioners' suggestion thus depends 
on the existence of a regulation that imposes a label warning or that 
limits an ingredient's or substance's use due to ``substantial safety 
concerns.'' However, the petitioners' suggestion would exclude 
customary limits established in food additive, generally recognized as 
safe, and color additive regulations, so few food exports would need a 
certification. While the petitioners' suggestion would free most food 
exports from the certification provision, we are concerned that it 
might not provide sufficient guidance on what records would be 
acceptable to show that the export did not conflict with the foreign 
country's laws. Moreover, when coupled with the petitioners' assertion 
that we have no authority to inspect food records, could the 
petitioners' position eliminate our ability to determine whether a food 
export complied with a foreign country's laws?
     Is there another alternative that would be simple and 
reliable? Ideally, the alternative would meet most, if not all, of the 
following conditions for a regulatory requirement:
     A consistent regulatory standard for all firms affected by 
or subject to the same statutory requirement. A consistent standard 
would be easier for our investigators to apply and easier to implement 
by firms that export more than one type of product that would be 
subject to section 801(e)(1) of the act.
     A record that provides a reasonable basis for the 
exporter's belief that the export does not conflict with the foreign 
country's laws. For example, a statement such as, ``To the best of my 
knowledge, the export did not conflict with the foreign country's 
laws,'' may be unreliable because the phrase, ``to the best of my 
knowledge'' does not mean that the exporter knows about or even 
attempted to know about the foreign country's laws. Similarly, a 
statement claiming that someone in the foreign country affirmed that 
the export did not conflict with the foreign country's laws may be 
unreliable because the foreign citizen making the statement might not 
have been qualified to determine whether the export did not conflict 
with the foreign country's laws.
     A record that is simple and easy to identify. We conduct 
inspections to determine whether a firm complied with the appropriate 
export requirements, so the inspection would be shorter and easier if 
all parties could agree on the types of records that would demonstrate 
compliance with a particular regulatory requirement.
     A record that permits enforcement action in the United 
States. When we stated that the certification had to be from a 
responsible company official in the United States, the official's 
physical presence in the United States would give us the ability to 
pursue enforcement action against the official if the certification 
proved to be false or misleading. In contrast, if the record was 
created by an unknown foreign citizen in a foreign country, we might 
find it difficult to take action against the foreign citizen, and our 
ability to enforce the statute could be compromised.

III. References

    The following references have been placed on display in the 
Division of Dockets Management (see ADDRESSES) and may be seen by 
interested persons between 9 a.m. and 4 p.m., Monday through Friday.

    1. Petition for Reconsideration and Stay of Action, Covington 
and Burling, pp. 2 and 3, June 17, 2002.
    2. Letter from Peter Barton Hutt, Covington and Burling, to 
Daniel E. Troy, General

[[Page 30845]]

Counsel, Food and Drug Administration, p. 1, dated July 16, 2002.
    3. Letter from Margaret M. Dotzel, Associate Commissioner for 
Policy, Food and Drug Adminstration, to Peter Barton Hutt, Covington 
and Burling, July 22, 2002.

IV. Request For Comments

    Interested persons may submit to the Division of Dockets Management 
(see ADDRESSES) written or electronic comments regarding this document. 
Submit a single copy of electronic comments or two paper copies of any 
mailed comments, except that individuals may submit one paper copy. 
Comments are to be identified with the docket number found in brackets 
in the heading of this document. Received comments may be seen in the 
Division of Dockets Management between 9 a.m. and 4 p.m., Monday 
through Friday.
    This ANPRM is issued under section 201 et al. of the Federal Food, 
Drug, and Cosmetic Act (21 U.S.C. 321 et al.) and under authority of 
the Commissioner of Food and Drugs.

    Dated: April 21, 2004.
Jeffrey Shuren,
Assistant Commissioner for Policy.
[FR Doc. 04-12271 Filed 5-28-04; 8:45 am]
BILLING CODE 4160-01-S