[Federal Register Volume 85, Number 149 (Monday, August 3, 2020)]
[Notices]
[Pages 46666-46669]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-16791]


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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 2021

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) 2021 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, 2020, and will remain in effect through September 
30, 2021.

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.

[[Page 46667]]

    The FY 2021 VQIP user fee will support benefits from October 1, 
2020, through September 30, 2021.

II. Estimating the Average Cost of a Supported Direct FDA Work Hour for 
FY 2021

    FDA is required to estimate 100 percent of its costs for each 
activity in order to establish fee rates for FY 2021. 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 (IT), and other operating 
costs.

A. Estimating the Full Cost per Direct Work Hour in FY 2021

    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 2021 cost. The FY 2021 FDA-wide average cost for payroll (salaries 
and benefits) is $164,103; non-payroll--including equipment, supplies, 
IT, general and administrative overhead--is $94,685; and rent, 
including cost allocation analysis and adjustments for other rent and 
rent-related costs, is $25,386 per paid staff year, excluding travel 
costs.
    Summing the average cost of an FTE for payroll, non-payroll, and 
rent, brings the FY 2021 average fully supported cost to $284,174 per 
FTE, excluding travel costs. FDA will use this base unit fee in 
determining the hourly fee rate for VQIP fees for FY 2021 prior to 
including domestic or foreign travel costs as applicable for the 
activity.
    To calculate an hourly rate, FDA must divide the FY 2021 average 
fully supported cost of $284,174 per FTE by the average number of 
supported direct FDA work hours in FY 2019--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 2019
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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
  23 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 Assignments.   1,160
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    Dividing the average fully supported FTE cost in FY 2021 ($284,174) 
by the total number of supported direct work hours available for 
assignment in FY 2019 (1,160) results in an average fully supported 
cost of $245 (rounded to the nearest dollar), excluding inspection 
travel costs, per supported direct work hour in FY 2021.

B. Adjusting FY 2019 Travel Costs for Inflation To Estimate FY 2021 
Travel Costs

    To adjust the hourly rate for FY 2021, FDA must estimate the cost 
of inflation in each year for FY 2020 and FY 2021. 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 2020 inflation rate to be 2.3964 percent; this rate 
was published in the FY 2020 PDUFA user fee rates notice in the Federal 
Register (August 2, 2019, 84 FR 37882). Utilizing the method set forth 
in section 736(c)(1) of the FD&C Act, FDA has calculated an inflation 
rate of 2.3964 percent for FY 2020 and 1.3493 percent for FY 2021, and 
FDA intends to use these inflation rates to make inflation adjustments 
for FY 2021; the derivation of this rate will be published in the 
Federal Register in the FY 2021 notice for the PDUFA user fee rates. 
The compounded inflation rate for FYs 2020 and 2021, therefore, is 
1.037780 (or 3.7780 percent) (calculated as 1 plus 2.3964 percent times 
1 plus 1.3493 percent).
    The average fully supported cost per supported direct FDA work 
hour, excluding travel costs, of $245 already takes into account 
inflation as the calculation above is based on FY 2021 predicted costs. 
FDA will use this base unit fee in determining the hourly fee rate for 
VQIP fees for FY 2021 prior to including domestic or foreign travel 
costs as applicable for the activity.
    In FY 2019, FDA's Office of Regulatory Affairs (ORA) spent a total 
of $5,569,000 for domestic regulatory inspection travel costs and 
General Services Administration Vehicle costs 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 8,540 CFSAN and CVM domestic 
inspections, which averages a total of $652 per inspection. These 
inspections average 39.35 hours per inspection. Dividing $652 per 
inspection by 39.35 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 costs in FY 2019. To adjust for the $17 
per hour additional domestic cost inflation increases for FY 2020 and 
FY 2021, FDA must multiply the FY 2020 PDUFA inflation rate adjustor 
(1.023964) by the FY 2021 PDUFA inflation rate adjustor (1.013493) 
times the $17 additional domestic cost, which results in an estimated 
cost of $18 (rounded to the nearest dollar) per paid hour in addition 
to $245 for a total of $263 per paid hour ($245 plus $18) for each 
direct hour of work requiring domestic inspection travel. FDA will use 
these rates in charging fees in FY 2021 when domestic travel is 
required.
    In FY 2019, ORA spent a total of $3,506,000 on 463 foreign 
inspection trips related to FDA's CFSAN and CVM field activities 
programs, which averaged a total of $7,572 per foreign inspection trip. 
These trips averaged 3 weeks (or 120 paid hours) per trip. Dividing 
$7,572 per trip by 120 hours per trip results in a total and an 
additional cost of $63 (rounded to the nearest dollar) per paid hour 
spent for foreign inspection travel costs in FY 2019. To adjust $63 for 
inflationary increases in FY 2020 and FY 2021, FDA must multiply it by 
the same inflation factors mentioned previously in this document 
(1.023964 and 1.013493), which results in an estimated cost of $65 
(rounded to the nearest dollar) per paid hour in addition to $245 for a 
total of $310 per paid hour ($245 plus $65) for each direct hour of 
work requiring foreign inspection travel. FDA will use these rates in 
charging fees in FY 2021 when foreign travel is required.

                 Table 2--FSMA Fee Schedule for FY 2021
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                                                           Fee rates for
                      Fee category                            FY 2021
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Hourly rate without travel..............................            $245

[[Page 46668]]

 
Hourly rate if domestic travel is required..............             263
Hourly rate if foreign travel is required...............             310
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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 2021.

            Table 3--FSMA VQIP User Fee Schedule for FY 2021
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                                                          Fee rates for
                      Fee category                           FY 2021
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VQIP User Fee..........................................         $17,000
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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) of 
the FD&C Act, 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 
new VQIP application (including communication provided through the VQIP 
Importer's Help Desk), 28 person-hours to review a returning 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 $2,230 per VQIP importer.
    FDA anticipates that there may be up to one returning VQIP 
applicant and up to 199 new applicants. FDA employees are likely to 
review new VQIP applications from their worksites, so we use the fully 
supported FTE hourly rate excluding travel, $245/hour, to calculate the 
portion of the user fee attributable to those activities: $245/hour x 
(39 hours) = $9,555. FDA employees are likely to review returning VQIP 
applications from their worksites, so we use the fully supported FTE 
hourly rate excluding travel, $245/hour, to calculate the portion of 
the user fee attributable to those activities: $245/hour x (28 hours) = 
$6,860.
    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, $245/hour, to calculate the portion of the user fee 
attributable to those activities: $245/hour x (8 hours) = $1,960. 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, $263/hour, to calculate the portion of the user fee 
attributable to those activities: $263/hour x 8 hours (i.e., one fully 
supported FTE x (1 day onsite x 8 hours)) = $2,104. Therefore, the 
total cost of conducting the domestic performance evaluation of a VQIP 
importer is determined to be $2,104 + $1,960 = $4,064.
    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, $245/hour, to 
calculate the portion of the user fee attributable to those activities: 
$245/hour x (10 hours) = $2,450. 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, $310/hour, 
to calculate the portion of the user fee attributable to those 
activities: $310/hour x 24 hours (i.e., one fully supported FTE x ((2 
travel days x 8 hours) + (1 day onsite x 8 hours))) = $7,440. 
Therefore, the total cost of conducting the foreign performance 
evaluation of a VQIP importer is determined to be $2,450 + $7,440 = 
$9,890.
    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 $2,230 + ($9,555 x 0.995) + ($6,860 x 0.005) + ($4,064 
x 0.8) + ($9,890 x 0.2) = $17,000.

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, 2020, in order 
to be eligible for VQIP participation for the benefit year beginning 
October 1, 2020. 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. (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.

[[Page 46669]]

    When paying by check, bank draft, or U.S. postal money order, 
please include the invoice number in the check stub. Also write the FDA 
post office box number (P.O. Box 979108) on the enclosed check, bank 
draft, or money order. Mail the payment including the invoice number on 
the check stub 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 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: Invoice 
copies do not need to be submitted to FDA with the payments.)

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, 2020, 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, 2020. 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 28, 2020.
Lauren K. Roth,
Associate Commissioner for Policy.
[FR Doc. 2020-16791 Filed 7-29-20; 4:15 pm]
BILLING CODE 4164-01-P