[Federal Register Volume 69, Number 134 (Wednesday, July 14, 2004)]
[Proposed Rules]
[Pages 42275-42285]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-15880]



  Federal Register / Vol. 69, No. 134 / Wednesday, July 14, 2004 / 
Proposed Rules  

[[Page 42275]]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

21 CFR Parts 189 and 700

[Docket No. 2004N-0257]
RIN 0910-AF48


Recordkeeping Requirements for Human Food and Cosmetics 
Manufactured From, Processed With, or Otherwise Containing, Material 
From Cattle

AGENCY: Food and Drug Administration, HHS.

ACTION: Proposed rule.

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SUMMARY: The Food and Drug Administration (FDA) is proposing to require 
that manufacturers and processors of human food and cosmetics that are 
manufactured from, processed with, or otherwise contain, material from 
cattle must establish and maintain records sufficient to demonstrate 
the food or cosmetic is not manufactured from, processed with, or does 
not otherwise contain, prohibited cattle materials. This is a companion 
rulemaking to FDA's interim final rule entitled ``Use of Materials 
Derived From Cattle in Human Food and Cosmetics,'' published in this 
issue of the Federal Register. FDA is proposing recordkeeping 
requirements because records documenting the absence of prohibited 
cattle materials are needed by manufacturers and processors of human 
food and cosmetics that contain cattle material to ensure that these 
products do not contain prohibited cattle materials. In addition, such 
records are necessary to help FDA ensure compliance with the 
requirements of the interim final rule.

DATES: You may submit written or electronic comments on the proposed 
rule by August 13, 2004. Submit written comments on the information 
collection requirements by August 13, 2004.

ADDRESSES: You may submit comments, identified by Docket No. 2004N-
0257, 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. 2004N-
0257 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 the ``Effective 
Date and Opportunity for Public Comment'' heading 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.
Information Collection Provisions: Submit written comments on the 
information collection provisions to the Office of Information and 
Regulatory Affairs, Office of Management and Budget (OMB).
    OMB is still experiencing significant delays in the regular mail, 
including first class and express mail, and messenger deliveries are 
not being accepted. To ensure that comments on the information 
collection are received, OMB recommends that written comments be faxed 
to the Office of Information and Regulatory Affairs, OMB, Attn: Fumie 
Yokota, Desk Officer for FDA, FAX: 202-395-6974.

FOR FURTHER INFORMATION CONTACT: Rebecca J. Buckner, Center for Food 
Safety and Applied Nutrition (HFS-306), Food and Drug Administration, 
5100 Paint Branch Pkwy., College Park, MD 20740, 301-436-1486.

SUPPLEMENTARY INFORMATION:

I. Background

    In this issue of the Federal Register we are publishing an interim 
final rule entitled ``Use of Materials Derived From Cattle in Human 
Food and Cosmetics'' (referred to as the ``interim final rule'') to 
prohibit the use of prohibited cattle materials in human food, 
including dietary supplements, and cosmetics. Prohibited cattle 
materials include specified risk materials (SRMs), small intestine of 
all cattle, material from nonambulatory disabled cattle, material from 
cattle not inspected and passed for human consumption, and mechanically 
separated (MS)(Beef). SRMs are the brain, skull, eyes, trigeminal 
ganglia, spinal cord, vertebral column (excluding the vertebrae of the 
tail, the transverse processes of the thoracic and lumbar vertebrae, 
and the wings of the sacrum), and dorsal root ganglia of cattle 30 
months and older; and the tonsils and distal ileum of the small 
intestine of all cattle. Prohibited cattle materials do not include 
tallow that contains no more than 0.15 percent hexane-insoluble 
impurities and tallow derivatives. The preamble to the interim final 
rule describes the background and justification for the ban on 
prohibited cattle materials in human food and cosmetics.
    In this companion rulemaking, we are proposing that manufacturers 
and processors of human food and cosmetics that are manufactured from, 
processed with, or otherwise contain, material from cattle must 
establish and maintain records sufficient to demonstrate the food or 
cosmetic is not manufactured from, processed with, or does not 
otherwise contain, prohibited cattle materials. We believe that records 
documenting the absence of prohibited cattle materials in human food 
and cosmetics are critical for manufacturers, processors, and FDA to 
ensure compliance with the ban on the use of prohibited cattle 
materials in the interim final rule. Once material is removed from 
cattle, we may not be able to obtain the information necessary to 
determine whether it is prohibited cattle material. There is currently 
no way to test reliably for the presence of the bovine spongiform 
encephalopathy (BSE) agent or for the presence of prohibited cattle 
materials. Therefore, manufacturers and processors of human food and 
cosmetics must depend on records from the suppliers of cattle material 
to demonstrate that the supplier's cattle material does not contain 
prohibited cattle materials.
    Through these records, manufacturers and processors of human food 
and cosmetics can ensure that prohibited cattle materials are not 
included in their products. The agency believes that recordkeeping and 
records access requirements are necessary immediately. The agency 
recognizes, however, that recordkeeping systems cannot be put into 
place immediately and, therefore, to include recordkeeping requirements 
in the interim final rule could result in manufacturers and processors 
immediately being in violation of the adulteration provisions of the 
Federal Food, Drug, and Cosmetic Act (the act) with respect to food and 
cosmetics because of their failure immediately to establish and 
maintain the necessary records as of the effective date of the interim 
final rule. For that reason, we are proposing record establishment and 
maintenance

[[Page 42276]]

 requirements in this separate rulemaking, rather than including them 
in the interim final rule. In addition, the agency is seeking 
information from the public regarding the types of records that may 
already be available to document the absence of prohibited cattle 
materials in human food and cosmetics and the types of records that 
could be established to document the absence of prohibited cattle 
materials in these FDA-regulated products. In the meantime, FDA is 
ensuring that it can enforce the new prohibitions in the interim final 
rule through the provisions in that rule requiring FDA be given access 
to any existing records relevant to compliance with the ban on 
prohibited cattle materials.

II. Definitions From the Interim Final Rule

    The following definitions are from the interim final rule (new 
Sec. Sec.  189.5(a) and 700.27(a) (21 CFR 189.5(a) and 700.27(a))) and 
are included here because they are relevant to the proposed 
recordkeeping provisions:
     Prohibited cattle materials means specified risk 
materials, small intestine of all cattle, material from nonambulatory 
disabled cattle, material from cattle not inspected and passed, or 
MS(Beef). The phrase ``prohibited cattle materials'' includes all of 
the individual categories of materials and tissues prohibited by this 
rulemaking. Prohibited cattle materials do not include tallow that 
contains no more than 0.15 percent hexane-insoluble impurities and 
tallow derivatives.
     Inspected and passed means that the product has been 
inspected and passed for human consumption by the appropriate 
regulatory authority, and at the time it was inspected and passed, it 
was found to be not adulterated. This definition is consistent with the 
U.S. Department of Agriculture's (USDA's) definition in 9 CFR 301.2.
     Mechanically Separated (MS) (Beef) means a meat food 
product that is finely comminuted, resulting from the mechanical 
separation and removal of most of the bone from attached skeletal 
muscle of cattle carcasses and parts of carcasses, that meets the 
specifications contained in 9 CFR 319.5, the USDA regulation that 
prescribes the standard of identity for MS (Species). This definition 
of MS(Beef) is consistent with the term as used by USDA in its recent 
BSE interim final rule (January 12, 2004, 69 FR 1862) prohibiting its 
use in food.
     Nonambulatory disabled cattle means cattle that cannot 
rise from a recumbent position or that cannot walk, including, but not 
limited to, those with broken appendages, severed tendons or ligaments, 
nerve paralysis, fractured vertebral column or metabolic conditions. 
This definition of nonambulatory disabled cattle is consistent with the 
definition of nonambulatory disabled livestock in USDA's BSE interim 
final rule requiring nonambulatory disabled cattle be condemned and not 
used as human food.
     Specified risk material (SRM) means the brain, skull, 
eyes, trigeminal ganglia, spinal cord, vertebral column (excluding the 
vertebrae of the tail, the transverse processes of the thoracic and 
lumbar vertebrae, and the wings of the sacrum), and dorsal root ganglia 
of cattle 30 months and older and the tonsils and distal ileum of the 
small intestine of all cattle. This definition of SRM is the same as 
that used by USDA in its BSE interim final rule declaring SRMs to be 
inedible and prohibiting their use in human food.
     Tallow means the rendered fat of cattle obtained by 
pressing or by applying any other extraction process to tissues derived 
directly from discrete adipose tissue masses or to other carcass parts 
and tissues. Tallow must be free of prohibited cattle material or must 
contain not more than 0.15 percent hexane-insoluble impurities as 
determined by the method for ``hexane-insoluble matter'' in the 5th 
edition of the Food Chemicals Codex, incorporated by reference in 
accordance with 5 U.S.C. 552(a) and 1 CFR part 51, or another method 
equivalent in accuracy, precision, and sensitivity. You may obtain a 
copy of the above-referenced method from the Division of Dairy and Egg 
Safety (HFS-306), Center for Food Safety and Applied Nutrition, Food 
and Drug Administration, 5100 Paint Branch Pkwy., College Park, MD 
20740, or you may examine a copy at the Center for Food Safety and 
Applied Nutrition's Library, 5100 Paint Branch Pkwy., College Park, MD 
or at the Office of the Federal Register, 800 North Capitol St., NW., 
suite 700, Washington, DC.
     Tallow derivative means any chemical obtained through 
initial hydrolysis, saponification, or transesterification of tallow; 
chemical conversion of material obtained by hydrolysis, saponification, 
or transesterification may be applied to obtain the desired product.

III. The Proposed Recordkeeping Requirements

A. Proposed Recordkeeping Requirements

    We are proposing in Sec. Sec.  189.5(c)(1) and 700.27(c)(1) that 
manufacturers and processors of human food and cosmetics that are 
manufactured from, processed with, or otherwise contain, material from 
cattle establish and maintain records that demonstrate that the 
material from cattle meets the requirements of the interim final rule. 
Because there is currently no way to test reliably for the presence of 
the BSE agent or for the presence of prohibited cattle materials, 
manufacturers and processors of human food and cosmetics must depend on 
records from the suppliers of cattle material to demonstrate that their 
source material is free from prohibited cattle material. Similarly, 
without adequate records, FDA may not know whether manufacturers and 
processors of human food and cosmetics have complied with the 
prohibitions against the use of prohibited cattle materials. Therefore, 
we are proposing under Sec. Sec.  189.5(c)(1) and 700.27(c)(1) that 
manufacturers and processors of human food and cosmetics that are 
manufactured from, processed with, or otherwise contain, material from 
cattle must establish and maintain records sufficient to demonstrate 
that the human food and cosmetics do not contain prohibited cattle 
materials and that such records must be made available to FDA for 
inspection and copying.
    For example, to satisfy the requirement in Sec. Sec.  189.5(c)(1) 
and 700.27(c)(1) of this proposed rule that records must show the 
absence of specified risk materials, manufacturers and processors of 
human food and cosmetics that are manufactured with, processed from, or 
otherwise contain, brain from cattle would have to establish and 
maintain records to demonstrate, among other things, that the human 
food or cosmetic was not manufactured with, processed from, or does not 
otherwise contain, brain from cattle over 30 months of age.
    In general, we would expect a manufacturer or processor of FDA-
regulated human food or cosmetics containing cattle material (e.g., 
soup containing beef broth, dietary supplements containing cattle brain 
powder) to have the following types of records:
     A signed and dated affirmation (with contact information) 
by the slaughter establishment that cattle material supplied by that 
establishment in a particular shipment does not contain prohibited 
cattle materials. If lots of cattle material from different slaughter 
establishments are pooled into a final product, then a manufacturer or 
processor would need to maintain records from each slaughter 
establishment.

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     For human food and cosmetics containing tallow, a 
manufacturer or processor would need to maintain records from a 
slaughter establishment affirming that the tallow was produced from 
material containing no prohibited cattle materials or similar records 
(i.e., signed, dated, with contact information) from the tallow 
supplier affirming that the tallow contains no more than 0.15 percent 
hexane-insoluble impurities.
    We request comments on other ways in which the proposed 
recordkeeping requirements might be satisfied. We also request comments 
on whether existing recordkeeping practices include the required 
information and, if not, what changes the proposal would necessitate.
    We note that USDA is working toward the establishment of a national 
database for animal identification, which should make maintaining 
information about source animals less burdensome.
    We are proposing in Sec. Sec.  189.5(c)(2) and 700.27(c)(2) that 
records be retained for 2 years after the date the records were 
created. We acknowledge that USDA in its BSE interim final rule is 
requiring that records be retained for 1 year. However, FDA-regulated 
human food, such as canned and dried foods and dietary supplements and 
cosmetics have a longer shelf life than most USDA-regulated products, 
which are primarily fresh meat. It is important for traceback and 
recall purposes that records be retained for the likely shelf life of 
the product. As discussed previously, records documenting the absence 
of prohibited cattle materials in human food and cosmetics are 
necessary to help FDA ensure compliance with the requirements of the 
interim final rule. It is important for the records to be kept during 
the shelf life of these products, so that FDA can ensure that products 
on the market are not adulterated. Therefore, we have tentatively 
concluded that records must be retained for 2 years.
    We are proposing in Sec. Sec.  189.5(c)(3) and 700.27(c)(3) that 
records be maintained at the manufacturing or processing establishment 
or at a reasonably accessible location. Proposed Sec. Sec.  189.5(c)(4) 
and 700.27(c)(4) provide that maintenance of electronic records is 
acceptable and that electronic records are considered to be reasonably 
accessible if they are accessible from an onsite location.
    Proposed Sec. Sec.  189.5(c)(5) and 700.27(c)(5) provide that 
records required by this subpart must be available to FDA for 
inspection and copying.
    Because we do not necessarily have access to records maintained at 
foreign establishments, we are proposing in Sec. Sec.  189.5(c)(6) and 
700.27(c)(6), respectively, that importers must electronically affirm 
their compliance with the recordkeeping requirements in Sec. Sec.  
189.5(c)(1) and 700.27(c)(1), respectively, at the time of entry into 
the United States of human food or cosmetics manufactured from, 
processed with, or otherwise containing, material from cattle and must 
provide the required records within a reasonable time if requested. The 
records we would expect are similar to those described above for 
domestic products. In order for importers to electronically affirm 
compliance, FDA intends to modify our electronic entry system to 
provide a field where importers can tell us that they have the required 
BSE records. Proposed Sec. Sec.  189.5(c)(7) and 700.27(c)(7) provide 
that records established or maintained to satisfy the requirements of 
this subpart that meet the definition of electronic records in 21 CFR 
11.3(b)(6) of this chapter are exempt from the requirements of part 11 
of this chapter. Under the proposed rule, records that satisfy the 
requirements of this subpart but that are also required under other 
applicable statutory provisions or regulations would remain subject to 
part 11 of this chapter.

B. Legal Authority

    Because this proposed rule is a companion rule to the interim final 
rule, we are issuing this proposed rule under the authorities cited in 
the interim final rule as well as sections 801(a) and 701(b) of the 
Federal Food, Drug, and Cosmetic Act (the act) (21 U.S.C. 381(a) and 
371(b)). As we stated in the interim final rule, FDA is issuing these 
regulations under the adulteration provisions in sections 402(a)(2)(C), 
(a)(3), (a)(4), (a)(5), 601(c), and under section 701(a) of the act (21 
U.S.C. 342(a)(2)(C), (a)(3), (a)(4), (a)(5), 361(c), and 371(a)). Under 
section 402(a)(3) of the act, a food is deemed adulterated ``if it 
consists in whole or in part of any filthy, putrid, or decomposed 
substance, or if it is otherwise unfit for food.'' ``Otherwise unfit 
for food'' is an independent clause in section 402(a)(3). It does not 
seem to require that a food be filthy, putrid, or decomposed for it to 
be ``otherwise unfit for food.'' We conclude that a food can be 
``otherwise unfit for food'' based on health risks. We seek comments on 
this interpretation. Because of the discovery of a BSE positive cow in 
the United States and the possibility of disease transmission to humans 
from exposure to material from infected cattle, prohibited cattle 
materials (SRMs, small intestine of all cattle, MS(Beef), material from 
nonambulatory disabled cattle, and material from cattle not inspected 
and passed) these materials may present a risk to human health. Under 
our interpretation of section 402(a)(3), these materials are unfit for 
food. Under section 402(a)(4) of the act, a food is adulterated ``if it 
has been prepared, packed, or held under insanitary conditions whereby 
it may have become contaminated with filth, or whereby it may have been 
rendered injurious to health.'' The failure to ensure that food is 
prepared, packed, or held under conditions in which prohibited cattle 
materials do not contaminate the food constitutes an insanitary 
condition whereby it may have been rendered injurious to health and 
thus renders the food adulterated under section 402(a)(4) of the act.
    Under section 402(a)(5) of the act, food is deemed adulterated if 
``it is, in whole or in part, the product * * * of an animal which has 
died otherwise than by slaughter.'' Some cattle are not inspected and 
passed because they have died before slaughter. Material from these 
cattle that die otherwise than by slaughter is adulterated under 
section 402(a)(5). We are also relying on the food additive provision 
in section 402(a)(2)(C) of the act. As a result, because neither a food 
additive regulation nor an exemption is in effect for prohibited cattle 
materials intended for use in human food, such materials, with the 
exception of dietary ingredients in dietary supplements, are 
adulterated under section 402(a)(2)(C) of the act and their presence in 
food renders the food adulterated. Under section 601(c) of the act, a 
cosmetic is adulterated ``if it has been prepared, packed, or held 
under insanitary conditions whereby it may have become contaminated 
with filth, or whereby it may have been rendered injurious to health.'' 
The failure to ensure that a cosmetic is prepared, packed, or held 
under conditions in which prohibited cattle materials do not 
contaminate the cosmetic constitutes an insanitary condition whereby it 
may have been rendered injurious to health and, thus, renders the 
cosmetic adulterated under section 601(c) of the act.
    Under section 701(a) of the act, FDA is authorized to issue 
regulations for the act's efficient enforcement. A regulation that 
requires measures to prevent human food from being unfit for food, from 
being or bearing an unsafe food additive, from being the product of an 
animal that died otherwise than by slaughter, and to prevent human food 
and cosmetics from being held under insanitary conditions allows for 
efficient enforcement of the act. These proposed regulations require 
that manufacturers

[[Page 42278]]

and processors of human food and cosmetics that are manufactured from, 
processed with, or otherwise contain material from cattle establish and 
maintain records that document the absence of prohibited cattle 
materials in such products and require that such records be made 
available to FDA for inspection and copying.
    Once material is removed from cattle, we may not be able to obtain 
the information necessary to determine whether it is prohibited cattle 
material. For example, we would not know from examination of a spinal 
cord whether the source animal was over 30 months of age at the time of 
slaughter, or whether it was inspected and passed. Because there is 
currently no way to test reliably for the presence of the BSE agent or 
for the presence of prohibited cattle materials, manufacturers and 
processors of human food and cosmetics must depend on records from 
their suppliers of cattle materials to ensure that their source 
material does not contain prohibited cattle materials. Without records 
documenting the absence of prohibited cattle materials in source 
materials, manufacturers and processors of human food and cosmetics 
cannot know whether they are adulterating their products by including 
prohibited cattle materials. Therefore, a failure of manufacturers and 
processors to establish and maintain such records results in human food 
and cosmetics being prepared under insanitary conditions whereby they 
may have been rendered injurious to health. Furthermore, without 
adequate records, FDA cannot know whether manufacturers and processors 
of human food have complied with the prohibitions against use of 
prohibited cattle materials. Therefore, the proposed recordkeeping 
requirements are necessary for the efficient enforcement of the interim 
final rule. Under the proposed rule, failure to comply with the 
recordkeeping requirements would render the affected human food and 
cosmetics adulterated under sections 402(a)(4) and 601(a) of the act, 
respectively.
    We are also issuing the provisions of this proposed rule related to 
records regarding imported human food and cosmetics under sections 
801(a) and 701(b) of the act. Section 801(a) of the act provides 
requirements with regard to imported food and cosmetics and provides 
for refusal of admission into the United States of human food and 
cosmetics that appear to be adulterated. Section 701(b) of the act 
authorizes the Secretaries of Treasury and Health and Human Services to 
jointly prescribe regulations for the efficient enforcement of section 
801 of the act. This proposed rule sets out requirements for imported 
human food and cosmetics to ensure that only products that fully comply 
with the requirements of the interim final rule are admitted into the 
United States.

IV. Effective Date and Opportunity for Public Comment

    We are proposing that any final rule based on this proposal be 
effective 30 days after issuance of that final rule.
    FDA invites public comment on this proposed rule. The agency will 
consider modifications to this proposed rule based on comments made 
during the comment period. Interested persons may submit to the 
Division of Dockets Management (see ADDRESSES) written or electronic 
comments regarding this proposed rule. 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.

V. Preliminary Regulatory Impact Analysis of the Proposed Rule 
Recordkeeping Requirements on Materials Derived From Cattle in Human 
Food and Cosmetics

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 the following conditions: 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 not an economically significant 
regulatory action.
1. Need for Regulation
    USDA's BSE interim final rule requires that specified risk 
materials, small intestine of all cattle, tissue from nonambulatory 
disabled cattle, and MS(Beef) not be used for human food. SRMs include 
the brain, skull, eyes, trigeminal ganglia, spinal cord, vertebral 
column (excluding the vertebrae of the tail, the transverse process of 
the thoracic and lumbar vertebrae, and the wings of the sacrum), and 
dorsal root ganglia of cattle 30 months and older, and the tonsils and 
distal ileum of the small intestine of all cattle. USDA's BSE interim 
final rule requires that all of the prohibited materials be destroyed 
or sent to inedible rendering.
    FDA, in response to the finding of an adult cow, imported from 
Canada, that tested positive for BSE in the State of Washington and to 
be consistent with USDA in regulating cattle products that could 
potentially transmit BSE, is issuing an interim final rule for FDA-
regulated human food and cosmetics that contain cattle material. This 
proposed recordkeeping rule is a companion to the interim final rule 
and responds to the same public health concerns. This proposed rule 
would not affect the incidence of BSE in cattle, which is addressed in 
other FDA regulations. This proposed rule would serve as an additional 
safeguard to reduce human exposure to the agent that causes BSE that 
may be present in cattle-derived products from domestic and imported 
sources.
2. Proposed Rule Coverage
    This proposed rule would require recordkeeping to document 
compliance with the provisions of the interim final rule that prohibit 
the use of ``prohibited cattle materials.'' Prohibited cattle materials 
include SRMs (brain, skull, eyes, trigeminal ganglia, spinal cord, 
vertebral column (excluding the vertebrae of the tail, the transverse 
process of the thoracic and lumbar vertebrae, and the wings of the 
sacrum), and dorsal root ganglia of cattle 30 months and older, and the 
tonsils and distal ileum of the small intestine of all cattle), small 
intestine of all cattle, tissue from nonambulatory disabled cattle, 
tissue from cattle not inspected and passed for human consumption, and 
MS(Beef).
    This proposed rule would require that manufacturers and processors 
of human foods and cosmetics maintain records indicating that 
prohibited cattle materials have not been used in the manufacture or 
processing of a human food or cosmetic, and make such records available 
to FDA for inspection

[[Page 42279]]

and copying. There are several reasons for the proposed requirements. 
First, once cattle material such as brain or spinal cord is separated 
from the source animal, it may not be possible to determine the age of 
the animal from which the material came without records and, therefore, 
whether it is an SRM. Second, without records it may not be possible to 
determine whether a product contains material from cattle that were not 
inspected and passed. Third, a product might contain MS(Beef) without 
its presence being evident from the appearance of the product. Finally, 
manufacturers and processors might not, without a legal requirement, 
establish and maintain records to demonstrate that cattle material does 
not contain prohibited cattle materials. We have tentatively concluded 
that, to ensure that public health is protected, it is necessary that 
manufacturers and processors keep records indicating that human food 
and cosmetics are not manufactured from, processed with, or otherwise 
contain, prohibited cattle materials. Because we do not necessarily 
have access to records maintained at foreign establishments, we have 
included in this proposed rule a requirement that importers of food or 
cosmetics manufactured from, processed with, or otherwise containing, 
cattle material electronically affirm their compliance with the 
relevant recordkeeping requirements in this proposed rule at the time 
of entry into the United States and provide required records if 
requested.
3. Costs and Benefits of the Proposed Rule
    This proposed rule would require manufacturers and processors of 
FDA-regulated human food and cosmetics manufactured from, processed 
with, or otherwise containing, cattle material to maintain records 
demonstrating that prohibited cattle materials are not used in their 
products. This proposed rule would require that the manufacturer or 
processor retain records for 2 years after using the cattle material in 
food or cosmetics. Records must be kept at the manufacturing or 
processing establishment or another reasonably accessible location. 
Manufacturers and processors must provide FDA with access to the 
required records for inspection and copying.
    a. Costs of proposed rule. FDA used establishment data from the FDA 
Small Business Model (which includes information on all establishments 
in a manufacturing sector regardless of size) (Ref. 1) to determine the 
number of food manufacturers and processors that will need to comply 
with the proposed recordkeeping requirements. The model contains 
information on the number of establishments in certain food producing 
sectors but does not have information on specific ingredients used by 
the food establishments in making products. Data from the model 
indicates that 181 establishments produce spreads, 127 establishments 
produce flavoring extracts, 40 establishments produce canned soups and 
stews, 625 establishments produce nonchocolate candy, 88 establishments 
produce yogurt, and 451 establishments produce ice cream. FDA cannot 
verify that all of these establishments actually use cattle materials 
that fall under the jurisdiction of this proposed rule; many may not. 
It is likely that all of the 132 establishments that produce fats and 
oils currently use tallow derivatives, not tallow, so FDA assumes that 
no records will be required to be kept by this establishment group. We 
assume that only 25 percent of the establishments from the remaining 
production sectors listed above actually produce food that is 
manufactured from, processed with, or otherwise contains, material from 
cattle and are therefore required to keep records. We include only 25 
percent of the establishments in our estimates because most of the 
manufacturers likely do not use cattle-derived materials in their 
products. FDA requests comments on this assumption.
    FDA research shows that 25 establishments with U.S. addresses 
supply cattle-derived ingredients that are used in cosmetics (Ref. 2). 
These cattle-derived ingredients include albumin, brain extract, brain 
lipids, cholesterol and cholesterol compounds, fibronectin, 
sphingolipids, spleen extract, tallow, and keratin and keratin 
compounds. FDA research also shows that 22 foreign establishments may 
export these cattle-derived ingredients to U.S. cosmetic manufacturers. 
These foreign establishments would be required to provide records to 
their U.S. cosmetic manufacturer customers. We therefore include these 
foreign establishments when we estimate the recordkeeping costs. 
Imported cosmetic products represent about 10 to 20 percent of the 
cosmetic products on U.S. store shelves (Refs. 3, 4, and 5). However, 
the burden of the interim final rule to foreign cosmetics input 
suppliers and manufacturers will be less than the burden on domestic 
cosmetics producers. The burden will be less for foreign cosmetics 
manufacturers because Europe currently imposes some requirements 
similar to this rule.
    FDA does not have enough information on the precise cattle material 
used by the 47 domestic and foreign cosmetics establishments to know 
how often tallow derivatives (exempt from this proposed rulemaking) are 
the only cattle-derived ingredient used in these products. We estimate 
that 75 percent (or 35) of the 47 cosmetics establishments would have 
to keep records for their cattle-derived ingredients. We estimate only 
75 percent will keep records because many cosmetics use tallow 
derivatives as their only cattle-derived material, and such materials 
are not covered by the recordkeeping provisions. FDA requests comments 
on this assumption.
    From FDA's dietary supplement database (Ref. 6), we are able to 
tell that there are 162 dietary supplement brand names that use cattle 
material as ingredients in their products. We assume that each brand 
name represents a facility that produces multiple dietary supplement 
products containing cattle-derived ingredients; therefore we assess 
recordkeeping costs for all 162 brand names. We do not have information 
to determine if any of the dietary supplement manufacturers use tallow 
derivatives (exempt from this recordkeeping requirement) as their only 
cattle-derived ingredient.
    b. Recordkeeping. USDA's BSE interim final rule requires those 
establishments that slaughter cattle or that process the carcasses or 
parts of carcasses of cattle maintain daily records sufficient to 
document the implementation and monitoring of procedures for removal, 
segregation, and disposition of SRMs. USDA's BSE interim final rule 
requirements will reduce the startup costs of recordkeeping required by 
this proposed rule.
    Recordkeeping costs include one-time costs and recurring costs. 
One-time costs include the costs of designing records and training 
personnel in the maintenance of the records. The recurring costs are 
the costs of ensuring that the records adequately document that the 
shipment of cattle materials to an FDA-regulated facility is free of 
prohibited cattle materials. The costs of retaining records and 
planning for an FDA request for records access are estimated to be 
zero. We estimate these costs to be zero because current business 
practices already dictate that records are kept for at least 1 year for 
tax purposes and product liability purposes; the marginal private 
benefit of retaining records for a second year is assumed to be greater 
than the marginal cost of doing so. Although there is no specific time 
period for providing records when requested, FDA notes that records 
requests costs are zero when

[[Page 42280]]

FDA gives the records submitter 24 hours to comply. These cost 
estimates are consistent with cost estimates used in FDA's proposed 
recordkeeping requirements in ``Establishment and Maintenance of 
Records Under the Public Health Security and Bioterrorism Preparedness 
and Response Act of 2002'' (the Bioterrorism Act proposed recordkeeping 
rule) (68 FR 25188, May 9, 2003).
    We assume that the one-time training burden incurred for each 
facility is approximately one-third of an hour. This time includes both 
the training required for personnel to learn how to verify that the 
appropriate records have been received and/or created, and also the 
training required for personnel to learn how to file and maintain those 
records. Given current business practices, we know personnel are 
familiar with recordkeeping; therefore, the requirement to maintain 
additional records is expected to be learned quickly. This training 
burden for recordkeeping is consistent with the recordkeeping training 
burden in the analysis for the Bioterrorism Act proposed recordkeeping 
rule (68 FR 25188; May 9, 2003) and the records maintenance burden used 
in the analysis of the juice HACCP rule (66 FR 6138; January 19, 2001). 
Consistent with the analysis conducted for the Bioterrorism Act 
proposed recordkeeping rule, FDA assumes an hourly cost of an 
administrative worker, $25.10 per hour, which has been doubled from 
$12.55 wage per hour to include overhead costs. This cost, $25.10 per 
hour, applies to all labor costs.
    We use the FDA Labeling Cost Model to estimate the one-time records 
design costs per facility of $1,190 per stock keeping unit (SKU) (Ref. 
7). It is likely that facilities using cattle-derived ingredients, 
whether the ingredients are for human food or cosmetics, will take 
advantage of their economies of scope and produce more than one product 
with these ingredients. It is probable that each establishment has 
several SKUs associated with products containing cattle-derived 
ingredients that will now require recordkeeping. To account for 
additional products and SKUs we take the record design costs per 
facility times 1.5 for a total design cost per facility of $1,785 
($1,095 in labor costs and $690 in capital costs).
    We multiplied the cost per product per SKU by 1.5 to account for 
the additional records design required for the additional SKUs. The 
record design cost for the first affected product or SKU will be more 
expensive than the marginal cost of adding records for additional SKUs. 
This marginal cost of record design for additional SKUs could be 
negligible or it could come close to doubling the costs; we therefore 
pick 1.5, the midpoint of 1 and 2, to be the cost multiplier.
    Consistent with the analysis conducted for the Bioterrorism Act 
proposed recordkeeping rule, this record design cost is assumed to be 
shared between two facilities--the upstream facility and the downstream 
facility--as both will need to be involved in record production that 
meets the needs of both the supplier and customer for the cattle-
derived ingredient.
    Unlike the Bioterrorism Act proposed recordkeeping rule, we do not 
have direct information on all the facilities covered; we do not have 
data on the number of slaughter plants or renderers that supply cattle 
material for the food and cosmetic manufacturers and processors under 
FDA jurisdiction. FDA does, however, have some information on the 
number and type of downstream facilities that receive this material. 
Using information on the number of food and cosmetic manufacturers that 
may use cattle-derived ingredients subject to the interim final rule 
and this proposed rule, we can account for the total shared records 
costs by assuming that each food manufacturer or processor facility 
listed in table 1 of this document procures ingredients from one 
upstream slaughter plant or renderer. It is likely that each 
manufacturer or processor has a contractual relationship with an 
upstream slaughterer or renderer. FDA requests comment on whether food 
manufacturers and processors maintain contractual relationships with 
one or several cattle-material input suppliers. Information on food 
producing facilities in table 1 represents U.S. facilities; dietary 
supplement numbers account for both domestic and foreign facilities; 
cosmetics numbers account for both domestic and foreign input 
suppliers.

                                       Table 1.--First Year Records Costs
----------------------------------------------------------------------------------------------------------------
                                              Number of                       Costs per
                                             Facilities       Costs per     Facility for
  Type of Product Using Cattle Material     Estimated to    Facility for    Training (1/3    Total Setup Costs
                                             Use /cattke      Designing     hour * $25.10
                                              Materials        Records        per Hour)
----------------------------------------------------------------------------------------------------------------
Canned soups and stews                          10          $1,785              $8.37            $17,934
----------------------------------------------------------------------------------------------------------------
Fats and oils                                 none         ..............  ..............  .....................
----------------------------------------------------------------------------------------------------------------
Flavoring extracts                              32          $1,785              $8.37            $57,388
----------------------------------------------------------------------------------------------------------------
Spreads                                         45          $1,785              $8.37            $80,702
----------------------------------------------------------------------------------------------------------------
Candy                                          156          $1,785              $8.37           $279,766
----------------------------------------------------------------------------------------------------------------
Yogurt                                          22          $1,785              $8.37            $39,454
----------------------------------------------------------------------------------------------------------------
Ice cream                                      113          $1,785              $8.37           $202,651
----------------------------------------------------------------------------------------------------------------
Dietary supplements                            162          $1,785              $8.37           $290,526
----------------------------------------------------------------------------------------------------------------
Cosmetics                                       35          $1,785              $8.37            $62,768
----------------------------------------------------------------------------------------------------------------
Color additives                               none         ..............  ..............  .....................
----------------------------------------------------------------------------------------------------------------
Total                                          575          $1,785              $8.37         $1,031,189
----------------------------------------------------------------------------------------------------------------


[[Page 42281]]

    The recurring recordkeeping cost is the cost of ensuring that 
appropriate records document the absence of prohibited cattle materials 
in human food and cosmetics. The framework for estimating the amount of 
time required for FDA-regulated facilities to ensure adequate records 
for each shipment of materials is based on the regulatory impact 
analysis of the Bioterrorism Act proposed recordkeeping rule. In that 
analysis we estimated that 30 minutes per week would be required to 
ensure that records on each shipment to and from a facility contain 
adequate information regarding the contents of the package, the 
transporter, supplier, and receiver.
    The recordkeeping requirements of this proposed rule would cover 
only a small fraction of all ingredients used in the food and cosmetic 
manufacturing processes and only require that records of cattle-derived 
ingredient origin from the input supplier be verified and maintained by 
the food or cosmetic manufacturer and processor. Because this 
recordkeeping requirement is less complex than the recordkeeping 
requirements under the Bioterrorism Act and affects fewer ingredients, 
we estimate the per facility burden to be about one-half of the burden 
estimated for the Bioterrorism Act proposed recordkeeping rule: 15 
minutes per week, or 13 hours per year. FDA assumes that this 
recordkeeping burden would be shared between two entities (i.e., the 
slaughter plant and the manufacturer of finished products containing 
cattle-derived ingredients).
    Table 2 of this document shows the recurring recordkeeping costs 
for food and cosmetics manufacturers that would be needed to comply 
with this proposed rule. As stated earlier, information on food 
producing facilities in table 2 represents U.S. facilities; dietary 
supplement numbers account for both domestic and foreign facilities; 
cosmetics numbers account for both domestic and foreign input 
suppliers.

                                    Table 2.--Recurring Annual Records Costs
----------------------------------------------------------------------------------------------------------------
                                                                      Annual Costs per
                                                                    Facility of Ensuring
                                                                      that Appropriate
  Type of Product (From Raw or Rendered Material      Number of      Records Accompany    Total recurring annual
      that Needs Accompanying Documentation)         Facilities        Each Shipment               costs
                                                                    Received (13 Hours *
                                                                      $25.10 per Hour)
----------------------------------------------------------------------------------------------------------------
Canned soups and stews                                  10                   $326.30                 $3,263
----------------------------------------------------------------------------------------------------------------
Fats and oils                                         none         .....................  ......................
----------------------------------------------------------------------------------------------------------------
Flavoring extracts                                      32                   $326.30                $10,442
----------------------------------------------------------------------------------------------------------------
Spreads                                                 45                   $326.30                $14,684
----------------------------------------------------------------------------------------------------------------
Candy                                                  156                   $326.30                $50,903
----------------------------------------------------------------------------------------------------------------
Yogurt                                                  22                   $326.30                 $7,179
----------------------------------------------------------------------------------------------------------------
Ice cream                                              113                   $326.30                $36,872
----------------------------------------------------------------------------------------------------------------
Dietary supplements                                    162                   $326.30                $52,861
----------------------------------------------------------------------------------------------------------------
Cosmetics                                               35                   $326.30                $11,421
----------------------------------------------------------------------------------------------------------------
Color additives                                       none         .....................  ......................
----------------------------------------------------------------------------------------------------------------
Total                                                  575                   $326.30               $187,625
----------------------------------------------------------------------------------------------------------------

    c. Benefits of the proposed rule. The benefits of this proposed 
rule are derived from the benefits of the interim final rule, which are 
the value of the public health benefits. The public health benefit is 
the reduction in the risk of the human illness associated with 
consumption of the agent that causes BSE.
    If we define the baseline risk as the expected annual number of 
cases of variant Creutzfeldt-Jakob disease (vCJD) per year, then the 
annual benefits of prohibiting prohibited cattle materials for use in 
foods and cosmetics would be:
    (baseline annual cases of vCJD--annual cases of vCJD under FDA 
interim final rule) x (value of preventing a case of VCJD).
    An alternative way to characterize benefits is:
    Reduction in annual cases in vCJD under FDA interim final rule x 
(value of preventing a case of vCJD).
    We do not know the baseline expected annual number of cases. But 
based on the epidemiology of vCJD in the United Kingdom, we anticipate 
much less than one case of vCJD per year in the United States. Because 
the interim final rule and this proposed rule would reduce rather than 
eliminate risk of exposure to BSE infectious materials, the reduction 
in the number of cases will be some fraction of the expected number. 
The value of preventing a case of vCJD is the value of a statistical 
life plus the value of preventing a year-long or longer illness that 
precedes certain death for victims of vCJD. In a recent rule making 
regarding labeling of trans fatty acids (68 FR 41434, July 11, 2003), 
we used a range of $5 million to $6.5 million for the value of a 
statistical life. The value of preventing a vCJD case would be even 
higher because of the significant medical costs associated with the 
illness (Ref. 8). We estimate that the value of preventing a single 
case of vCJD ranges from $5.7 million to $7.1 million. This estimate 
includes direct medical costs, reduced ability of the ill person to 
function at home and at work, and the cost of premature death.
    As discussed in the companion interim final rule, the Harvard-
Tuskegee study has stated that a ban on specified risk materials, 
including cattle brains, spinal cord and vertebral column, from

[[Page 42282]]

inclusion in human and animal food would reduce the very few potential 
BSE cases in cattle by a further 88 percent and potential human 
exposure to infectivity in meat and meat products by a further 95 
percent. The interim final rule, in conjunction with USDA's BSE interim 
final rule, will help achieve this reduction in potential human 
exposure. The interim final rule will also reduce potential human 
exposure to BSE infectivity in other human food not covered by the 
Harvard-Tuskegee study. This proposed rule would help ensure that the 
provisions of the interim final rule are carried out. For example, this 
proposed rule will require documentation that a domestically produced 
or foreign-produced dietary supplement or ingredient contains cattle 
material (e.g., brain) only from animals of an appropriate age.
    d. Summary of costs and benefits of proposed rule. For this 
proposed rule, the costs are to setup and then to maintain a 
recordkeeping system to document all cattle-derived ingredients, except 
tallow derivatives, used in FDA-regulated food and cosmetics. The setup 
costs are about $1 million, and the annual costs of maintaining the 
recordkeeping system are about $200,000. The benefit of this proposed 
rule is that its requirements will--by requiring records that the 
provisions of the interim final rule have been followed--provide an 
additional safeguard against a case of vCJD occurring in humans.

B. Regulatory Flexibility Analysis

    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 finds that this proposed rule would have a 
significant economic impact on a substantial number of small entities.
    First year costs of this proposed rule are about $1,800 per 
facility pair, with this cost divided between the upstream facility 
(slaughterhouse or rendering plant) and downstream facilities 
(manufacturers of food or cosmetics). FDA cannot determine if the cost 
sharing between the two firms would be equal. If the cost sharing is 
equal, then each facility would have to bear about a $900 first year 
cost to comply with the recordkeeping required by the proposed rule; if 
the cost sharing is not equal, then one facility in the partnership may 
bear zero costs all the way up to the total first year costs of $1,800. 
Recurring costs of this proposed rule are about $326 per facility 
relationship, which may be borne by only one firm or may be shared 
between facilities.
    Using FDA's Small Business Model, we can estimate the number of 
facilities, when recordkeeping costs are shared and when they are not 
shared, that may go out of business as a result of this proposed rule.
    Table 3 of this document shows that if facilities are only 
responsible for one-half of the recordkeeping cost burden (the burden 
is equally shared between the upstream and downstream facilities), then 
only two very small facilities (less than 20 employees) may be 
overburdened by having to comply with this proposed rule in a year's 
time; if the recordkeeping cost burden is borne by only one facility in 
the business relationship (either the upstream or the downstream firm), 
then six very small facilities (less than 20 employees) may have 
trouble complying with this interim final rule and staying in business. 
Facilities with 20 to 499 employees and facilities with at least 500 
employees that must comply with this proposed rule are not in danger of 
having to stop operating as a result of the proposed rule.

                Table 3.--Potential for Facility Shutdown
------------------------------------------------------------------------
                                            Regulation
                             Estimated    Burden on Each     Number of
                             Number of       Facility      Facilities in
        Industry            Facilities    (Shared Burden   Industry That
                             Affected        or Total      May Shut Down
                                              Burden)
------------------------------------------------------------------------
Canned soups and stews         10            $900               0
------------------------------------------------------------------------
Canned soups and stews         10          $1,800               0
------------------------------------------------------------------------
Flavoring extracts             32            $900               0
------------------------------------------------------------------------
Flavoring extracts             32          $1,800               0
------------------------------------------------------------------------
Spreads                        45            $900               0
------------------------------------------------------------------------
Spreads                        45          $1,800               1
------------------------------------------------------------------------
Candy                         156            $900               1
------------------------------------------------------------------------
Candy                         156          $1,800               2
------------------------------------------------------------------------
Yogurt                         22            $900               0
------------------------------------------------------------------------
Yogurt                         22          $1,800               0
------------------------------------------------------------------------
Ice cream                     113            $900               0
------------------------------------------------------------------------
Ice cream                     113          $1,800               1
------------------------------------------------------------------------
Dietary supplements           162            $900               1
------------------------------------------------------------------------
Dietary supplements           162          $1,800               2
------------------------------------------------------------------------
Cosmetics                      35            $900               0
------------------------------------------------------------------------

[[Page 42283]]

 
Cosmetics                      35          $1,800               0
------------------------------------------------------------------------

C. Unfunded Mandates

    Title II of the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1501 
et seq.) 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 $115 million. FDA has determined that this 
proposed rule does not constitute a significant rule under the Unfunded 
Mandates Reform Act.

D. The Small Business Regulatory Enforcement Fairness Act of 1996 Major 
Rule

    The Small Business Regulatory Enforcement Fairness Act of 1996 
(Public Law 104-121) defines a major rule for the purpose of 
congressional review as having caused or being likely to cause one or 
more of the following: An annual effect on the economy of $100 million 
or more; 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, 
should it become final, would not be a major rule for the purpose of 
congressional review.

VI. Paperwork Reduction Act Analysis

    This proposed rule contains information collections that are 
subject to review by OMB under the Paperwork Reduction act of 1995 (44 
U.S.C. 3501-3520). A description of these provisions is given below 
with an estimate of the annual recorkeeping 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 the following topics: (1) Whether the 
proposed collection of information is necessary for the proper 
performance of FDA's functions, including whether the information will 
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: Recordkeeping Requirements for Human Food and Cosmetics 
Manufactured From, Processed With, or Otherwise Containing, Material 
From Cattle
    Description: This proposed rule would require records on FDA-
regulated human food, including dietary supplements, and cosmetics that 
are manufactured from, processed with, or otherwise contain, material 
derived from cattle. This proposed rule is a companion rulemaking to 
FDA's interim final rule entitled ``Use of Materials Derived From 
Cattle in Human Food and Cosmetics'' published in this issue of the 
Federal Register. This proposed rule would require that manufacturers 
and processors of human food and cosmetics manufactured from, processed 
with, or that otherwise contain, material from cattle, maintain records 
demonstrating that the food or cosmetic has not been manufactured from, 
processed with, or does not otherwise contain, prohibited cattle 
materials and make such records available to FDA for inspection and 
copying. These proposed requirements are necessary because, once 
materials are separated from an animal, it may not be possible without 
records to know the following: (1) Whether the cattle materials 
contains SRMs, (2) whether the material contains small intestine, (3) 
whether the material was sourced from an animal that was inspected and 
passed for human consumption, (4) whether the material was sourced from 
a nonambulatory disabled animal, and (5) whether the product contains 
MS(Beef). Under the proposed rule, manufacturers and processors must 
retain records for 2 years at the manufacturing or processing 
establishment or another reasonably accessible location.
    Information Collection Burden Estimate
    FDA estimates the burden for this information collection as 
follows:

                               Table 4.--Estimated Annual Recordkeeping Burden\1\
----------------------------------------------------------------------------------------------------------------
                                     Annual
 21 CFR Section       No. of      Frequency per      Total Annual      Hours per   Total Capital    Total Hours
                  Recordkeepers      Record            Records          Record         Costs
----------------------------------------------------------------------------------------------------------------
189.5(c),             575                1                  575          44.33     $396,750          25,490
 700.27(c)
----------------------------------------------------------------------------------------------------------------
189.5(c),             575               52               29,900           0.25           $0           7,475
 700.27(c)
----------------------------------------------------------------------------------------------------------------
Total one time    .............  ..............  ...................  ..........  ..............     25,490
 burden hours
----------------------------------------------------------------------------------------------------------------
Total recurring   .............  ..............  ...................  ..........  ..............      7,475
 burden hours
----------------------------------------------------------------------------------------------------------------
\1\ There are no operating and maintenance costs associated with this collection of information.


[[Page 42284]]

    Burden:
    Hour Burden Estimate
    FDA has determined that there are 575 facility relationships, 
consisting of the following facilities: A producer of cattle materials 
requiring records--this may be a slaughterhouse or renderer (the 
upstream facility) and a purchaser of cattle materials requiring 
documentation--this may be a human food or cosmetic manufacturer or 
processor. Together, the upstream and downstream facilities are 
responsible for designing records, verifying records, and storing 
records that contain information on sources of cattle materials.
    In this hour burden estimate, as in the economic analysis, we treat 
these recordkeeping activities as shared activities between the 
upstream and downstream facilities. It is in the best interests of both 
facilities in the relationship to carry the burden necessary to comply 
with this proposed rule; therefore we estimate the time burden of 
developing these records as a joint task between the two facilities.
    One Time Burden
    The first year burden of the proposed recordkeeping requirement 
consists of the facilities training their employees on how to keep the 
records necessary to comply with this proposed rule and designing the 
records. The one-time training burden incurred for each facility is 
assumed to be the equivalent of 1 month's worth of on-the-job training 
or approximately one-third of an hour. This time includes both the 
training required for personnel to verify that appropriate records have 
been received and/or created, and also the training required by 
personnel to file and maintain those records. Therefore, the total one-
time training burden is 575 x 0.33 hrs = 190 hours.
    We use the FDA Labeling Cost Model to estimate the one-time records 
design costs per facility of $1,785. This cost includes the costs of 
designing records for multiple products and consists $1,095 in labor 
costs (and $690 in capital costs which we deal with in the next 
section). Dividing the $1,095 of labor costs by the hourly wage for 
workers of $25.10 (doubled to include overhead), we have a design-time 
burden per facility of about 44 hours; we multiplied the burden per 
facility by 575 facilities to get an estimated total training and 
design burden of 25,490 hours.
    Table 4 row 1 of this document shows the total hour burden from 
training and records design to be 44.33 hours per facility x 575 record 
keepers = 25,490 hours for the year.
    Recurring Burden
    The recurring recordkeeping burden is the burden of sending and 
verifying documents regarding shipments of cattle material that is to 
be used in human food and cosmetics.
    We estimate this recurring recordkeeping burden will be about 15 
minutes per week, or 13 hours per year. FDA assumes that this 
recordkeeping burden will be shared between two entities (i.e., the 
slaughter plant and the manufacturer of finished products containing 
cattle-derived ingredients). Therefore the total recurring burden will 
be 13 hrs x 575 = 7,475 hours, as shown in row 2 of table 4 of this 
document.
    Capital Cost and Operating and Maintenance Cost Burden
    We use the FDA Labeling Cost Model to estimate the one-time records 
design costs per facility of $1,875 per facility, based on the facility 
producing multiple products with ingredients that now require records. 
Over $1,000 of the record design cost is due to labor, but $690 of the 
records design represents capital costs to each facility. The total 
capital costs for records design for all facilities is $690 x 575 = 
$396,750. These one time costs are shown in row 1 of table 4 of this 
document.
    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 fax comments regarding information collection to the 
Office of Information and Regulatory Affairs, OMB, Attn: Fumie Yokota, 
Desk Officer, FDA, FAX: 202-395-6974.

VII. Environmental Impact Analysis

    The agency has determined under 21 CFR 25.30(h) that this action is 
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.

VIII. Federalism

    We have analyzed this proposed rule in accordance with the 
principles set forth in Executive Order 13132. We have 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, 
we have tentatively concluded 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 is not 
required.

IX. References

    1. Model for Estimating the Impacts for Regulatory Costs on the 
Survival of Small Businesses and its Application to Four FDA-
Regulated Industries, Final Report, Eastern Research Group, July 
2002.
    2. CTFA International Buyer's Guide, produced by the Cosmetics, 
Toiletries, and Fragrances Association (CTFA) found on the Internet 
at http://www.ctfa-buyersguide.org.
    3. Memorandum of Telephone Conversation, Dr. Gerald McEwen, 
Cosmetic, Toiletry, and Fragrance Association and Karen L. Carson, 
Food and Drug Administration, June 29, 2004.
    4. United States International Trade Commission Interactive 
Tariff and Trade DataWeb, Essential Oils and Resinoids; Perfumery, 
Cosmetic or Toilet Preparations. Accessed online at http://dataweb.usitc.gov.
    5. U.S. Census Bureau, 1997 Economic Census: Bridge Between 
NAICS and SIC Manufacturing. Accessed online at http://www.census.gov.
    6. FDA Dietary Supplement Products with Animal Ingredients 
Database (DSPD-A), September 2002, RTI International, contractor--
FDA Contract Number 06673.013
    7. FDA Labeling Cost Model, Final Report, Muth, M. K., E. C. 
Gledhill, and S. A. Karns, RTI, Health, Social, and Economics 
Research, Research Triangle, NC, April 2002.
    8. Memorandum to the Record, The Costs of a Case of Variant 
Creutzfeldt-Jakob disease (vCJD), 2004.

List of Subjects

21 CFR Part 189

    Food additives, Food packaging, Substances prohibited from use in 
human food.

21 CFR Part 700

    Cosmetics, Packaging and containers.
    Therefore, under the Federal Food, Drug, and Cosmetic Act, and 
under authority delegated to the Commissioner of Food and Drugs, the 
Food and Drug Administration proposes to amend 21 CFR parts 189 and 700 
as follows:
* * * * *

PART 189--SUBSTANCES PROHIBITED FROM USE IN HUMAN FOOD

    1. The authority citation for 21 CFR part 189 is revised to read as 
follows:

    Authority: 21 U.S.C. 321, 342, 348, 371, 381.
    2. Section 189.5 is amended by revising paragraph (c) to read as 
follows:


Sec.  189.5  Prohibited cattle materials.

* * * * *
    (c)(1) Records. Manufacturers and processors of human food that is 
manufactured from, processed with, or otherwise contains, material from 
cattle

[[Page 42285]]

must establish and maintain records sufficient to demonstrate that the 
food is not manufactured from, processed with, or does not otherwise 
contain, prohibited cattle materials.
    (2) Records must be retained for 2 years after the date the records 
were created.
    (3) Records must be retained at the manufacturing or processing 
establishment or at a reasonably accessible location.
    (4) The maintenance of electronic records is acceptable. Electronic 
records are considered to be reasonably accessible if they are 
accessible from an onsite location.
    (5) Records required by this subpart must be available to FDA for 
inspection and copying.
    (6) Importers must electronically affirm their compliance with the 
recordkeeping requirements in paragraph (c)(1) of this section at the 
time of entry into the United States of human food manufactured from, 
processed with, or otherwise containing, material from cattle and must, 
if requested, provide the required records within a reasonable time.
    (7) Records established or maintained to satisfy the requirements 
of this subpart that meet the definition of electronic records in Sec.  
11.3(b)(6) of this chapter are exempt from the requirements of part 11 
of this chapter. Records that satisfy the requirements of this subpart 
but that are also required under other applicable statutory provisions 
or regulations remain subject to part 11 of this chapter.
* * * * *

PART 700--GENERAL

    3. The authority citation for 21 CFR part 700 continues to read as 
follows:

    Authority: 21 U. S. C. 321, 331, 352, 355, 361, 362, 371, 374.
    4. Section 700.27 is amended by revising paragraph (c) to read as 
follows:


Sec.  700.27  Use of prohibited cattle materials from cattle in 
cosmetic products.

* * * * *
    (c)(1) Records. Manufacturers and processors of a cosmetic that is 
manufactured from, processed with, or otherwise contains, material from 
cattle must establish and maintain records sufficient to demonstrate 
that the cosmetic is not manufactured from, processed with, or does not 
otherwise contain, prohibited cattle materials.
    (2) Records must be retained for 2 years after the date the records 
were created.
    (3) Records must be retained at the manufacturing or processing 
establishment or at a reasonably accessible location.
    (4) The maintenance of electronic records is acceptable. Electronic 
records are considered to be reasonably accessible if they are 
accessible from an onsite location.
    (5) Records required by this subpart must be available to FDA for 
inspection and copying.
    (6) Importers must electronically affirm their compliance with the 
recordkeeping requirements in paragraph (c)(1) of this section at the 
time of entry into the United States of cosmetics manufactured from, 
processed with, or otherwise containing, material from cattle and must, 
if requested, provide the required records within a reasonable time.
    (7) Records established or maintained to satisfy the requirements 
of this subpart that meet the definition of electronic records in Sec.  
11.3(b)(6) of this chapter are exempt from the requirements of part 11 
of this chapter. Records that satisfy the requirements of this subpart 
but that are also required under other applicable statutory provisions 
or regulations remain subject to part 11 of this chapter.
* * * * *

    Dated: July 8, 2004.
Lester M. Crawford,
Acting Commissioner of Food and Drugs.
[FR Doc. 04-15880 Filed 7-9-04; 11:00 am]
BILLING CODE 4160-01-S