[Federal Register Volume 80, Number 142 (Friday, July 24, 2015)]
[Proposed Rules]
[Pages 43987-43998]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-18141]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

21 CFR Part 1

[Docket No. FDA-2011-N-0146]
RIN 0910-AG66


User Fee Program To Provide for Accreditation of Third-Party 
Auditors/Certification Bodies To Conduct Food Safety Audits and To 
Issue Certifications

AGENCY: Food and Drug Administration, HHS.

ACTION: Proposed rule.

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SUMMARY: The Food and Drug Administration (FDA, the Agency, or we) is 
issuing this proposed rule to amend the proposed rule, ``Accreditation 
of Third-Party Auditors/Certification Bodies to Conduct Food Safety 
Audits and to Issue Certifications'' (Accreditation of Third-Party 
Auditors proposed rule) and to propose to establish a reimbursement 
(user fee) program to assess fees and require reimbursement for the 
work performed to establish and administer the system for the 
Accreditation of Third-Party Auditors under the FDA Food Safety 
Modernization Act (FSMA).

DATES: Submit either electronic or written comments on the proposed 
rule by October 7, 2015.

ADDRESSES: You may submit comments by any of the following methods.

Electronic Submissions

    Submit electronic comments in the following way:
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.

Written Submissions

    Submit written submissions in the following ways:
     Mail/Hand delivery/Courier (for paper submissions): 
Division of Dockets Management (HFA-305), Food and Drug Administration, 
5630 Fishers Lane, Rm. 1061, Rockville, MD 20852.
    Instructions: All submissions received must include the Docket No. 
FDA-2011-N-0146 for this rulemaking. All comments received may be 
posted without change to http://www.regulations.gov, including any 
personal information provided. For additional information on submitting 
comments, see the ``Comments'' 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.regulations.gov and insert the 
docket number(s), found in brackets in the heading of this document, 
into the ``Search'' box and follow the prompts and/or go to the 
Division of Dockets Management, 5630 Fishers Lane, Rm. 1061, Rockville, 
MD 20852.

FOR FURTHER INFORMATION CONTACT: Charlotte A. Christin, Center for Food 
Safety and Applied Nutrition, Food and Drug Administration, 5100 Paint 
Branch Pkwy., College Park, MD 20740, 240-402-3708.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Background
    A. Introduction
    B. Accreditation of Third-Party Auditors Proposed Rule
    C. Regulatory Use of Certifications Under FSMA
    D. Reimbursement (User Fee) Program Under Section 808(c)(8) of 
the FD&C Act
II. Legal Authority
III. Description of the Proposed Rule
    A. Who would be subject to a user fee?
    B. What user fees would be established?
    C. How will FDA notify the public about the fee schedule?
    D. When must the user fee be submitted?
    E. Are user fees refundable?
    F. What are the consequences of not paying a user fee on time?
    G. Possible Exemptions
IV. Preliminary Regulatory Impact Analysis
    A. Introduction
    B. Regulatory Flexibility Act
    C. Unfunded Mandates Reform Act of 1995
    D. Need for This Regulation
V. Paperwork Reduction Act of 1995
VI. Analysis of Environmental Impact
VII. Federalism
VIII. Comments
IX. References


[[Page 43988]]



I. Background

A. Introduction

    President Obama signed FSMA (Pub. L. 111-353) into law on January 
4, 2011. FSMA enables us to better protect public health by helping to 
ensure the safety and security of the U.S. food supply. Among other 
things, FSMA gives us important new tools to better ensure the safety 
of imported foods, which constitute approximately 15 percent of the 
U.S. food supply (including approximately 80 percent of our seafood, 50 
percent of our fresh fruit, and 20 percent of our vegetables). One of 
these tools is a new program authorized by section 307 of FSMA for 
third-party auditing and certification of eligible foreign entities, 
including registered foreign food facilities that meet our applicable 
requirements.

B. Accreditation of Third-Party Auditors Proposed Rule

    On July 29, 2013, FDA published for public comment in the Federal 
Register a proposed rule, ``Accreditation of Third-Party Auditors/
Certification Bodies to Conduct Food Safety Audits and to Issue 
Certifications'' (Accreditation of Third-Party Auditors proposed rule) 
to establish a program that would provide for accreditation of third-
party auditors/certification bodies (CBs) to conduct food safety audits 
of eligible foreign entities (including registered foreign food 
facilities), and to issue food and facility certifications (third-party 
accreditation program) (78 FR 45782, July 29, 2013). Under this 
program, FDA would recognize accreditation bodies (ABs) to accredit 
CBs, except for limited circumstances in which we may directly accredit 
CBs. The Accreditation of Third-Party Auditors proposed rule contains 
eligibility requirements for ABs to qualify for recognition and 
requirements that ABs participating in the FDA program must meet, once 
recognized. It also contains eligibility requirements for CBs to 
qualify for accreditation and requirements that CBs choosing to 
participate in the FDA program must meet, once accredited. These 
proposed requirements would ensure the competence and independence of 
the ABs and CBs participating in the third-party accreditation program. 
The Accreditation of Third-Party Auditors proposed rule also provides 
for the monitoring and oversight of participating ABs and CBs, and 
procedures for removing a CB or an AB from the program. Finally, the 
Accreditation of Third-Party Auditors proposed rule proposes 
requirements relating to auditing and certification of eligible foreign 
entities under the program and for notifying FDA of conditions in an 
audited facility that could cause or contribute to a serious risk to 
the public health. More information on the Accreditation of Third-Party 
Auditors proposed rule can be found on FDA's Web site at http://www.fda.gov/FSMA.
    The comment period on that proposed rule closed on January 27, 
2014, and FDA is currently working on the final rule, which will 
respond to the comments submitted. Because that rule has not yet been 
finalized, this user fee proposed rule is based on the Accreditation of 
Third-Party Auditors proposed rule. When this user fee proposed rule is 
finalized, this proposed rule will be finalized to align with the 
Accreditation of Third-Party Auditors final rule.

C. Regulatory Use of Certifications Under FSMA

    FDA will use certifications issued by accredited CBs in deciding 
whether to admit certain imported food into the United States that FDA 
has determined poses a food safety risk under section 801(q) of the 
Federal Food, Drug, and Cosmetic Act (FD&C Act) (21 U.S.C. 381), and in 
deciding whether an importer is eligible to participate in the 
Voluntary Qualified Importer Program (VQIP) under section 806(a) of the 
FD&C Act (21 U.S.C. 384b(a)) for expedited review and entry of food 
imports. These and other potential uses of facility and food 
certifications are discussed in more detail in the Federal Register 
notice announcing the Accreditation of Third-Party Auditors proposed 
rule (78 FR 45782 at 45785 through 45786). On June 5, 2015, FDA 
published a notice of availability, ``Draft Guidance for Industry on 
the Voluntary Qualified Importer Program for Food Importers and 
Guidelines in Consideration of the Burden of the Voluntary Qualified 
Importer Program Fee Amounts on Small Business,'' which contains draft 
criteria and procedures for VQIP participation (80 FR 32136). The VQIP 
draft guidance can be found on FDA's Web site at http://www.fda.gov/Food/GuidanceRegulation/FSMA/ucm253380.htm.

D. Reimbursement (User Fee) Program Under Section 808(c)(8) of the FD&C 
Act

    Section 808(c)(8) of the FD&C Act (21 U.S.C. 384d(c)(8)), 
established by FSMA, requires FDA to establish by regulation a 
reimbursement (user fee) program by which we assess fees and require 
reimbursement for the work we perform to establish and administer the 
third-party accreditation program under section 808 of the FD&C Act. In 
this document, we are proposing to establish this user fee program.

II. Legal Authority

    Section 307 of FSMA, Accreditation of Third-Party Auditors, amends 
the FD&C Act to create a new provision, section 808, under the same 
name. Section 808 of the FD&C Act directs us to establish a new program 
for accreditation of third-party auditors conducting food safety audits 
and issuing food and facility certifications to eligible foreign 
entities (including registered foreign food facilities) that meet our 
applicable requirements. Under this provision, we will recognize ABs to 
accredit CBs, except for limited circumstances in which we may directly 
accredit CBs to participate in the third-party accreditation program.
    Our authority for this proposed rule is derived in part from 
section 808(c)(8) of the FD&C Act, which requires us to establish by 
regulation a reimbursement (user fee) program by which we assess fees 
and require accredited third-party auditors and audit agents to 
reimburse us for the work performed to establish and administer the 
third-party accreditation program under section 808 of the FD&C Act. 
Accordingly, section 808(c)(8) of the FD&C Act authorizes us to assess 
fees and require reimbursement from ABs applying for recognition under 
section 808 of the FD&C Act, CBs applying for direct accreditation 
under section 808 of the FD&C Act, and recognized ABs and accredited 
CBs participating in the third-party accreditation program under 
section 808 of the FD&C Act.
    Further, section 701(a) (21 U.S.C. 371(a)) authorizes us to issue 
regulations for the efficient enforcement of the FD&C Act, including 
this proposed rule to establish a user fee program for the third-party 
accreditation program under section 808 of the FD&C Act. Thus, FDA has 
the authority to issue this proposed rule under sections 808 and 701(a) 
of the FD&C Act.

III. Description of the Proposed Rule

    This proposal includes the following: (1) Who would be subject to a 
user fee; (2) how user fees would be computed; (3) how FDA would notify 
the public about annual fee rates; (4) how the user fee would be 
collected; and (5) what the consequences would be for not paying a user 
fee.

A. Who would be subject to a user fee?

    In determining what user fees to establish, FDA considered the 
obligations the Agency would have under the Accreditation of Third-
Party

[[Page 43989]]

Auditors proposed rule and the parties that would be participating in 
the third-party accreditation program. FDA is likely to perform a 
significant amount of work reviewing applications for recognition of 
ABs, even where FDA denies an application (see proposed 21 CFR 1.631). 
Reviewing renewal applications is also a source of cost to FDA, but 
that will likely take fewer resources than reviewing original 
applications for recognition. FDA will also perform a significant 
amount of work to monitor recognized ABs, which may include onsite 
assessments of statistically significant numbers of CBs accredited by 
the recognized AB and onsite audits of eligible entities that such CBs 
certified (see proposed Sec.  1.633). FDA also will perform a 
significant amount of work to periodically evaluate the performance of 
each accredited CB to determine whether it continues to comply with the 
requirements for participation (see proposed Sec.  1.662).
    In certain circumstances, FDA would consider applications from CBs 
for direct accreditation (see proposed Sec.  1.670). This application 
review, and any subsequent monitoring and renewal application review, 
would add to FDA's program costs.
    FDA tentatively concludes that there are four main groups to whom 
costs should be attributed for the purposes of charging fees:
     ABs submitting applications or renewal applications for 
recognition in the third-party accreditation program;
     Recognized ABs participating in the third-party 
accreditation program subject to FDA monitoring activities;
     CBs submitting applications or renewal applications for 
direct accreditation; and
     Accredited CBs (whether accredited by recognized ABs or by 
FDA through direct accreditation) participating in the third-party 
accreditation program subject to FDA monitoring activities.
    These are the parties identified in proposed Sec.  1.700.
    We note that under this proposed rule, FDA's collection of fees 
through the proposed user fee program would not recover all costs 
associated with the establishment and administration of the third-party 
accreditation program under section 808 of the FD&C Act. Other FDA 
costs include those involving reconsiderations of certain regulatory 
decisions such as denial of an application for recognition or waiver 
request (see proposed Sec.  1.691), reviewing waiver requests (see 
proposed Sec.  1.663), revocation of recognition of ABs or withdrawal 
of accreditation of CBs (see proposed Sec.  1.634 and Sec.  1.664), and 
maintaining a Web site listing recognized ABs and accredited CBs (see 
proposed Sec.  1.690). Additionally, FDA would bear general initial 
startup costs, mainly due to training new employees and establishing an 
IT system to support the new third-party accreditation program.
    FDA requests comment on whether any of the costs to FDA of the 
third-party accreditation program that are not accounted for in this 
proposed rulemaking should be paid for through user fees collected 
under section 808(c)(8) of the FD&C Act, and if so, to whom should the 
fees be charged and how should the fees be calculated (e.g., the 
estimated average cost of processing a waiver request, per hour of 
FDA's work to determine whether to revoke recognition of an AB or 
withdraw accreditation of a CB, a flat annual fee to recognized ABs and 
accredited CBs to cover maintenance of the Web site).

B. What user fees would be established?

    Proposed Sec.  1.705 would establish application fees and annual 
fees. The proposed rule would establish application fees for ABs 
applying for recognition (proposed Sec.  1.705(a)(1)), recognized ABs 
submitting renewal applications (proposed Sec.  1.705(a)(2)), CBs 
applying for direct accreditation (proposed Sec.  1.705(a)(3)), and CBs 
applying for renewal of direct accreditation (proposed Sec.  
1.705(a)(4)). The proposed rule would establish annual fees for 
recognized ABs (proposed Sec.  1.705(b)(1)), CBs directly accredited by 
FDA (proposed Sec.  1.705(b)(2)), and CBs accredited by recognized ABs 
(proposed Sec.  1.705(b)(3)). The application fees would fund our 
review of the applications. The annual fees would support relevant 
monitoring activities.
1. Application Fee for ABs Applying for Recognition
    Under proposed Sec.  1.705(a)(1), ABs applying for recognition 
would be subject to an application fee for the estimated average cost 
of the work FDA performs in reviewing and evaluating applications for 
recognition of ABs. The average cost of the work FDA performs in 
reviewing and evaluating one application for recognition of an AB would 
be estimated by: (1) Estimating the number of hours, on average, it 
would take a full-time federal employee (FTE) to review and evaluate an 
application for recognition and (2) multiplying that estimate by the 
fully supported FTE hourly rates calculated by the Agency for the 
applicable fiscal year.
    Data collected over a number of years and used consistently in 
other FDA user fee programs (e.g., under the Prescription Drug User Fee 
Act and the Medical Device User Fee and Modernization Act) show that 
every seven FTEs who perform direct FDA work require three indirect and 
supporting FTEs. These indirect and supporting FTEs function in budget, 
facility, human resource, information technology, planning, security, 
administrative support, legislative liaison, legal counsel, program 
management, and other essential program areas. On average, two of these 
indirect and supporting FTEs are located in the Office of Regulatory 
Affairs (ORA) or the FDA center where the direct work is being 
conducted, and one of them is located in the Office of the 
Commissioner.
    To calculate an hourly rate of a fully supported FTE (i.e., an 
hourly rate that takes into account the direct work performed by FTEs 
and the work performed by indirect and supporting FTEs), FDA would 
first calculate the average cost of the direct work performed by an FTE 
per year and multiply that average annual cost of the work performed by 
an FTE by 1.43 (10 total FTEs divided by 7 direct FTEs). FDA would then 
divide the fully supported cost of an FTE per year by the average 
number of supported direct FDA work hours in that year an average FTE 
is available for work assignment (which excludes, e.g., annual leave, 
sick leave, and trainings).
    For example, in fiscal year (FY) 2013, a recent fiscal year for 
which data is available, the estimated average cost of an FTE doing 
Center for Food Safety and Applied Nutrition (CFSAN) and Center for 
Veterinary Medicine (CVM) related field activities work was $216,543, 
excluding the cost of inspection travel. Multiplying $216,543 by 1.43 
results in an average fully supported cost of $309,657 per FTE, 
excluding travel costs. Dividing this average fully supported cost of 
an FTE in FY 2013 by the total number of supported direct work hours 
available for assignment per FTE (1,600 hours) results in an average 
fully supported cost of $194 per supported direct work hour in FY 2013, 
excluding travel costs.
    In this example, to estimate the inflation-adjusted average fully 
supported cost for FY 2015, we use the method set forth in the 
Prescription Drug User Fee Act provisions of the FD&C Act (21 U.S.C. 
379h), the statutory method for inflation adjustment in the FD&C Act 
that FDA has used consistently in setting user fees. FDA previously 
determined the FY 2014

[[Page 43990]]

inflation adjustment factor to be 2.20 percent (78 FR 46980, August 2, 
2013), and the inflation adjustment factor for the FY 2015 to be 2.0813 
percent (79 FR 44807, August 1, 2014). The inflation adjustment factor 
for FY 2015 (2.0813 percent) is compounded by adding 1 and then 
multiplying by 1 plus the inflation adjustment factor for FY 2014 (2.20 
percent), which equals a compounded inflation adjustment factor of 
1.043271 (rounded) (1.020813 x 1.0220). After adjusting for inflation, 
the estimated cost of $192 per supported direct work hour in FY 2013 
increases to $202 per supported direct work hour in FY 2015.
    For the purposes of providing a sense of the fee we are proposing, 
in this document we use $202 as the base unit fee in determining the 
hourly fee rate, prior to including domestic or foreign travel costs as 
applicable for the activity.
    When travel is required, we would have one hourly rate for domestic 
travel and one hourly rate for foreign travel. To calculate an hourly 
rate of a fully supported FTE including travel costs, FDA would 
calculate the additional cost per hour spent on travel (taking into 
account domestic and foreign travel, as applicable), adjust for 
inflation, and add this amount to the base unit fee.
    For the purposes of providing a sense of the fee we are proposing, 
in this document we demonstrate calculation of additional costs per 
hour spent on travel using information from ORA's inspection trips 
related to FDA's CFSAN and CVM field activities programs. In FY 2013, 
ORA spent a total of $2,797,656 on 235 foreign inspection trips related 
to FDA's CFSAN and CVM field activities programs which averaged a total 
of $11,905 per trip. The average paid hours per trip was 120 hours. 
Dividing $11,905 per trip by the average paid hours per trip (120 
hours) results in a total and an additional cost of $99 per paid hour 
spent for foreign inspection travel costs in FY 2013. To adjust for 
inflationary increases in FY 2014 and FY 2015, we multiply $99 by the 
compounded inflation adjustment factor previously mentioned in this 
document (1.04327), which results in an adjusted estimated additional 
cost of $103 per paid hour spent for foreign inspection travel costs in 
FY 2015. We then add $103 to $202 (base unit fee) to get a total of 
$305 per paid hour for each direct hour of work requiring foreign 
inspection travel.
    In addition, in FY 2013, ORA spent a total of $4,687,907 on 11,779 
domestic regulatory inspection trips related to FDA's CFSAN and CVM 
activities programs which averaged a total of $398 per inspection. 
Dividing $398 by the average number of hours per inspection (27.91 
hours) results in an additional cost of $14 per hour spent for domestic 
inspection travel costs in FY 2013. To adjust for inflationary 
increases in FY 2014 and FY 2015, we multiply $14 by the compounded 
inflation adjustment factor previously mentioned in this document 
(1.04327), which results in an adjusted estimated additional cost of 
$15 per paid hour spent for domestic inspection travel costs in FY 
2015. We then add $15 to $202 (base unit fee) to get a total of $217 
per paid hour for each direct hour of work requiring domestic 
inspection travel.
    To provide a sense of the fee we are proposing, we calculate an 
estimated fee using these fully supported FTE hourly rates, and 
estimates of the number of hours it would take FDA to perform relevant 
activities. These estimates represent FDA's current thinking and differ 
from the Preliminary Regulatory Impact Analysis (PRIA) for the 
Accreditation of Third-Party Auditors proposed rule (Ref. 1). FDA's 
thinking may also continue to evolve as we consider the RIA for the 
Accreditation of Third-Party Auditors final rule. We estimate that it 
would take, on average, 60 person-hours to review an AB's submitted 
application, 48 person-hours for an onsite performance evaluation of 
the applicant AB (including travel and other steps necessary for a 
fully supported FTE to complete an onsite performance evaluation), and 
45 person-hours to prepare a written report documenting the onsite 
audit.
    FDA employees are likely to review applications and prepare reports 
from their worksites, so we use the fully supported FTE hourly rate 
excluding travel, $202/hour, to estimate the portion of the user fee 
attributable to those activities: $202/hour x (60 hours + 45 hours) = 
$21,210. FDA employees will likely travel to foreign countries for the 
onsite performance evaluations because most ABs are located in foreign 
countries, so for this estimated fee we use the fully supported FTE 
hourly rate for work requiring foreign inspection travel, $305/hour, to 
estimate the portion of the user fee attributable to those activities: 
$305 x 48 hours (i.e., 2 fully supported FTEs x (2 travel days + 1 day 
onsite)) = $14,640. The estimated average cost of the work FDA performs 
in total for reviewing an application for recognition for an AB based 
on these figures would be $21,210 + $14,640 = $35,850.
    We anticipate that the RIA for the Accreditation of Third-Party 
Auditors final rule, which FDA intends to publish in the fall of 2015, 
will include updated hourly estimates based on comments received on 
that rulemaking. In addition, we expect that all of these estimates 
used to calculate the actual user fees will be informed by FDA's 
experience with the third-party accreditation program, once that 
program begins, and the estimates used to calculate the user fees will 
be updated accordingly. For example, if it takes less time, on average 
for us to prepare written reports documenting audits, we will use that 
information to decrease the fee for the following year. As another 
example, if an AB applying for recognition is located in the United 
States, domestic travel, not foreign travel will be needed to conduct 
onsite audits of such applicant ABs. This, too, would lower the average 
cost to FDA of conducting onsite audits, and, in turn, would contribute 
to lowering the estimated fee rate.
    Note that in the above calculation, we estimate the average number 
of hours it would take for FDA to conduct relevant activities, and 
multiply that by the appropriate fully supported FTE hourly rate to 
generate one flat fee that would be paid by every applicant AB. 
Alternatively, we could track the number of hours it actually takes FDA 
staff to conduct relevant activities for each applicant AB, and 
multiply that number by the fully supported FTE hourly rate calculated 
by the Agency for the applicable fiscal year. We could then bill each 
applicant AB separately for the actual application costs attributable 
to it. Under this approach, we would likely bill after ABs learn 
whether or not they are accepted into the program.
    The proposed approach provides predictability for FDA and for 
industry, and allows FDA to collect application fees before beginning 
to perform the work of reviewing the application. However, this 
alternative approach may create incentives for higher quality 
applications. Applications that are faster to review, e.g., because 
they are better prepared, could result in lower fees, while 
applications that are slower to review, e.g., because they are less 
organized or necessitate more back-and-forth with the applicant, could 
result in higher fees. Similarly, applicants that facilitate the onsite 
audit process and have higher quality operations would likely have 
shorter onsite audits than other applicants. Still, because FDA would 
bill applicant ABs after completing application review, applicants 
whose applications are not accepted may have a lowered incentive to pay 
the application fee at all. This alternative approach might also raise 
questions regarding differences in

[[Page 43991]]

application review costs that in turn could take additional FDA 
resources to resolve.
    We request comment on the proposed and alternative approaches, 
particularly whether one approach would create more favorable 
incentives for quality of the application. For the alternative 
approach, we also request comment on possible consequences we should 
impose on ABs for not paying the fee on time. We also request comment 
on whether we should adopt the alternative approach for a portion of 
the application review process, e.g., the onsite audit portion, while 
maintaining a flat fee for other portions, e.g., the paper application 
review. Such a hybrid approach may be most consistent with how ABs 
currently charge CBs and provide a balance of predictability and 
incentives.
2. Application Fee for Recognized ABs Submitting Renewal Applications
    Under proposed Sec.  1.705(a)(2), recognized ABs submitting renewal 
applications would be subject to a renewal application fee for the 
estimated average cost of the work FDA performs in reviewing and 
evaluating renewal applications for recognition of ABs. The average 
cost of the work FDA performs in reviewing and evaluating renewal 
applications for recognized ABs would be estimated by: (1) Estimating 
the number of hours it would take an FTE to review and evaluate a 
renewal application, on average and (2) multiplying that estimate by 
the fully supported FTE hourly rates calculated by the Agency for the 
applicable fiscal year.
    The review and evaluation of renewal applications submitted by 
recognized ABs, including the onsite assessments, is expected to be 
less burdensome than the review and evaluation required for initial 
applications for recognition submitted by ABs. As above, to provide a 
sense of the fee we are proposing, we calculate an estimated fee here 
using estimates that represent FDA's current thinking of the number of 
hours it would take FDA to perform relevant activities and the fully 
supported FTE hourly rates described above. We estimate that it would 
take, on average, 40 person-hours to review an AB's renewal 
application, including review of reports prepared by FDA detailing the 
FDA performance evaluations, which include FDA's onsite assessments of 
the AB, review of the AB's annual self-assessment reports submitted to 
FDA, and review of relevant records maintained by the AB. We estimate 
that for AB's seeking renewal of recognition, approximately 25 percent 
of such FDA performance evaluations will be conducted onsite and we 
expect that it will take 1 fully supported FTE 2 travel days and 2 
onsite days to conduct an onsite assessment for a total of 32 hours. 
Therefore, on average, 8 person-hours (i.e., 25 percent x 1 fully 
supported FTE x (2 travel days + 2 onsite days)) would be spent on an 
onsite evaluation of an AB as part of FDA's review of an AB's renewal 
of recognition application. In addition, 41.25 person-hours would be 
spent on report preparation. For activities FDA employees are likely to 
perform at their worksites (i.e., the application review and report 
preparation), we use the fully supported FTE hourly rate excluding 
travel, of $202/hour, while for activities FDA employees are likely to 
need to travel to foreign countries to perform (i.e., the onsite 
audit), we use the fully supported FTE hourly rate for work requiring 
inspection travel, of $305/hour. The estimated average cost of the work 
FDA performs in reviewing and evaluating an application for renewal of 
recognition for an AB would be $16,413 ($202/hour x (40 hours + 41.25 
hours)) plus $2,440 ($305/hour x 8 hours), which is $18,853 total. As 
previously mentioned, the hourly rate used would be adjusted each year 
for changes in FDA's costs using an inflation adjustment factor, and we 
expect the estimates of the number of hours each activity takes will be 
revised in the RIA of the Accreditation of Third-Party Auditors final 
rule. More generally, we expect that these estimates will be informed 
by FDA's experience with the third-party accreditation program, once 
that program begins.
    Similar to the alternative approach we discussed for initial 
application fees, we are considering billing each applicant for the 
actual amount of time FDA takes to review and evaluate the particular 
applicant's renewal application, using the fully supported FTE hourly 
rates calculated by the Agency for the applicable fiscal year. We see 
the same policy considerations as discussed for the analogous 
alternative approach for the initial application fees discussed above. 
We request comment on the proposal and alternative approach for renewal 
application fees. We also request comment on whether we should adopt 
the alternative approach for a portion of the renewal application 
review process, e.g., the onsite audit portion, while maintaining a 
flat fee for other portions, e.g., the paper application review.
3. Application Fee for CBs Applying for Direct Accreditation
    Under proposed Sec.  1.705(a)(3), CBs applying for direct 
accreditation would be subject to an application fee for the estimated 
average cost of the work FDA performs in reviewing and evaluating 
applications for direct accreditation. As with the two proposed 
application fees for ABs, the average cost of the work FDA performs in 
reviewing and evaluating applications for direct accreditation of CBs 
would be estimated by: (1) Estimating the number of hours, on average, 
it would take an FTE to review and evaluate an application for direct 
accreditation and (2) multiplying that estimate by the fully supported 
FTE hourly rates calculated by the Agency for the applicable fiscal 
year.
    Again, to provide a sense of the fee we are proposing, we calculate 
an estimated fee here using estimates that represent FDA's current 
thinking of the number of hours it would take FDA to perform relevant 
activities and the fully supported FTE hourly rates described above. 
For activities FDA employees are likely to perform at their worksites, 
we use the fully supported FTE hourly rate excluding travel, of $202/
hour, while for activities FDA employees are likely to need to travel 
to foreign countries to perform, we use the fully supported FTE hourly 
rate for work requiring inspection travel, of $305/hour. We tentatively 
estimate that it would take, on average, 60 person-hours to review a 
CB's application for direct accreditation, 48 person-hours to conduct 
an onsite performance evaluation of the applicant CB, including travel 
and other steps necessary for a fully supported FTE to complete an 
onsite performance evaluation, and 45 person-hours to prepare a written 
report documenting the onsite performance evaluation. Given that FDA 
employees are likely to conduct application review and report 
preparation at their worksites, the estimated average cost of the work 
FDA performs for those activities would be $202/hour x (60 hours + 45 
hours) = $21,210. FDA employees will likely travel to foreign countries 
for the onsite performance evaluations, so the estimated average cost 
of the work FDA performs for those activities would be $305 x 48 hours 
(i.e., 2 fully supported FTEs x (2 travel days + 1 day onsite)) = 
$14,640. Therefore, the estimated average cost of the work FDA performs 
in reviewing and evaluating an application for direct accreditation for 
a CB would be $21,210 + $14,640 = $35,850. As previously mentioned, the 
hourly rate used would be adjusted each year for changes in FDA's costs 
using an inflation adjustment factor, we expect the estimates of the 
number of hours each activity takes will be revised in the RIA for the 
Accreditation of Third-Party

[[Page 43992]]

Auditors final rule based on comments to that proposed rulemaking, and 
we expect our estimates used to calculate actual user fees will be 
informed by FDA's experience with the third-party accreditation 
program, once that program begins.
    Similar to the alternative approach we discussed for initial 
application fees for AB recognition, we considered an alternative 
approach for direct accreditation applications where FDA would bill 
each applicant for the actual amount of time FDA takes to review and/or 
evaluate the particular applicant's application, using the fully 
supported FTE hourly rate calculated by the Agency for the applicable 
fiscal year. This would likely have the same policy considerations as 
discussed for the analogous alternative approach discussed in section 
III.B.1. We request comment on this alternative. We also request 
comment on whether we should adopt the alternative approach for a 
portion of the application review process, e.g., the onsite audit 
portion, while maintaining a flat fee for other portions, e.g., the 
paper application review.
4. Application Fee for CBs Applying for Renewal of Direct Accreditation
    Under proposed Sec.  1.705(a)(4), CBs applying for renewal of 
direct accreditation would be subject to an application fee for the 
estimated average cost of the work FDA performs in reviewing and 
evaluating renewal applications for direct accreditation. The average 
cost of the work FDA performs in reviewing and evaluating renewal 
applications for directly accredited CBs would be estimated by: (1) 
Estimating the number of hours it would take an FTE to review and 
evaluate a renewal application, on average and (2) multiplying that 
estimate by the fully supported FTE hourly rates calculated by the 
Agency for the applicable fiscal year.
    The review and evaluation of renewal applications submitted by 
directly accredited CBs, including the onsite assessments, is expected 
to be less burdensome than the review and evaluation required for 
initial applications for direct accreditation. As above, to provide a 
sense of the fee we are proposing, we calculate an estimated fee here 
using estimates that represent FDA's current thinking of the number of 
hours it would take FDA to perform relevant activities and the fully 
supported FTE hourly rates described above. We estimate that it would 
take, on average, 40 person-hours to review a CB's renewal application, 
including review of reports prepared by FDA detailing the records 
review from the FDA performance evaluations, which include FDA's onsite 
assessments of the CB, review of the CB's annual self-assessment 
reports submitted to FDA, and review of relevant records maintained by 
the CB. In addition, we estimate that 32 person-hours (i.e., 1 fully 
supported FTE x (2 travel days + 2 onsite days)) would be spent on 
onsite audits and 45 person-hours would be spent on report preparation. 
For activities FDA employees are likely to perform at their worksites 
(i.e., the application review and report preparation), we use the fully 
supported FTE hourly rate excluding travel, of $202/hour, while for 
activities FDA employees are likely to need to travel to foreign 
countries to perform (i.e., the onsite audit), we use the fully 
supported FTE hourly rate for work requiring inspection travel, of 
$305/hour. The estimated average cost of the work FDA performs in 
reviewing and evaluating a renewal application for direct accreditation 
for a CB would be $17,170 ($202/hour x (40 hours + 45 hours)) plus 
$9,760 ($305/hour x 32 hours), which is $26,930 total.
    As previously mentioned, the hourly rate used would be adjusted 
each year for changes in FDA's costs using an inflation adjustment 
factor, and we expect the estimates of the number of hours each 
activity takes will be revised in the RIA for the Accreditation of 
Third-Party Auditors final rule. More generally, we expect that these 
estimates will be informed by FDA's experience with the third-party 
accreditation program, once that program begins.
    Similar to the approach we discussed for renewal application fees 
for AB recognition, we considered an alternative approach to renewal 
applications for direct accreditation of CBs where FDA would bill each 
applicant for the actual amount of time FDA takes to review and 
evaluate the particular applicant's renewal application, using the 
fully supported FTE hourly rates calculated by the Agency for the 
applicable fiscal year. We see the same policy considerations as 
discussed for the analogous alternative approach for renewal 
application fees for ABs discussed above. We request comment on the 
proposal and alternative approach for these renewal application fees. 
We also request comment on whether we should adopt the alternative 
approach for a portion of the renewal application process, e.g., the 
onsite audit portion, while maintaining a flat fee for other portions, 
e.g., the paper application review.
5. Annual Fees for Recognized ABs
    Proposed Sec.  1.633(a) of the Accreditation of Third-Party 
Auditors proposed rule states that FDA would periodically evaluate the 
performance of each recognized AB to determine its compliance with the 
applicable requirements of that proposed rule. Such evaluation would 
occur by at least 4 years after the date of recognition for a 5-year 
term of recognition, or by no later than the mid-term point for 
recognition granted for less than 5 years. FDA may conduct additional 
performance evaluations of a recognized AB at any time.
    Proposed Sec.  1.705(b)(1) would require recognized ABs to pay an 
annual fee for the estimated average cost of the work FDA performs to 
monitor performance of recognized ABs under proposed Sec.  1.633. The 
average cost of the work FDA performs to monitor performance of a 
recognized AB would be estimated by: (1) Estimating the number of 
hours, on average, it would take an FTE to monitor the performance of a 
recognized AB and (2) multiplying that estimate by the fully supported 
FTE hourly rates calculated by the Agency for the applicable fiscal 
year.
    To calculate the annual fee for each recognized AB, FDA would take 
the estimated average cost of work FDA performs to monitor performance 
of a single recognized AB and annualize that over the average term of 
recognition. For the calculations in this document, we assume an 
average term of recognition of 5 years. We also assume that FDA would 
monitor 10 percent of recognized ABs onsite. Terms of recognition may 
initially be shorter than 5 years during the first few years of the 
program, but we anticipate that 5 years is likely to be the most common 
term of recognition as the program continues. We estimate that for one 
performance evaluation of a recognized AB, it would take, on average 
(taking into account that not all recognized ABs would be monitored 
onsite), 24 hours for FDA to conduct records review, 4.8 hours of 
onsite performance evaluation (i.e., 10 percent x 2 fully supported 
FTEs x (2 travel days + 1 day onsite)), and 8 hours to prepare a report 
detailing the records review and onsite performance evaluation. Using 
the fully supported FTE hourly rates described above, the estimated 
average cost of the work FDA performs to monitor performance of a 
single recognized AB would be $6,464 ($202/hour x (24 hours + 8 hours)) 
plus $1,464 ($305/hour x 4.8 hours), which is $7,928. Annualizing this 
amount over 5 years would lead to an annual fee of

[[Page 43993]]

roughly $1,585 to $1,878, depending on inflation.
    The proposed approach is relatively simple and consistent with 
industry models. However, if a recognized AB leaves the program, either 
voluntarily or because FDA revokes such AB's recognition, before FDA 
conducts its monitoring activities, such AB will have paid an annual 
fee for monitoring that never occurs. If a recognized AB leaves the 
program after FDA conducts its monitoring activities, but before the 
term of recognition ends, such AB's annual fees will not fully 
compensate FDA for monitoring. In addition, if an AB completes its term 
of recognition in the program but its term of recognition is less than 
the average term of recognition used to calculate the annual fee, the 
proposed approach will not fully reimburse FDA for monitoring of that 
AB.
    We request comment on the proposed approach and whether another 
approach would resolve some of these issues. For example, each AB could 
pay in full for monitoring in the year that FDA conducts it. FDA could 
calculate the fee using the same method applied under the proposed 
approach (i.e., by estimating the number of hours, on average, it would 
take an FTE to monitor the performance of a recognized AB and 
multiplying that estimate by the fully supported FTE hourly rates 
calculated by the Agency for the applicable fiscal year). Or, FDA could 
track the number of hours spent monitoring that particular AB and 
multiply the fully supported FTE hourly rate by that number of hours. 
Either way, in general, FDA would receive the money as costs are 
incurred. However, a large fee for each instance that FDA conducts a 
performance evaluation that may or may not be charged in any given year 
may be financially impractical for ABs who would otherwise participate 
in the program. They may prefer a smaller fee collected annually, 
rather than a much larger fee due at one time.
    Under another alternative, FDA would calculate the annual 
monitoring fee using the same method applied by the proposed approach, 
adjusted for inflation, but the fee would be annualized based on the 
term of recognition for each recognized AB. So if an AB is only 
recognized for a term of 3 years, the fee would be annualized over 3 
years, while an AB that is recognized for a 5-year term would have its 
fee annualized over 5 years. As a result, an AB with a shorter term of 
recognition would have a higher annual fee than an AB with a longer 
term of recognition. Under this alternative, FDA would need to 
calculate a different annual fee for each possible term length, and FDA 
would have to ensure that ABs are billed an annual fee consistent with 
their particular term lengths.
6. Annual Fees for CBs Directly Accredited by FDA
    Similarly, proposed Sec.  1.662 of the Accreditation of Third-Party 
Auditors proposed rule states that FDA would periodically evaluate the 
performance of each accredited CB to determine whether the accredited 
CB continues to comply with the requirements and whether there are 
deficiencies in the performance of the accredited CB that, if not 
corrected, would warrant withdrawal of its accreditation. FDA would 
evaluate each directly accredited CB annually. FDA may conduct 
additional performance evaluations of an accredited CB at any time.
    Proposed Sec.  1.705(b)(2) would require directly accredited CBs to 
pay an annual fee for the estimated average cost of the work FDA 
performs to monitor directly accredited CBs under proposed Sec.  1.662. 
The average cost of the work FDA performs to monitor directly 
accredited CBs would be estimated by: (1) Estimating the number of 
hours, on average, it would take an FTE to monitor the performance of a 
directly accredited CB and (2) multiplying that estimate by the fully 
supported FTE hourly rates calculated by the Agency for the applicable 
fiscal year. We estimate that it would take FDA about the same amount 
of time to conduct records review (24 hours) and to prepare a report 
detailing the records review and onsite performance evaluation (8 
hours) as it would for FDA to perform these activities for a recognized 
AB. However, we expect to conduct onsite performance evaluations for 
100 percent of directly accredited CBs (48 hours per directly 
accredited CB, including travel and other steps necessary for a fully 
supported FTE to complete an onsite performance evaluation). In 
addition, because FDA would be conducting these activities annually for 
each directly accredited CB, the annual fee for a directly accredited 
CB would cover the full cost of performance evaluation, approximately 
$21,104. We request comment on this proposal.
7. Annual Fees for CBs That Are Accredited by a Recognized AB
    Proposed Sec.  1.662(a) of the Accreditation of Third-Party 
Auditors proposed rule states that FDA would evaluate an accredited CB 
annually evaluated by a recognized accreditation body by not later than 
3 years after the date of accreditation for a 4-year term of 
accreditation, or by no later than the mid-term point for accreditation 
granted for less than 4 years. FDA may conduct additional performance 
evaluations of an accredited CB at any time.
    Under proposed Sec.  1.705(b)(3), CBs accredited by recognized ABs 
would be subject to an annual fee for the estimated average cost of the 
work FDA performs to monitor CBs under proposed Sec.  1.662 that are 
accredited by a recognized AB. The average cost of the work FDA 
performs to monitor performance of a CB accredited by a recognized AB 
would be estimated by: (1) Estimating the number of hours, on average, 
it would take an FTE to monitor the performance of a CB accredited by a 
recognized AB and (2) multiplying that estimate by the fully supported 
FTE hourly rates calculated by the Agency for the applicable fiscal 
year.
    To calculate the annual fee for each CB accredited by a recognized 
AB, FDA would take the estimated average cost of work FDA performs to 
monitor performance of a single CB accredited by a recognized AB and 
annualize that over 4 years, assuming that 4 years would be the most 
common term of accreditation. We estimate that FDA would conduct, on 
average, the same activities for the same amount of time to monitor CBs 
accredited by a recognized AB as we would to monitor an AB recognized 
by FDA, costing approximately $7,928. Annualizing this over 4 years 
would generate an annual fee of approximately $1,982 to $2,250, 
depending on inflation.
    The proposed provision is analogous to proposed Sec.  1.705(b)(1), 
which would establish the annual fee for recognized accreditation 
bodies. As discussed for that provision, the proposed approach is 
relatively simple and consistent with industry models. But if an 
accredited CB leaves the program, either voluntarily or because of a 
decision from its AB or FDA, before FDA conducts its monitoring 
activities, such CB will have paid an annual fee for monitoring that 
never occurs. If the CB leaves the program after FDA conducts its 
monitoring activities, but before the term ends, the CB's annual fees 
will not fully compensate FDA for monitoring. In addition, if a CB 
completes its term of accreditation in the program but its term is less 
than 4 years, the proposed approach will not fully reimburse FDA for 
monitoring of that CB. We request comment on the proposed approach and 
any possible alternatives. For example, each CB could pay in full for 
monitoring in the year that FDA conducts it. FDA could calculate the 
fee using the same method applied under the proposed approach (i.e., 
estimating the number of

[[Page 43994]]

hours, on average, it would take an FTE to monitor the performance of a 
CB accredited by a recognized AB and multiplying that estimate by the 
fully supported FTE hourly rates calculated by the Agency for the 
applicable fiscal year). Or, FDA could track the number of hours spent 
monitoring that particular CB and multiply the fully supported FTE 
hourly rate by that number of hours. Either way, in general, FDA would 
receive the money as we incur the costs. However, a large fee for each 
instance that FDA conducts a performance evaluation that may or may not 
be charged in any given year may be impractical for CBs who would 
otherwise participate in the program.
    Under another alternative, FDA would calculate the annual 
monitoring fee using the same method applied under the proposed 
approach, adjusted for inflation, but the fee would be annualized based 
on the term of accreditation for each CB. So if a CB is only accredited 
for a term of 2 years, the fee would be annualized over 2 years, while 
a CB that is accredited for a 4-year term would have its fee annualized 
over 4 years. As a result, a CB with a shorter term of accreditation 
would have a higher annual fee than a CB with a longer term of 
accreditation. FDA would need to calculate a different annual fee for 
each possible term length, and FDA would have to ensure that CBs are 
billed an annual fee consistent with their particular term lengths.
8. General Fee Structure and Alternatives
    Having an application fee that is separate from the annual 
monitoring fee would allow FDA to recover costs of work performed to 
review applications that are ultimately denied because the applicants 
do not meet the eligibility criteria for the program. In addition, we 
understand that it is common for ABs to charge an application fee to 
CBs that apply for accreditation and an annual fee to accredited CBs; 
our proposed fee structure is consistent with this industry model.
    The application fee would likely be significantly higher than the 
annual monitoring fee, as can be seen by the examples above. We are 
wary that a high application fee could deter participation in the 
program. We considered alternative fee structures to address this 
potential issue. For example, we considered annualizing the cost of 
application review over the length of the term of recognition (e.g., 5 
years) or accreditation (e.g., 4 years), adjusting for inflation. The 
annualized application fee could be added to the annual fee funding 
FDA's monitoring costs to generate a single annual fee. Under this 
alternative, the total fee paid each year by participants in the 
program would be consistent, adjusting for inflation, over the term of 
the recognition or accreditation. In an application year, the total fee 
charged for that year would be lower under this alternative than under 
the proposed fee structure, but the total fee charged in each 
subsequent year of the term of recognition or accreditation would be 
higher than under the proposed fee structure.
    We decided against this alternative approach for several reasons. 
First, if an application is not accepted into the program or an 
applicant leaves the program before the end of the term of recognition 
or accreditation, e.g., because FDA revokes an AB's recognition under 
proposed Sec.  1.634, FDA would not recover the total cost of reviewing 
the application. Second, while an excessively large application fee 
could deter participation in a way that would negatively affect program 
participation, an application fee that is appropriately high, and not 
annualized over the length of the term of recognition or accreditation, 
could serve as a barrier for lower quality applicants that may not have 
sufficient resources to meet the program criteria and carry out the 
duties of program participants as prescribed in proposed 21 CFR part 1, 
subpart M.
    Third, as described above, the cost to FDA of reviewing a renewal 
application is expected to be less than the cost to FDA of reviewing an 
initial application. Therefore, to avoid overcharging ABs and directly 
accredited CBs in their second or third terms of recognition or direct 
accreditation, we would need to establish two different annual fees for 
ABs and two different annual fees for directly accredited CBs; one for 
those in their first term and one for those who are in a subsequent 
term, with the latter reduced to account for the lower annualized cost 
to FDA of reviewing renewal applications. For proper billing, FDA would 
need to keep track of which term each participant was in as well as the 
length of the term, adding another layer of complexity. Moreover, FDA 
would continue to need to establish a separate annual fee that does not 
include an application surcharge for those CBs that are accredited by 
ABs. For these reasons, FDA tentatively concludes that the alternative 
fee structure could potentially reimburse FDA less for work performed 
and could lead to more lower-quality applications.
    We request comment on the proposed fee structure, the alternative 
discussed here, and any other alternative fee structures that may be 
simpler or more consistent with industry practice.

C. How will FDA notify the public about the fee schedule?

    In general, FDA publishes notices in the Federal Register in late 
summer announcing the fee rates of its user fee programs for the 
upcoming fiscal year (e.g., Generic Drug User Fee Rates for Fiscal Year 
2015 (79 FR 44797, August 1, 2014) and Medical Device User Fee Rates 
for Fiscal Year 2015 (79 FR 44178, July 30, 2014)). Therefore, under 
proposed Sec.  1.710, FDA would notify the public of the fee schedule 
annually prior to the beginning of the fiscal year for which the fees 
apply. Each new fee schedule would be calculated based on the 
parameters in this proposed rulemaking, adjusting for improvements in 
the estimates of the cost to FDA of performing relevant work for the 
upcoming year and inflation. For example, after experience with the 
program, FDA is likely to have more accurate estimates of the costs of 
performing certain activities to carry out the program than it does 
now. FDA would use these revised estimates to calculate the fee.

D. When must the user fee be submitted?

    Under proposed Sec.  1.715(a), ABs applying for recognition and CBs 
applying for direct accreditation would be required to submit a fee 
concurrently with submitting their applications or renewal 
applications. FDA would not review an application until the fee has 
been submitted (see proposed Sec.  1.725(a)). This approach would 
require applicants to pay the user fee in a timely manner and would 
maximize the extent to which work FDA performs to review applications 
is user fee funded.
    Under proposed Sec.  1.715(b), ABs and CBs subject to an annual fee 
must submit payment within 30 days of receiving billing for the fee. We 
understand 30 days to be a generally accepted norm in financial 
transactions and consistent with FDA's practice for its other user fee 
programs. We request comment on these proposed timeframes.

E. Are user fees refundable?

    Under proposed Sec.  1.720, user fees submitted under this subpart 
would not be refundable. We tentatively conclude that this is the 
simplest approach and is most likely to encourage higher quality 
applications and to encourage ABs and CBs to make thoughtful decisions 
about whether to remain in the program for subsequent years. In 
addition, we are wary of creating additional costs to administer the 
program--which would then need to be paid for either through

[[Page 43995]]

raising user fees or through appropriated funds--as a result of 
disagreements between FDA and industry about whether a particular 
refund would be granted. However, we note that FDA may refund other 
user fees in a few very limited specific circumstances (see, e.g., User 
Fees and Refunds for Premarket Approval Applications and Device 
Biologics License Applications; Guidance for Industry and FDA Staff).
    We request comment on whether we should consider refund requests 
under this program and, if so, under what circumstances.

F. What are the consequences of not paying a user fee on time?

    Under proposed Sec.  1.725(a), applications would not be considered 
complete until FDA receives the application fee. In practice, this 
means that FDA would not review an application until it is informed by 
the receiving bank that the application fee payment is received. This 
is consistent with FDA's practices for its other user fee programs with 
application fees. In addition, this approach would require applicants 
to pay the user fee in a timely manner and would maximize the extent to 
which work FDA performs to review applications is user fee funded.
    As of the date of this publication, the two receiving banks that 
FDA uses for user fee payment are the Federal Reserve Bank of New York, 
for wire transfer, and U.S. Bank, for check payment. For FDA's user fee 
programs currently in place, these banks generally notify FDA within 24 
hours of the receipt of fee payments. We expect the same for the user 
fee proposed here. FDA intends to publish payment instructions with the 
addresses for sending payments (by mail, courier, or wire) at the time 
that the fee payment schedules are published, before the start of the 
fiscal year. Again, this is consistent with FDA's practice for its 
other user fee programs.
    Under proposed Sec.  1.725(b), a recognized AB that fails to submit 
its annual user fee within 30 days of the due date would have its 
recognition suspended. FDA would notify the AB that its recognition is 
suspended electronically, in English. FDA would notify the public of 
the suspension on the Web site that lists the recognized ABs (described 
in previously proposed Sec.  1.690 of the Accreditation of Third-Party 
Auditors proposed rule). During the period that an AB's recognition is 
suspended, the AB would not be permitted to accredit additional CBs for 
participation in FDA's program. However, any CB accredited by such AB 
prior to the suspension would be unaffected by the suspension, as would 
any food or facility certification issued by such CB.
    Unlike the grounds for revocation listed in proposed Sec.  1.634 of 
the Accreditation of Third-Party Auditors proposed rule, failure to pay 
a user fee within 30 days does not necessarily indicate that the AB no 
longer meets the substantive standards of the program. We tentatively 
conclude that there should be some significant consequence to the AB 
for not paying the user fee in a timely manner, but the consequence 
should be easily reversible once the fee is paid. Therefore, we decided 
to propose a middle ground, suspension, during which an AB suffers some 
consequences for not paying the fee, but those consequences are not as 
significant as the consequences of revocation.
    Our proposal to notify the AB electronically in English of 
suspension is consistent with the provision in proposed Sec.  
1.634(c)(1) that FDA would notify the AB electronically in English of 
revocation. Our proposal to notify the public of the suspension on our 
Web site is consistent with the provision in proposed Sec.  1.634(f) of 
the Accreditation of Third-Party Auditors proposed rule that FDA would 
provide notice on its Web site of the revocation of recognition of an 
AB. We tentatively conclude that there is no reason for the process of 
notifying the AB and the public of suspension to differ from the 
process of notifying the AB and the public of revocation in these 
respects. We request comment on these tentative conclusions. We also 
request comment on whether FDA should notify a CB if the recognition of 
its AB has been suspended.
    At some point, an AB that does not pay its annual fee should not be 
allowed to continue to participate in the program. Therefore, under 
proposed Sec.  1.725(b)(3), if payment is not received within 90 days 
of the payment due date, FDA would revoke the AB's recognition under 
proposed Sec.  1.634(a)(4), and provide notice of such revocation in 
accordance with the procedures in proposed Sec.  1.634. We are 
proposing to amend proposed Sec.  1.634(a)(4) by adding a new proposed 
Sec.  1.634(a)(4)(iii), which would explicitly include failure to pay 
the annual user fee within 90 days of the payment due date, as 
specified in Sec.  1.725(b)(3), as a basis for revoking an AB's 
recognition. We request comment on whether 90 days is an appropriate 
timeframe and whether all of the consequences of revocation (see 
proposed Sec.  1.634(d) and (e)) should apply here. Please note that we 
are no longer soliciting comment on the consequences of revocation 
generally proposed in Sec.  1.634; we are only requesting comment on 
the appropriate consequences in the narrow circumstance of failure to 
pay a user fee.
    Under proposed Sec.  1.725(c), an accredited CB that fails to 
submit its annual user fee within 30 days of the due date would have 
its accreditation suspended. FDA would notify the CB that its 
accreditation is suspended electronically, in English. FDA would notify 
a recognized AB as well, electronically and in English, if the 
accreditation of one of its CBs is suspended. FDA would notify the 
public of the suspension on the Web site that lists the recognized ABs 
and accredited CBs (described in proposed Sec.  1.690). While a CB's 
accreditation is suspended, it would not be allowed to issue food or 
facility certifications as part of FDA's third-party accreditation 
program. However, food or facility certifications issued by a CB prior 
to the suspension of the CB's accreditation would remain in effect. If 
payment is not received within 90 days of the payment due date, FDA 
would withdraw the CB's accreditation under proposed Sec.  1.664(a), 
and provide notice of such withdrawal in accordance with the procedures 
in proposed Sec.  1.664. We propose this process to be analogous to the 
process for suspending recognition of a recognized AB that is 
delinquent on its fee payment. We are also proposing to amend proposed 
Sec.  1.664(a) of the Accreditation of Third-Party Auditors proposed 
rule to add a new proposed Sec.  1.664(a)(4), which would explicitly 
include failure to pay the annual user fee within 90 days of the 
payment due date, as specified in Sec.  1.725(c)(3), as a basis for 
withdrawing a CB's accreditation. We request comment on whether the 
consequences of a CB failing to pay a user fee by the due date are 
appropriate. Please note that we are no longer soliciting comment on 
the consequences of withdrawal of accreditation generally proposed in 
Sec.  1.664(a); we are only requesting comment on the appropriate 
consequences in the narrow circumstance of failure to pay a user fee.

G. Possible Exemptions

    Under the proposed rule, there would be no exemption or reduced fee 
for small businesses or entities. Under other (non-food) FDA user fee 
programs, some exemptions or reductions for small businesses are 
specified by the authorizing legislation (Refs. 2 and 3). For the user 
fees proposed here, no such statutory exemption, reduction, or 
requirement for consideration exists in

[[Page 43996]]

section 808 of the FD&C Act. While we are not proposing a small 
business exemption or reduction here, we believe that some of the 
proposed approaches and alternative approaches we discussed above could 
be more amenable to small businesses than others. For example, an 
annualized fee may be more affordable for a small business than a 
larger lump sum payment. We seek comment on whether we should account 
for small businesses in other ways, including whether an exemption or 
fee reduction would be appropriate. We request that comments that state 
that FDA should provide an exemption or fee reduction for small 
businesses state who should be eligible for an exemption or fee 
reduction; if recommending a fee reduction, how much of a reduction 
should be granted; and why.
    Under the proposed rule, FDA would charge user fees to government 
entities that are applying to and participating in the program as 
either an AB or a CB. FDA is requesting comment on the impact of 
charging a user fee to foreign governments applying to and 
participating in the program, and whether, for trade or other reasons, 
we should consider a different approach.

IV. Preliminary Regulatory Impact Analysis

A. Introduction

    FDA has examined the impacts of the proposed rule under Executive 
Order 12866, Executive Order 13563, the Regulatory Flexibility Act (5 
U.S.C. 601-612), and the Unfunded Mandates Reform Act of 1995 (Pub. L. 
104-4). Executive Orders 12866 and 13563 direct 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). The Agency believes that this proposed rule is not a 
significant regulatory action as defined by Executive Order 12866.

B. Regulatory Flexibility Act

    The Regulatory Flexibility Act requires Agencies to analyze 
regulatory options that would minimize any significant impact of a rule 
on small entities. The proposed rule demonstrates how user fees will be 
calculated for different activities FDA conducts under FDA's third-
party accreditation program. The proposed rule does not require action 
by entities affected by the forthcoming Accreditation of Third-Party 
Auditors final rule; it merely provides additional information so that 
affected entities can make an informed decision on whether to 
participate in FDA's third-party accreditation program. FDA plans to 
analyze the costs and benefits of FDA's third-party accreditation 
program including imposition of user fees resulting from participating 
in the third-party accreditation program in the regulatory impact 
analysis of the Accreditation of Third-Party Auditors final rule. 
Hence, for the purpose of this rule, the Agency proposes to certify 
that the resulting final rule will not have a significant economic 
impact on a substantial number of small entities.

C. Unfunded Mandates Reform Act of 1995

    Section 202(a) of the Unfunded Mandates Reform Act of 1995 requires 
that Agencies prepare a written statement, which includes an assessment 
of anticipated costs and benefits, before proposing ``any rule that 
includes any 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 one year.'' The current threshold after adjustment 
for inflation is $144 million, using the most current (2014) Implicit 
Price Deflator for the Gross Domestic Product. FDA does not expect this 
proposed rule to result in any 1-year expenditure that would meet or 
exceed this amount.

D. Need for This Regulation

    The need for the proposed regulation is under the authority of 
section 808(c)(8) of the FD&C Act, established by FSMA, which requires 
FDA to establish by regulation a reimbursement (user fee) program by 
which we assess fees and require reimbursement for the work we perform 
to establish and administer the third-party accreditation program under 
section 808 of the FD&C Act.

V. Paperwork Reduction Act of 1995

    This proposed rule contains no collection of information. 
Therefore, clearance by OMB under the Paperwork Reduction Act of 1995 
is not required.

VI. Analysis of Environmental Impact

    We have carefully considered the potential environmental effects of 
this action. We have concluded, under 21 CFR 25.30(h), that this action 
is of a type that does not individually or cumulatively have a 
significant effect on the human environment. Therefore, neither an 
environmental assessment nor an environmental impact statement is 
required (Ref. 4).

VII. 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.

VIII. Comments

    Interested persons may submit either electronic comments regarding 
this document to http://www.regulations.gov or written comments to the 
Division of Dockets Management (see ADDRESSES). It is only necessary to 
send one set of comments. Identify comments 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, and will be posted to the docket at http://www.regulations.gov.

IX. References

    The following references have been placed on display in FDA's 
Division of Dockets Management (see ADDRESSES) and may be seen by 
interested persons between 9 a.m. and 4 p.m., Monday through Friday, 
and are available electronically at http://www.regulations.gov. (FDA 
has verified the Web site addresses, but FDA is not responsible for any 
subsequent changes to the Web sites after this document publishes in 
the Federal Register.)

1. FDA, ``Preliminary Regulatory Impact Analysis for the proposed 
rules on Foreign Supplier Verification Programs (Docket No. FDA-
2011-N-0143) and Accreditation of Third-Party Auditors/Certification 
Bodies to Conduct Food Safety Audits and to Issue Certifications 
(Docket No. FDA-2011-N-0146) under Executive Order 13563, the 
Regulatory Flexibility Act (5 U.S.C. 601-612), the Unfunded Mandates 
Reform Act of 1995 (Public Law 104-4), and the Paperwork Reduction 
Act of 1995 (44 U.S.C. 3501-3520),'' (http://www.fda.gov/downloads/AboutFDA/ReportsManualsForms/Reports/EconomicAnalyses/UCM363286.pdf), 2013. Accessed and printed on June 23, 2015.
2. FDA, ``FY 2015 Medical Device User Fee Small Business 
Qualification and

[[Page 43997]]

Certification: Guidance for Industry, Food and Drug Administration 
Staff and Foreign Governments,'' (http://www.fda.gov/downloads/MedicalDevices/DeviceRegulationandGuidance/Overview/MDUFAIII/UCM314389.pdf), August 1, 2014. Accessed and printed on June 23, 
2015.
3. FDA, ``Guidance for Industry: User Fee Waivers, Reductions, and 
Refunds for Drug and Biological Products,'' (http://www.fda.gov/downloads/Drugs/GuidanceComplianceRegulatoryInformation/Guidances/ucm079298.pdf), September 2011. Accessed and printed on June 23, 
2015.
4. FDA, ``Memorandum: Proposed Rule: User Fees for FDA's Third Party 
Accreditation Program for Food and Feed,'' March 3, 2015.

List of Subjects in 21 CFR Part 1

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

    Therefore, under the Federal Food, Drug, and Cosmetic Act and under 
authority delegated to the Commissioner of Food and Drugs, it is 
proposed that 21 CFR part 1, as proposed to be amended on July 29, 2013 
(78 FR 45782), be further amended as follows:

PART 1--GENERAL ENFORCEMENT REGULATIONS

0
1. The authority citation for 21 CFR part 1 is revised to read as 
follows:

    Authority: 15 U.S.C. 1453, 1454, 1455; 19 U.S.C. 1490, 1491; 21 
U.S.C. 321, 331, 332, 333, 334, 335a, 343, 350c, 350d, 350k, 352, 
355, 360b, 362, 371, 374, 381, 382, 384a, 384b, 384d, 393; 42 U.S.C. 
216, 241, 243, 262, 264.

0
2. In Sec.  1.634, add paragraph (a)(4)(iii) to read as follows:


Sec.  1.634  When will FDA revoke recognition?

* * * * *
    (iii) Failure to pay the annual user fee within 90 days of the 
payment due date, as specified in Sec.  1.725(b)(3).
* * * * *
0
3. In Sec.  1.664, add paragraph (a)(4) to read as follows:


Sec.  1.664  When can FDA withdraw accreditation?

* * * * *
0
(4) If payment of the auditor/certification body's annual fee is not 
received within 90 days of the payment due date, as specified in Sec.  
1.725(c)(3).
* * * * *
0
4. In subpart M, add Sec. Sec.  1.700 through 1.725 to read as follows:

Sec.
1.700 Who is subject to a user fee under this subpart?
1.705 What user fees are established under this subpart?
1.710 How will FDA notify the public about the fee schedule?
1.715 When must a user fee required by this subpart be submitted?
1.720 Are user fees under this subpart refundable?
1.725 What are the consequences of not paying a user fee under this 
subpart on time?


Sec.  1.700  Who is subject to a user fee under this subpart?

    (a) Accreditation bodies submitting applications or renewal 
applications for recognition in the third-party accreditation program;
    (b) Recognized accreditation bodies participating in the third-
party accreditation program;
    (c) Auditors/certification bodies submitting applications or 
renewal applications for direct accreditation; and
    (d) Accredited auditors/certification bodies (whether accredited by 
recognized accreditation bodies or by FDA through direct accreditation) 
participating in the third-party accreditation program.


Sec.  1.705  What user fees are established under this subpart?

    (a) The following application fees:
    (1) Accreditation bodies applying for recognition are subject to an 
application fee for the estimated average cost of the work FDA performs 
in reviewing and evaluating applications for recognition of 
accreditation bodies.
    (2) Recognized accreditation bodies submitting renewal applications 
are subject to a renewal application fee for the estimated average cost 
of the work FDA performs in reviewing and evaluating renewal 
applications for recognition of accreditation bodies.
    (3) Auditors/certification bodies applying for direct accreditation 
are subject to an application fee for the estimated average cost of the 
work FDA performs in reviewing and evaluating applications for direct 
accreditation.
    (4) Accredited auditors/certification bodies applying for renewal 
of direct accreditation are subject to an application fee for the 
estimated average cost of the work FDA performs in reviewing and 
evaluating renewal applications for direct accreditation.
    (b) The following annual fees:
    (1) Recognized accreditation bodies are subject to an annual fee 
for the estimated average cost of the work FDA performs to monitor 
performance of recognized accreditation bodies under Sec.  1.633.
    (2) Auditors/certification bodies directly accredited by FDA are 
subject to an annual fee for the estimated average cost of the work FDA 
performs to monitor directly accredited auditors/certification bodies 
under Sec.  1.662.
    (3) Auditors/certification bodies accredited by recognized 
accreditation bodies are subject to an annual fee for the estimated 
average cost of the work FDA performs to monitor auditors/certification 
bodies that are accredited by a recognized accreditation body under 
Sec.  1.662.


Sec.  1.710  How will FDA notify the public about the fee schedule?

    FDA will notify the public of the fee schedule annually prior to 
the beginning of the fiscal year for which the fees apply. Each new fee 
schedule will be adjusted for inflation and improvements in the 
estimates of the cost to FDA of performing relevant work for the 
upcoming year.


Sec.  1.715  When must a user fee required by this subpart be 
submitted?

    (a) Accreditation bodies applying for recognition and auditors/
certification bodies applying for direct accreditation must submit a 
fee concurrently with submitting an application or a renewal 
application.
    (b) Accreditation bodies and auditors/certification bodies subject 
to an annual fee must submit payment within 30 days of receiving 
billing for the fee.


Sec.  1.720  Are user fees under this subpart refundable?

    No. User fees submitted under this subpart are not refundable.


Sec.  1.725  What are the consequences of not paying a user fee under 
this subpart on time?

    (a) An application for recognition or renewal of recognition will 
not be considered complete for the purposes of Sec.  1.631(a) until the 
date that FDA receives the application fee. An application for direct 
accreditation or for renewal of direct accreditation will not be 
considered complete for the purposes of Sec.  1.671(a) until FDA 
receives the application fee.
    (b) A recognized accreditation body that fails to submit its annual 
user fee within 30 days of the due date will have its recognition 
suspended.
    (1) FDA will notify the accreditation body electronically that its 
recognition is suspended. FDA will notify the public of the suspension 
on the Web site described in Sec.  1.690.
    (2) While an accreditation body's recognition is suspended, the 
accreditation body will not be able to accredit additional auditors/
certification bodies. The accreditation of auditors/certification 
bodies that occurred prior to an accreditation body's suspension, as 
well as food or facility certifications

[[Page 43998]]

issued by such auditors/certification bodies, would remain in effect.
    (3) If payment is not received within 90 days of the payment due 
date, FDA will revoke the accreditation body's recognition under Sec.  
1.634(a)(4)(iii), and provide notice of such revocation in accordance 
with Sec.  1.634.
    (c) An accredited auditor/certification body that fails to submit 
its annual fee within 30 days of the due date will have its 
accreditation suspended.
    (1) FDA will notify the auditor/certification body that its 
accreditation is suspended, electronically and in English. FDA will 
notify a recognized accreditation body, electronically and in English, 
if the accreditation of one if its auditors/certification bodies is 
suspended. FDA will notify the public of the suspension on the Web site 
described in Sec.  1.690.
    (2) While an auditor/certification body's accreditation is 
suspended, the auditor/certification body will not be able to issue 
food or facility certifications. A food or facility certification 
issued by an auditor/certification body prior to the suspension of the 
auditor/certification body accreditation will remain in effect.
    (3) If payment is not received within 90 days of the payment due 
date, FDA will withdraw the auditor/certification body's accreditation 
under Sec.  1.664(a)(4), and provide notice of such withdrawal in 
accordance with Sec.  1.664.

    Dated: July 20, 2015.
Leslie Kux,
Associate Commissioner for Policy.
[FR Doc. 2015-18141 Filed 7-23-15; 8:45 am]
 BILLING CODE 4164-01-P