[Federal Register Volume 84, Number 141 (Tuesday, July 23, 2019)]
[Notices]
[Pages 35395-35398]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-15622]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

[Docket No. FDA-2016-N-4119]


Food Safety Modernization Act Third-Party Certification Program 
User Fee Rate for Fiscal Year 2020

AGENCY: Food and Drug Administration, HHS.

ACTION: Notice.

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SUMMARY: The Food and Drug Administration (FDA) is announcing the 
fiscal year (FY) 2020 annual fee rate for recognized accreditation 
bodies and accredited certification bodies, and the fee rate for 
accreditation bodies applying to be recognized in the third-party 
certification program that is authorized by the Federal Food, Drug, and 
Cosmetic Act (FD&C Act), as amended by the FDA Food Safety 
Modernization Act (FSMA). We are also announcing the fee rate for 
certification bodies that are applying to be directly accredited by 
FDA.

DATES: This fee is effective October 1, 2019.

FOR FURTHER INFORMATION CONTACT: Donald Prater, Office of Food Policy 
and Response, Food and Drug Administration, 10903 New Hampshire Ave., 
Bldg. 1, Rm. 3202, Silver Spring, MD 20993, 301-348-3007.

SUPPLEMENTARY INFORMATION:

I. Background

    Section 307 of FSMA (Pub. L. 111-153), Accreditation of Third-Party 
Auditors, amended the FD&C Act to create a new provision, section 808, 
under the same name. Section 808 of the FD&C Act (21 U.S.C. 384d) 
directs FDA to establish a program for accreditation of third-party 
certification bodies \1\ 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 established a system for FDA to 
recognize accreditation bodies to accredit certification bodies, except 
for limited circumstances in which we may directly accredit 
certification bodies to participate in the third-party certification 
program.
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    \1\ For the reasons explained in the third-party certification 
final rule (80 FR 74570 at 74578 to 74579, November 27, 2015), and 
for consistency with the implementing regulations for the third-
party certification program in 21 CFR parts 1, 11, and 16, this 
notice uses the term ``third-party certification body'' rather than 
the term ``third-party auditor'' used in section 808(a)(3) of the 
FD&C Act.
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    Section 808(c)(8) of the FD&C Act directs FDA to establish a 
reimbursement (user fee) program by which we assess fees and require 
reimbursement for the work FDA performs to establish and administer the 
third-party certification program under section 808 of the FD&C Act. 
The user fee program for the third-party certification program was 
established by a final rule entitled ``Amendments to Accreditation of 
Third-Party Certification Bodies To Conduct Food Safety Audits and To 
Issue Certifications To Provide for the User Fee Program'' (81 FR 
90186, December 14, 2016).
    The FSMA FY 2020 third-party certification program user fee rate 
announced in this notice is effective on October 1, 2019, and will 
remain in effect through September 30, 2020.

II. Estimating the Average Cost of a Supported Direct FDA Work Hour for 
FY 2020

    FDA must estimate its costs for each activity in order to establish 
fee rates for FY 2020. In each year, the costs of salary (or personnel 
compensation) and benefits for FDA employees account for between 50 and 
60 percent of the funds available to, and used by, FDA. Almost all of 
the remaining funds (operating funds) available to FDA are used to 
support FDA employees for paying rent, travel, utility, information 
technology, and other operating costs.

A. Estimating the Full Cost per Direct Work Hour in FY 2020

    Full-time Equivalent (FTE) reflects the total number of regular 
straight-time hours--not including overtime or holiday hours--worked by 
employees, divided by the number of compensable hours applicable to 
each fiscal year. Annual leave, sick leave, compensatory time off, and 
other approved leave categories are considered ``hours worked'' for 
purposes of defining FTE employment.
    In general, the starting point for estimating the full cost per 
direct work hour is to estimate the cost of an FTE or paid staff year. 
Calculating an Agency-wide total cost per FTE requires three primary 
cost elements: Payroll, non-payroll, and rent.
    We have used an average of past year cost elements to predict the 
FY 2020 cost. The FY 2020 FDA-wide average cost for payroll (salaries 
and benefits) is $160,885; non-payroll--including equipment, supplies, 
information technology, general and administrative overhead--is 
$92,828; and rent, including cost allocation analysis and adjustments 
for other rent and rent-related costs, is $24,888 per paid staff year, 
excluding travel costs.
    Summing the average cost of an FTE for payroll, non-payroll, and 
rent, brings the FY 2020 average fully supported cost to $278,602 per 
FTE, excluding travel costs. FDA will use this base unit

[[Page 35396]]

fee in determining the hourly fee rate for third-party certification 
user fees for FY 2020 prior to including travel costs as applicable for 
the activity.
    To calculate an hourly rate, FDA must divide the FY 2020 average 
fully supported cost of $278,602 per FTE by the average number of 
supported direct FDA work hours in FY 2018--the last FY for which data 
are available. See table 1.

Table 1--Supported Direct FDA Work Hours in a Paid Staff Year in FY 2018
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Total number of hours in a paid staff year.................        2,080
Less:
  10 paid holidays.........................................          -80
  20 days of annual leave..................................         -160
  10 days of sick leave....................................          -80
  12.5 days of training....................................         -100
  26.5 days of general administration......................         -184
  26.5 days of travel......................................         -212
  2 hours of meetings per week.............................         -104
                                                            ------------
    Net Supported Direct FDA Work Hours Available for              1,160
     Assignments...........................................
------------------------------------------------------------------------

    Dividing the average fully supported FTE cost in FY 2020 ($278,602) 
by the total number of supported direct work hours available for 
assignment in FY 2018 (1,160) results in an average fully supported 
cost of $240 (rounded to the nearest dollar), excluding travel costs, 
per supported direct work hour in FY 2020.

B. Adjusting FY 2018 Travel Costs for Inflation To Estimate FY 2020 
Travel Costs

    To adjust the hourly rate for FY 2020, FDA must estimate the cost 
of inflation in each year for FY 2019 and FY 2020. FDA uses the method 
prescribed for estimating inflationary costs under the Prescription 
Drug User Fee Act (PDUFA) provisions of the FD&C Act (section 736(c)(1) 
(21 U.S.C. 379h(c)(1)), the statutory method for inflation adjustment 
in the FD&C Act that FDA has used consistently. FDA previously 
determined the FY 2019 inflation rate to be 1.7708 percent; this rate 
was published in the FY 2019 PDUFA user fee rates notice in the Federal 
Register 83 FR 37504, August 1, 2018). Utilizing the method set forth 
in section 736(c)(1) of the FD&C Act, FDA has calculated an inflation 
rate of 1.7708 percent for FY 2019 and 2.3964 percent for FY 2020, and 
FDA intends to use this inflation rate to make inflation adjustments 
for FY 2020 for several of its user fee programs; the derivation of 
this rate will be published in the Federal Register in the FY 2020 
notice for the PDUFA user fee rates. The compounded inflation rate for 
FYs 2019 and 2020, therefore, is 1.042096 (or 4.2096 percent) (1 plus 
1.7708 percent times 1 plus 2.3964 percent).
    The average fully supported cost per supported direct FDA work 
hour, excluding travel costs, of $240 already takes into account 
inflation as the calculation above is based on FY 2020 predicted costs. 
FDA will use this base unit fee in determining the hourly fee rate for 
third-party certification program fees for FY 2020 prior to including 
travel costs as applicable for the activity. For the purpose of 
estimating the fee, we are using the travel cost rate for foreign 
travel because we anticipate that the vast majority of onsite 
assessments made by FDA under this program will require foreign travel. 
In FY 2018, the Office of Regulatory Affairs spent a total of 
$3,229,335 on 455 foreign inspection trips related to FDA's Center for 
Food Safety and Applied Nutrition and Center for Veterinary Medicine 
field activities programs, which averaged a total of $7,097 per foreign 
inspection trip. These trips averaged 3 weeks (or 120 paid hours) per 
trip. Dividing $7,097 per trip by 120 hours per trip results in a total 
and an additional cost of $59 (rounded to the nearest dollar) per paid 
hour spent for foreign inspection travel costs in FY 2017. To adjust 
$59 for inflationary increases in FY 2019 and FY 2020, FDA must 
multiply it by the same inflation factor mentioned previously in this 
document (1.042096 or 4.2096 percent), which results in an estimated 
cost of $61 (rounded to the nearest dollar) per paid hour in addition 
to $240 for a total of $301 per paid hour ($240 plus $61) for each 
direct hour of work requiring foreign inspection travel. FDA will use 
these rates in charging fees in FY 2020 when travel is required for the 
third-party certification program.

                 Table 2--FSMA Fee Schedule for FY 2020
------------------------------------------------------------------------
                                                              Fee rates
                        Fee category                         for FY 2020
------------------------------------------------------------------------
Hourly rate without travel.................................         $240
Hourly rate if travel is required..........................          301
------------------------------------------------------------------------

III. Fees for Accreditation Bodies and Certification Bodies in the 
Third-Party Certification Program Under Section 808(c)(8) of the FD&C 
Act

    The third-party certification program assesses application fees and 
annual fees. In FY 2020, the only fees that could be collected by FDA 
under section 808(c)(8) of the FD&C Act are the initial application fee 
for accreditation bodies seeking recognition, the annual fee for 
recognized accreditation bodies, the annual fee for certification 
bodies accredited by a recognized accreditation body, and the initial 
application fee for a certification body seeking direct accreditation 
from FDA. Table 3 provides an overview of the fees for FY 2020.

Table 3--FSMA Third-Party Certification Program User Fee Schedule for FY
                                  2020
------------------------------------------------------------------------
                                                              Fee rates
                        Fee category                         for FY 2020
------------------------------------------------------------------------
Initial Application Fee for Accreditation Body Seeking           $41,328
 Recognition...............................................
Annual Fee for Recognized Accreditation Body...............        1,945
Annual Fee for Accredited Certification Body...............        2,432
Initial Application Fee for a Certification Body Seeking          41,328
 Direct Accreditation from FDA.............................
------------------------------------------------------------------------

A. Application Fee for Accreditation Bodies Applying for Recognition in 
the Third-Party Certification Program Under Section 808(c)(8) of the 
FD&C Act

    Section 1.705(a)(1) (21 CFR 1.705(a)(1)) establishes an application 
fee for accreditation bodies applying for initial recognition that 
represents the estimated average cost of the work FDA performs in 
reviewing and evaluating initial applications for recognition of 
accreditation bodies.
    The fee is based on the 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 as 
the program evolves, FDA will continue to reconsider the estimated 
hours. Based on data we have acquired since starting the program, we 
estimate that it would take, on average, 70 person-hours to review an 
accreditation body's submitted application, 48 person-hours for an 
onsite performance evaluation of the applicant (including travel and 
other steps necessary for a fully supported FTE to complete an onsite 
assessment), and 42 person-hours to prepare a written report 
documenting the onsite assessment.
    FDA employees review applications and prepare reports from their 
worksites, so we use the fully supported FTE hourly rate excluding 
travel, $240/hour, to calculate the portion of the user

[[Page 35397]]

fee attributable to those activities: $240/hour x (70 hours + 42 hours) 
= $26,880. FDA employees will likely travel to foreign countries for 
the onsite performance evaluations because most accreditation bodies 
are anticipated to be located in foreign countries. For this portion of 
the fee we use the fully supported FTE hourly rate for work requiring 
travel, $301/hour, to calculate the portion of the user fee 
attributable to those activities: $301/hour x 48 hours (i.e., two fully 
supported FTEs x ((2 travel days x 8 hours) + (1 day onsite x 8 
hours))) = $14,448. The estimated average cost of the work FDA performs 
in total for reviewing an initial application for recognition for an 
accreditation body based on these figures would be $26,880 + $14,448 = 
$41,328. Therefore, the application fee for accreditation bodies 
applying for recognition in FY 2020 will be $41,328.

B. Annual Fee for Accreditation Bodies Participating in the Third-Party 
Certification Program Under Section 808(c)(8) of the FD&C Act

    To calculate the annual fee for each recognized accreditation body, 
FDA takes the estimated average cost of work FDA performs to monitor 
performance of a single recognized accreditation body and annualizes 
that over the average term of recognition. At this time we assume an 
average term of recognition of 5 years. We also assume that FDA will 
monitor 10 percent of recognized accreditation bodies onsite. As the 
program proceeds, we will adjust the term of recognition as 
appropriate. We estimate that for one performance evaluation of a 
recognized accreditation body, it would take, on average (taking into 
account that not all recognized accreditation bodies would be monitored 
onsite), 33 hours for FDA to conduct records review, 8 hours to prepare 
a report detailing the records review and onsite performance 
evaluation, and 6 hours of onsite performance evaluation (i.e., 10 
percent x 60 hours). Using the fully supported FTE hourly rates in 
table 2, the estimated average cost of the work FDA performs to monitor 
performance of a single recognized accreditation body would be $7,920 
($240/hour x (25 hours + 8 hours)) plus $1,806 ($301/hour x 6 hours), 
which is $9,726. Annualizing this amount over 5 years would lead to an 
annual fee for recognized accreditation bodies of $1,945 for FY 2020.

C. Annual Fee for Certification Bodies Accredited by a Recognized 
Accreditation Body in the Third-Party Certification Program Under 
Section 808(c)(8) of the FD&C Act

    To calculate the annual fee for a certification body accredited by 
a recognized accreditation body, FDA takes the estimated average cost 
of work FDA performs to monitor performance of a single certification 
body accredited by a recognized accreditation body and annualizes that 
over the average term of accreditation. At this time we assume an 
average term of accreditation of 4 years. This fee is based on the 
fully supported FTE hourly rates and estimates of the number of hours 
it would take FDA to perform relevant activities. We estimate that FDA 
would conduct, on average, the same activities, for the same amount of 
time to monitor certification bodies accredited by a recognized 
accreditation body as we would to monitor an accreditation body 
recognized by FDA. Using the fully supported FTE hourly rates in table 
2, the estimated average cost of the work FDA performs to monitor 
performance of a single accredited certification body would be $7,920 
($240/hour x (25 hours + 8 hours)) plus $1,806 ($301/hour x 6 hours), 
which is $9,726. Annualizing this amount over 4 years would lead to an 
annual fee for accredited certification bodies of $2,432 for FY 2020.

D. Initial Application Fee for Certification Bodies Seeking Direct 
Accreditation From FDA in the Third-Party Certification Program Under 
Section 808(c)(8) of the FD&C Act

    Section 1.705(a)(3) establishes an application fee for 
certification bodies applying for direct accreditation from FDA that 
represents the estimated average cost of the work FDA performs in 
reviewing and evaluating initial applications for direct accreditation 
of certification bodies.
    The fee is based on the 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 as 
the program evolves, FDA will reconsider the estimated hours. We 
estimate that it would take, on average, 70 person-hours to review a 
certification body's submitted application, 48 person-hours for an 
onsite performance evaluation of the applicant (including travel and 
other steps necessary for a fully supported FTE to complete an onsite 
assessment), and 42 person-hours to prepare a written report 
documenting the onsite assessment.
    FDA employees are likely to review applications and prepare reports 
from their worksites, so we use the fully supported FTE hourly rate 
excluding travel, $240/hour, to calculate the portion of the user fee 
attributable to those activities: $240/hour x (70 hours + 42 hours) = 
$26,880. FDA employees will likely travel to foreign countries for the 
onsite performance evaluations because most certification bodies are 
anticipated to be located in foreign countries. For this portion of the 
fee we use the fully supported FTE hourly rate for work requiring 
travel, $301/hour, to calculate the portion of the user fee 
attributable to those activities: $301/hour x 48 hours (i.e., two fully 
supported FTEs x ((2 travel days x 8 hours) + (1 day onsite x 8 
hours))) = $14,448. The estimated average cost of the work FDA performs 
in total for reviewing an initial application for direct accreditation 
of a certification body based on these figures would be $26,880 + 
$14,448 = $41,328. Therefore, the application fee for certification 
bodies applying for direct accreditation from FDA in FY 2020 will be 
$41,328.

IV. Estimated Fees for Accreditation Bodies and Certification Bodies in 
Other Fee Categories for FY 2020

    Section 1.705(a) also establishes application fees for recognized 
accreditation bodies submitting renewal applications and certification 
bodies applying for renewal of direct accreditation. Section 1.705(b) 
also establishes annual fees for certification bodies directly 
accredited by FDA.
    Although we will not be collecting these other fees in FY 2020, for 
transparency and planning purposes, we have provided an estimate of 
what these fees would be for FY 2020 based on the fully supported FTE 
hourly rates for FY 2020 and estimates of the number of hours it would 
take FDA to perform relevant activities as outlined in the Final 
Regulatory Impact Analysis for the Third-Party Certification 
Regulation. Table 4 provides an overview of the estimated fees for 
other fee categories.

  Table 4--Estimated Fee Rates for Other Fee Categories Under the FSMA
                    Third-Party Certification Program
------------------------------------------------------------------------
                                                              Estimated
                        Fee category                          fee rates
                                                             for FY 2020
------------------------------------------------------------------------
Renewal application fee for recognized accreditation body..      $24,622
Renewal application fee for directly accredited                   24,622
 certification body........................................

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Annual fee for certification body directly accredited by          19,720
 FDA.......................................................
------------------------------------------------------------------------

V. How must the fee be paid?

    Accreditation bodies seeking initial recognition must submit the 
application fee with the application.
    For recognized accreditation bodies and accredited certification 
bodies, an invoice will be sent annually. Payment must be made within 
30 days of the receipt date. The payment must be made in U.S. currency 
from a U.S. bank by one of the following methods: Wire transfer, 
electronically, check, bank draft, or U.S. postal money order made 
payable to the Food and Drug Administration. The preferred payment 
method is online using an electronic check (Automated Clearing House 
(ACH), also known as eCheck) or credit card (Discover, VISA, 
MasterCard, American Express). Secure electronic payments can be 
submitted using the User Fees Payment Portal at https://userfees.fda.gov/pay or the Pay.gov payment option is available to you 
after you submit a cover sheet. (Note: Only full payments are accepted. 
No partial payments can be made online.) Once you have found your 
invoice, select ``Pay Now'' to be redirected to Pay.gov. Electronic 
payment options are based on the balance due. Payment by credit card is 
available only for balances less than $25,000. If the balance exceeds 
this amount, only the ACH option is available. Payments must be made 
using U.S. bank accounts as well as U.S. credit cards.
    When paying by check, bank draft, or U.S. postal money order, 
please include the invoice number. Also write the FDA post office box 
number (P.O. Box 979108) on the enclosed check, bank draft, or money 
order. Mail the payment and a copy of the invoice to: Food and Drug 
Administration, P.O. Box 979108, St. Louis, MO 63197-9000.
    When paying by wire transfer, it is required that the invoice 
number is included; without the invoice number the payment may not be 
applied. The originating financial institution may charge a wire 
transfer fee. If the financial institution charges a wire transfer fee, 
it is required to add that amount to the payment to ensure that the 
invoice is paid in full. For international wire transfers, please 
inquire with the financial institutions prior to submitting the 
payment. Use the following account information when sending a wire 
transfer: U.S. Department of the Treasury, TREAS NYC, 33 Liberty St., 
New York, NY 10045, Account Name: Food and Drug Administration, Account 
No.: 75060099, Routing No.: 021030004, Swift No.: FRNYUS33.
    To send a check by a courier such as Federal Express, the courier 
must deliver the check and printed copy of the cover sheet to: U.S. 
Bank, Attn: Government Lockbox 979108, 1005 Convention Plaza, St. 
Louis, MO 63101. (Note: This address is for courier delivery only. If 
you have any questions concerning courier delivery, contact U.S. Bank 
at 314-418-4013. This phone number is only for questions about courier 
delivery.)
    The tax identification number of FDA is 53-0196965. (Note: In no 
case should the payment for the fee be submitted to FDA with the 
invoice.)

VI. What are the consequences of not paying this fee?

    The consequences of not paying these fees are outlined in 21 CFR 
1.725. If FDA does not receive an application fee with an application 
for recognition, the application will be considered incomplete and FDA 
will not review the application. If a recognized accreditation body 
fails to submit its annual user fee within 30 days of the due date, we 
will suspend its recognition. If the recognized accreditation body 
fails to submit its annual user fee within 90 days of the due date, we 
will revoke its recognition. If an accredited certification body fails 
to pay its annual fee within 30 days of the due date, we will suspend 
its accreditation. If the accredited certification body fails to pay 
its annual fee within 90 days of the due date, we will withdraw its 
accreditation.

    Dated: July 18, 2019.
Lowell J. Schiller,
Principal Associate Commissioner for Policy.
[FR Doc. 2019-15622 Filed 7-22-19; 8:45 am]
BILLING CODE 4164-01-P