[Federal Register Volume 84, Number 142 (Wednesday, July 24, 2019)]
[Notices]
[Pages 35680-35683]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-15742]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Food and Drug Administration
[Docket No. FDA-2019-N-3406]
Food Safety Modernization Act Voluntary Qualified Importer
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 importers approved to
participate in the Voluntary Qualified Importer Program (VQIP) that is
authorized by the Federal Food, Drug, and Cosmetic Act (FD&C Act), as
amended by the FDA Food Safety Modernization Act (FSMA). This fee is
effective August 1, 2019, and will remain in effect through December
31, 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 302 of FSMA, Voluntary Qualified Importer Program, amended
the FD&C Act to create a new provision, section 806, under the same
name. Section 806 of the FD&C Act (21 U.S.C. 384b) directs FDA to
establish a program to provide for the expedited review and importation
of food offered for importation by importers who have voluntarily
agreed to participate in such program, and a process, consistent with
section 808 of the FD&C Act (21 U.S.C. 384d), for the issuance of a
facility certification to accompany a food offered for importation by
importers participating in the VQIP.
Section 743 of the FD&C Act (21 U.S.C. 379j-31) authorizes FDA to
assess and collect fees from each importer participating in VQIP to
cover FDA's costs of administering the program. Each fiscal year, fees
are to be established based on an estimate of 100 percent of the costs
for the year. The fee rates must be published in a Federal Register
notice not later than 60 days before the start of each fiscal year
(section 743(b)(1) of the FD&C Act). After FDA approves a VQIP
application, the user fee must be paid before October 1, the start of
the VQIP fiscal year, to begin receiving benefits for that VQIP fiscal
year.
The FSMA FY 2020 VQIP user fee rate announced in this notice is
effective on August 1, 2019, and will remain in effect through December
31, 2019. The FY 2020 VQIP user fee will support benefits from October
1, 2019, through September 30, 2020.
II. Estimating the Average Cost of a Supported Direct FDA Work Hour for
FY 2020
Each fiscal year, fees are to be established based on an estimate
of 100 percent of the costs for the year. 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.
[[Page 35681]]
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 fee in
determining the hourly fee rate for VQIP 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
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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
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Net Supported Direct FDA Work Hours Available for 1,160
Assignments................................................
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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 is 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
VQIP fees for FY 2020 prior to including domestic or foreign travel
costs as applicable for the activity. For the purpose of estimating the
fee, we are using the travel cost rate for both domestic and foreign
travel because we anticipate that a portion of onsite assessments made
by FDA under this program will require foreign travel in addition to
domestic travel.
In FY 2018 FDA's Office of Regulatory Affairs (ORA) spent a total
of $6,027,291 for domestic regulatory inspection travel costs and
General Services Administration Vehicle cost related to FDA's Center
for Food Safety and Applied Nutrition (CFSAN) and Center for Veterinary
Medicine (CVM) field activities programs. The total ORA domestic travel
costs spent is then divided by the 9,976 CFSAN and CVM domestic
inspections, which averages a total of $604 per inspection by 35.44
hours per inspection results in a total and an additional cost of $17
(rounded to the nearest dollar) per hour spent for domestic inspection
travel cost in FY 2018. To adjust for the $17 per hour 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 $18 (rounded to
the nearest dollar) per paid hour in addition to $240 for a total of
$258 per paid hour ($240 plus $18) for each direct hour of work
requiring domestic inspection travel. FDA will use these rates in
charging fees in FY 2020 when domestic travel is required.
In FY 2018, the ORA spent a total of $3,229,335 on 455 foreign
inspection trips related to FDA's CFSAN and CVM 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 2018. To adjust $59 for
inflationary increases in FY 2019 and FY 2020, FDA must multiply it by
the same compounded 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 foreign travel is required
for the VQIP.
Table 2--FSMA Fee Schedule for FY 2020
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Fee rates for
Fee category FY 2020
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Hourly rate without travel.............................. $240
Hourly rate if domestic travel is required.............. 258
Hourly rate if foreign travel is required............... 301
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III. Fees for Importers Approved To Participate in the Voluntary
Qualified Importer Program Under Section 743 of the FD&C Act
FDA assesses fees for VQIP annually. Table 3 provides an overview
of the fees for FY 2020.
[[Page 35682]]
Table 3--FSMA VQIP User Fee Schedule for FY 2020
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Fee rates for
Fee category FY 2020
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VQIP User Fee.......................................... $16,681
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Section 743 of the FD&C Act requires that each importer
participating in VQIP pay a fee to cover FDA's costs of administering
the program. This fee represents the estimated average cost of the work
FDA performs in reviewing and evaluating a VQIP importer. At this time,
FDA is not offering an adjusted fee for small businesses. As required
by section 743(b)(2)(B)(iii) of the FD&C Act, FDA previously published
a set of guidelines in consideration of the burden of the VQIP fee on
small businesses and provided for a period of public comment on the
guidelines (80 FR 32136, June 5, 2015). While we did receive some
comments in response, they did not address the questions posed, i.e.,
how a small business fee reduction should be structured, what
percentage of fee reduction would be appropriate, or what alternative
structures FDA might consider in order to indirectly reduce fees for
small businesses by charging different fee amounts to different VQIP
participants. We plan on monitoring costs and collecting data to
determine if, in future fiscal years, we will provide for a small
business fee reduction. Consistent with section 743(b)(2)(B)(iii), we
will adjust the fee schedule for small businesses only through notice
and comment rulemaking.
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, 39 person-hours to review a
VQIP application (including communication provided through the VQIP
Importer's Help Desk), 16 person-hours for an onsite performance
evaluation of a domestic VQIP importer (including travel and other
steps necessary for a fully supported FTE to complete and document an
onsite assessment), and 34 person-hours for an onsite performance
evaluation of a foreign VQIP importer (including travel and other steps
necessary for a fully supported FTE to complete and document an onsite
assessment). Additional costs include maintenance costs of information
technology of administering benefits of the program. These costs are
estimated to be $2,209 per VQIP importer.
FDA employees are likely to review applications 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 (39 hours) = $9,360.
FDA employees will conduct a VQIP inspection to verify the
eligibility criteria and full implementation of the food safety and
food defense systems established in the Quality Assurance Program. A
VQIP importer may be located inside or outside of the United States. We
have used an estimate that up to 20 percent of VQIP importers may be
located outside of the United States.
FDA employees are likely to prepare for and report on the
performance evaluation of a domestic VQIP importer at an FTE's
worksite, 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 (8 hours) = $1,920. For
the portion of the fee covering onsite evaluation of a domestic VQIP
importer, we use the fully supported FTE hourly rate for work requiring
domestic travel, $258/hour, to calculate the portion of the user fee
attributable to those activities: $258/hour x 8 hours (i.e., one fully
supported FTE x (1 day onsite x 8 hours)) = $2,064. Therefore, the
total cost of conducting the domestic performance evaluation of a VQIP
importer is determined to be $2,064 + $1,920 = $3,984.
Coordination of the onsite performance evaluation of a foreign VQIP
importer is estimated to take place at an FTE's worksite, 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 (10 hours) = $2,400. For the portion of the fee covering
onsite evaluation of a foreign VQIP importer, we use the fully
supported FTE hourly rate for work requiring foreign travel, $301/hour,
to calculate the portion of the user fee attributable to those
activities: $301/hour x 24 hours (i.e., one fully supported FTE x ((2
travel days x 8 hours) + (1 day onsite x 8 hours))) = $7,224.
Therefore, the total cost of conducting the foreign performance
evaluation of a VQIP importer is determined to be $2,400 + $7,224 =
$9,624.
Therefore, the estimated average cost of the work FDA performs in
total for approving an application for a VQIP importer based on these
figures would be $2,209 + $9,360 + ($3,984 x 0.8) + ($9,624 x 0.2) =
$16,681.
IV. How must the fee be paid?
An invoice will be sent to VQIP importers approved to participate
in the program. Payment must be made prior to October 1, 2019, in order
to be eligible for VQIP participation for the benefit year beginning
October 1, 2019. FDA will not refund the VQIP user fee for any reason.
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, which 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.
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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.)
V. What are the consequences of not paying this fee?
The consequences of not paying these fees are outlined in Section J
of ``FDA's Voluntary Qualified Importer Program; Guidance for
Industry'' document (available at https://www.fda.gov/media/92196/download). If the user fee is not paid before October 1, a VQIP
importer will not be eligible to participate in VQIP. For the first
year a VQIP application is approved, if the user fee is not paid before
October 1, 2019, you are not eligible to participate in VQIP. If you
subsequently pay the user fee, FDA will begin your benefits after we
receive the full payment. The user fee may not be paid after December
31, 2019. For a subsequent year, if you do not pay the user fee before
October 1, FDA will send a Notice of Intent to Revoke your
participation in VQIP. If you do not pay the user fee within 30 days of
the date of the Notice of Intent to Revoke, we will revoke your
participation in VQIP.
Dated: July 19, 2019.
Lowell J. Schiller,
Principal Associate Commissioner for Policy.
[FR Doc. 2019-15742 Filed 7-23-19; 8:45 am]
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