[Federal Register Volume 85, Number 178 (Monday, September 14, 2020)]
[Proposed Rules]
[Pages 56538-56548]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-17340]


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DEPARTMENT OF AGRICULTURE

Food Safety and Inspection Service

9 CFR Parts 352, 354, and 412

[Docket No. FSIS-2019-0019]
RIN 0583-AD78


Prior Label Approval System: Expansion of Generic Label Approval

AGENCY: Food Safety and Inspection Service, USDA.

ACTION: Proposed rule.

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SUMMARY: The Food Safety and Inspection Service (FSIS) is proposing to 
amend its inspection regulations to expand the circumstances under 
which FSIS will generically approve the labels of meat, poultry, and 
egg products. FSIS is also proposing to cease evaluating generically 
approved labels submitted to FSIS for review.

DATES: Submit comments on or before November 13, 2020.

ADDRESSES: FSIS invites interested persons to submit comments on this 
document. Comments may be submitted by one of the following methods:
     Federal eRulemaking Portal: This website provides 
commenters the ability to type short comments directly into the comment 
field on the web page or to attach a file for lengthier comments. Go to 
http://www.regulations.gov. Follow the on-line instructions at that 
site for submitting comments.
     Mail, including CD-ROMs, etc.: Send to Docket Clerk, U.S. 
Department of Agriculture, Food Safety and Inspection Service, 1400 
Independence Avenue SW, Mailstop 3758, Room 6065, Washington, DC 20250-
3700.
     Hand or Courier-Delivered Submittals: Deliver to 1400 
Independence Avenue SW, Room 6065, Washington, DC 20250-3700.
    Instructions: All items submitted by mail or electronic mail must 
include the Agency name and docket number FSIS-2019-0019. Comments 
received in response to this docket will be made available for public 
inspection and posted without change, including any personal 
information, to http://www.regulations.gov.
    Docket: For access to background documents or comments received, 
call (202) 720-5627 to schedule a time to visit the FSIS Docket Room at 
1400 Independence Avenue SW, Room 6065, Washington, DC 20250-3700.

FOR FURTHER INFORMATION CONTACT: Rachel Edelstein, Acting Assistant 
Administrator, Office of Policy and Program Development, by telephone 
at (202) 720-0399.

SUPPLEMENTARY INFORMATION:

Executive Summary

    To prevent the introduction of adulterated or misbranded products 
into commerce, the Food Safety and Inspection Service (FSIS) implements 
a prior approval program for labels intended to be used on federally 
inspected meat, poultry, and egg products (9 CFR part 412). Without 
approved labels, these products may not be sold, offered for sale, or 
otherwise distributed in commerce.
    Certain categories of labels or renderings of such labels (sketch 
labels) must be submitted to FSIS for review and approval before use. 
However, FSIS considers certain labels that comply with the Agency's 
labeling rules to be ``generically'' approved. Such labels are not 
submitted to FSIS, because they are deemed approved and may be applied 
to product in commerce.
    Generic label approval has been in place in some form since 1983. 
FSIS has previously expanded the categories of labeling claims eligible 
for generic approval, most recently in 2013 (78 FR 66826, November 7, 
2013). FSIS has also published a proposed rule that, if finalized as 
proposed, would permit generic approval for egg product labels (83 FR 
6314, February 13, 2018). FSIS is now proposing to expand the

[[Page 56539]]

categories of meat, poultry, and egg product labels that it will deem 
generically approved and thus not required to be submitted to FSIS. 
Specifically, under this proposal the following labels would no longer 
need to be submitted to FSIS for approval: (1) Labels on products for 
export that deviate from FSIS requirements; (2) labels that list 
ingredients in the ingredients statement as being certified ``organic'' 
(e.g., organic garlic) under the Agricultural Marketing Service (AMS) 
National Organic Program; (3) labels that display geographic landmarks, 
such as a foreign country's flag, monument, or map; (4) labels that 
make ``negative'' claims identifying the absence of certain ingredients 
or types of ingredients (e.g., statements such as ``No MSG Added,'' 
``Preservative Free,'' ``No Milk,'' ``No Pork,'' or ``Made Without 
Soy''); and (5) labels of products that receive voluntary FSIS 
inspection (e.g., exotic species under 9 CFR part 352). Finally, FSIS 
is proposing to cease evaluating labels submitted to FSIS that are 
eligible for generic approval.
    These reforms would result in an estimated 33.8 percent reduction 
in label submissions (based on fiscal year 2019 data) and reduce Agency 
costs expended to evaluate the labels (see Table 1). There will not be 
any negative food safety impacts from this proposal, based on FSIS's 
experience evaluating these types of labels and the ability of 
inspection personnel to continue to verify labeling requirements in the 
field.
    There is no cost burden for the industry or FSIS for the proposed 
rule. This is shown in Table 1 below, which summarizes the costs and 
benefits of the proposed rule. Industry would experience cost savings 
of $468,864, annualized at the 7 percent discount rate over 10 years, 
from the reduction in preparing and submitting certain labels for FSIS 
evaluation. FSIS would experience cost savings of $235,690, annualized 
at the 7 percent discount rate over 10 years, from the reduction in 
label evaluations.

                                Table 1--Summary of Annualized Costs and Benefits
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                                                                       Costs       Cost savings    Net benefits
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Industry........................................................              $0        $468,864        $468,864
Agency..........................................................               0         235,690         235,690
                                                                 -----------------------------------------------
    Total.......................................................               0         704,554         704,554
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Note: Estimates are annualized using a 7 percent discount rate over 10 years.

Table of Contents

I. Background
    A. Current Label Regulations
    B. Current Prior Label Approval System
    C. Generic Label Approval
II. Proposed Rule
III. Surveillance and Enforcement
IV. Executive Orders 12866 and 13563
V. Regulatory Flexibility Act Assessment
VI. Executive Order 13771
VII. Paperwork Reduction Act
VIII. E-Government Act
IX. Executive Order 12988
X. Executive Order 13175
XI. USDA Non-Discrimination Statement
XII. Environmental Impact
XIII. Congressional Review Act
XIV. Additional Public Notification

I. Background

    The Federal Meat Inspection Act (FMIA) (21 U.S.C. 601 et seq.), 
Poultry Products Inspection Act (PPIA) (21 U.S.C. 451 et seq.), and Egg 
Products Inspection Act (EPIA) (21 U.S.C. 1031 et seq.) direct the 
Secretary of Agriculture to maintain inspection programs designed to 
ensure that meat, poultry, and egg products are safe, wholesome, not 
adulterated, and properly marked, labeled, and packaged. These laws 
prohibit the sale of products under any false or misleading name, 
marking, or labeling and require the Secretary to approve product 
marking and labeling (21 U.S.C. 457(c), 607(d), and 1036(b)). The 
Department's longstanding interpretation of these provisions is that 
they require the Secretary or his or her representative to approve all 
labels to be used on federally inspected and passed, domestic and 
imported, meat, poultry and egg products, before the products may be 
distributed in commerce.
    To implement these provisions, FSIS uses a prior approval program 
for labels on federally inspected meat, poultry, and egg products (9 
CFR part 412). Without approved labels, meat, poultry, and egg products 
may not be sold, offered for sale, or otherwise distributed in 
commerce.

A. Current Label Regulations

    The meat, poultry, and egg products labeling regulations require 
that meat, poultry, and egg products are truthfully labeled, and that 
the labeling provides the necessary product information for consumers 
to make informed purchasing decisions.
    There are up to eight features required on meat, poultry, and egg 
product labels. The required features include: (1) The standardized, 
common or usual, or descriptive name, of the product (9 CFR 317.2(e), 
381.117, and 590.411(c)(1)); (2) an ingredients statement containing 
the common or usual name of each ingredient of the product listed in 
descending order of predominance (9 CFR 317.2(f), 381.118, and 
590.411(c)(1)); (3) the name and place of business of the manufacturer, 
packer, or distributor (9 CFR 317.2(g), 381.122, and 590.411(c)(2)); 
(4) an accurate statement of the net quantity of contents (9 CFR 
317.2(h), 381.121, and 590.411(c)(4)); (5) the inspection legend, 
including the number of the official establishment (9 CFR 312.2(b), 
317.2(i), 381.96, 381.123, and 590.411(c)(5)); (6) a handling statement 
if the product is perishable, e.g., ``Keep Frozen'' or ``Keep 
Refrigerated'' (9 CFR 317.2(k), 381.125(a), and 590.410(a)(1)-(2)); (7) 
nutrition labeling for applicable meat and poultry products (9 CFR part 
317, subpart B; part 381, subpart Y; and 590.411(e)); \1\ and (8) safe 
handling instructions if the meat or poultry component of the product 
is not ready-to-eat (9 CFR 317.2(l) and 381.125(b)). In addition, 
imported meat, poultry, and egg products must bear the country of 
origin under the product name (9 CFR 327.14(b)(1), 381.205(a), and 
590.950(a)(2)).
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    \1\ Nutrition labeling for egg products must comply with the 
provisions of 21 CFR part 101, promogulated under the Federal Food, 
Drug, and Cosmetic Act and the Fair Packaging and Labeling Act [9 
CFR 590.411(e)].
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    These required features must appear on the immediate containers of 
domestic products (9 CFR part 317, subpart A, and part 381, subpart N) 
and imported products (9 CFR part 327 and part 381, subpart T; 
590.411(c); and 590.950(a)). The meat inspection regulations define an 
``immediate container'' as ``the receptacle or other covering in which 
any product is directly contained or wholly or partially enclosed'' (9 
CFR 301.2). The EPIA and poultry products inspection regulations define 
an ``immediate container'' as ``any consumer package; or any other 
container in which poultry products,

[[Page 56540]]

not consumer packaged, are packed'' (21 U.S.C. 1033(d)(1) and 9 CFR 
381.1(b)).
    The principal display panel, information panel, or other surface of 
the product label must prominently display the mandatory features. The 
first six features described above, and the labeling of country of 
origin for imported products in accordance with 9 CFR 327.14 and 
381.205, have been required by the meat and poultry inspection 
regulations for decades. FSIS published regulations that require the 
nutrition labeling of cooked or heat-treated multi-ingredient meat and 
poultry products and the display of safe handling instructions in 1993 
and 1994, respectively. Given industry's familiarity with these 
requirements, FSIS typically finds establishments in compliance with 
its labeling regulations.
    The regulations contain other provisions to ensure that no 
statement, word, picture, design, or device that is false or misleading 
in any particular, or that conveys any false impression, or that gives 
any false indication of origin, identity, or quality, appears in any 
marking or other labeling (9 CFR 317.8, 381.129, and 590.411(f)(1)). 
Pursuant to the authority contained in section 7(e) of the FMIA (21 
U.S.C. 607(e)), section 8(d) of the PPIA (21 U.S.C. 457(d)), and 
section 7(b) of the EPIA (21 U.S.C. 1036(b)), the Administrator of FSIS 
may withhold the use of any marking or labeling that is false or 
misleading, within the meaning of the FMIA, PPIA, and EPIA and their 
implementing regulations.

B. Current Prior Label Approval System

    Under the current regulations, FSIS evaluates sketches of some 
labels for approval, and approves others generically, i.e., without 
submission to FSIS for sketch approval. A sketch label is a printer's 
proof or other version that clearly shows all required label features, 
size, location, and indication of final color (9 CFR 412.1(d)). To 
obtain sketch label approval, domestic meat and poultry establishments, 
egg product plants, and certified foreign establishments that are 
eligible to export product to the United States, or their 
representatives, are required to submit sketch labels to FSIS for 
evaluation, except when the label is generically approved by the Agency 
under 9 CFR 412.2.
    These firms submit sketch labels accompanied by FSIS Form 7234-1 
(11/16/2011), ``Application for Approval of Labels, Marking or 
Device,'' to the Agency for evaluation. In addition to the required 
label information, any special claims or statements that the 
establishment intends to make (e.g., quality claims, animal production 
raising claims, product origin claims, or nutrient content claims) must 
be included on the label, along with documentation supporting the 
claim. The label application must contain the basic information about 
the establishment and the product, including:
    1. Establishment number;
    2. Product name;
    3. Product formulation;
    4. Processing procedures and handling information;
    5. Firm name and address;
    6. Total available labeling space of the container;
    7. Size of the principal display panel; and
    8. The Hazard Analysis and Critical Control Point category under 
which the establishment is producing the meat or poultry product.
    FSIS's Labeling and Program Delivery Staff (LPDS), in the Office of 
Policy and Program Development (OPPD), verifies that sketch labels 
comply with the applicable requirements. Since July 1, 1996, a final 
version of a verified sketch label does not have to be submitted to the 
Agency for evaluation and approval (60 FR 67444, December 29, 1995).\2\ 
All labels are subject to verification for compliance with Agency 
regulations by FSIS inspectors to ensure that they are accurate, 
truthful, and not misleading.
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    \2\ On February 13, 2018 FSIS published the Egg Products 
Inspection Regulations proposed rule (83 FR 6314). If the rule is 
finalized as proposed, FSIS will also not require submission of 
final versions of sketch labels for egg products.
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C. Generic Label Approval

    FSIS allows certain meat, poultry, and egg product labels that bear 
all required labeling features and that comply with the Agency's 
labeling regulations to be generically approved (9 CFR 412.2(a)(1)). 
Generically approved labels do not need to be submitted to FSIS for 
sketch approval before they can be used on products in commerce. 
Generic label approval requires that all mandatory label features are 
prominent and conform to FSIS regulations. Although such labels are not 
submitted to FSIS for approval, they are deemed to be approved and, 
therefore, may be applied to product in accordance with the Agency's 
prior label approval system.
    Generic label approval has been in place in some form since 1983. 
That year, FSIS promulgated regulations that granted limited label 
approval authority to Inspectors-In-Charge (IICs) at official 
establishments and provided generic approval to limited types of labels 
(e.g., labels for raw, single ingredient meat and poultry products) (48 
FR 11410, March 18, 1983). The rulemaking's intent was to reduce the 
number of labels and other materials submitted for FSIS evaluation and 
to ease the paperwork burden on official establishments.
    Even with the changes made by the rule, the number of labels 
submitted to the Agency continued to grow. During fiscal year 1991, the 
Agency processed approximately 167,500 labels. Of these, FSIS approved 
approximately 87,500 final labels and 60,000 sketch labels. FSIS 
disapproved approximately 20,000 labels.
    On December 29, 1995, FSIS published a final rule that outlined the 
types of labels and modifications to labels that were deemed to be 
approved without submission to FSIS, provided that the label displayed 
all mandatory label features in conformance with applicable Federal 
regulations (60 FR 67444). The following labeling was deemed 
generically approved in that final rule: Labels on products with a 
standard of identity specified in FSIS regulations or Food Standards 
and Labeling Policy Book \3\ (``Policy Book''); labels for raw, single-
ingredient products that do not bear special claims; labels for 
containers of meat and poultry products sold under contract 
specifications to the Federal Government; labels for shipping 
containers that contain fully labeled immediate containers; labels for 
products not intended for human food (e.g., for the pharmaceutical 
industry) and for poultry heads and feet to be exported for processing 
as human food, provided specific regulatory requirements are met; meat 
and poultry inspection legends that comply with 9 CFR parts 312, 316, 
and 381, subpart M; labeling on inserts, tags, liners, posters, and 
like devices that are not misleading and do not reference products; 
labels for consumer test products not intended for sale; and labels 
that were previously sketch approved by FSIS and contain no 
modifications or only certain listed modifications.
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    \3\ Available at: https://www.fsis.usda.gov/wps/portal/fsis/topics/regulatory-compliance/labeling/Labeling-Policies.
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    The 1995 final rule also transferred responsibility for maintaining 
labeling records from IICs to official establishments in the United 
States and to foreign establishments certified as meeting U.S. 
requirements under foreign inspection systems. For labels that still 
required FSIS review, the final rule removed the requirement that firms 
submit final labels for FSIS approval; thus, today, firms must only 
submit

[[Page 56541]]

sketch labels. In the preamble to the 1995 final rule, FSIS stated that 
it intended to expand generic labeling after it completed an assessment 
of the modified system (60 FR 67444, 67448).
    As explained in the preamble to the 2011 rule, FSIS completed this 
assessment in 1998 (76 FR 75809, December 5, 2011). FSIS surveyed 
industry to measure the effects of the generic approval program and 
sampled 1,513 labels for compliance with Federal regulations and 
policies. FSIS concluded that the great majority of establishments 
effectively used generically approved labels and that the gradual 
implementation of generic label provisions under the 1995 final rule 
was effective.
    In 2011, FSIS published a proposed rule to replace the extensive 
list of generically approved meat and poultry labeling with a simpler 
set of label categories required to be submitted for Agency approval. 
FSIS proposed to require submission of: Labels for temporary approval, 
labels for products produced under religious exemption, labels for 
export with labeling deviations, and labeling with special statements 
and claims (76 FR 75809). FSIS also proposed to combine the label 
approval regulations for meat and poultry products (9 CFR 317.4 and 
381.132) into a new part, 9 CFR part 412.
    FSIS finalized the 2011 proposed rule on November 7, 2013 (78 FR 
66826). The final rule codified the labeling categories and combined 
the meat and poultry labeling regulations as proposed. However, upon 
consideration of comments, FSIS finalized the rule with four changes 
(78 FR 66826, 66827). First, FSIS decided to continue to review generic 
labels that establishments voluntarily submit for approval; but, the 
Agency also made clear that such labels would receive lower review 
priority than non-generic labels. Second, FSIS clarified that special 
statements or claims (except for ``natural'' and negative claims) that 
are defined in FSIS's regulations or in the Policy Book are deemed to 
be generically approved. Third, FSIS determined that a label bearing a 
child-nutrition (CN) box will not be considered to have a special 
statement or claim on it that would require sketch approval by FSIS 
because such information was evaluated for approval by AMS. Finally, 
the Agency stated that it would no longer add new entries to the Policy 
Book; however, already existing entries may be revised or removed.
    In the regulatory text of the 2013 final rule, FSIS stated that it 
would assess compliance by selecting samples of generically approved 
labels from establishments [9 CFR 412.2(a)(2)]. Additionally, after the 
final rule was published, FSIS received questions about the 
effectiveness of generic approval. To address these concerns and to 
establish a protocol for the future national assessment, the FSIS 
Office of Policy and Program Development (OPPD) conducted a limited 
assessment of labels.
    OPPD conducted this assessment over a three-week period in 
September 2016.\4\ Labeling policy experts traveled to five Federal 
meat and poultry establishments within the commuting area of FSIS 
headquarters in Washington, DC. Both large and small establishments 
were visited, including at least one corporation. In each 
establishment, the labeling policy experts assessed compliance of a 
representative sample of the generically approved label records on 
file. At the close of each assessment, the labeling policy experts held 
a closeout meeting with the FSIS inspection personnel and the 
establishment management. At this meeting, the labeling policy experts 
explained any deficiencies, determined if temporary approval was needed 
for deficient labels, and made recommendations for changes in the 
establishment's generic label approval and records management process. 
An assessment summary letter of this closeout meeting was provided to 
the establishment, inspection personnel, and the FSIS Office of Field 
Operations District Manager.
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    \4\ Methodology available at: https://www.fsis.usda.gov/wps/portal/fsis/topics/regulatory-compliance/labeling/labeling-policies/assessment-generically-approved-label.
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    This assessment found a high level of compliance with the 
requirements. During examination of 270 labels, FSIS identified only 
three labels with deficiencies necessitating label revocation, and none 
of these deficiencies involved food safety. During the closing meetings 
with establishments, inspection and industry personnel determined that 
more outreach would significantly improve compliance. FSIS has 
initiated more outreach regarding labeling requirements, as discussed 
later in this document.
    On February 13, 2018, FSIS published the proposed rule, Egg 
Products Inspection Regulations (83 FR 6314). This rule proposed 
several changes to FSIS's egg product inspection program, one of which 
adopted by reference FSIS's generic label approval regulation into the 
egg products regulations (9 CFR 590.412). If the rule is finalized as 
proposed, egg products will be eligible for generic approval of product 
labels on the same basis as meat and poultry product labels.

II. Proposed Rule

    Since the 2013 rulemaking that established the categories of labels 
requiring sketch approval, FSIS has gained significant, additional 
experience evaluating labels required to be submitted and approved. 
From that experience, the Agency has concluded that the current label 
regulations continue to require industry to submit for approval a 
significant number of labels that could successfully be generically 
approved. FSIS is therefore proposing changes to its regulations to 
reduce the number of labels submitted for evaluation by FSIS and to 
lessen the paperwork burden on official establishments. The reduction 
in staff time spent approving these labels would allow the Agency to 
better focus on other consumer protection and food safety activities, 
such as developing guidance materials, answering labeling policy 
questions, providing outreach to stakeholders, and ensuring inspection 
program personnel (IPP) effectively verify that establishments meet 
labeling requirements. All labels used at official establishments would 
still be subject to FSIS verification activities in the field. These 
activities are further described in the section III. ``Surveillance and 
Enforcement'' below.
    First, FSIS is proposing to extend generic label approval to 
products only intended for export that deviate from domestic labeling 
requirements, by removing 9 CFR 412.1(c)(2). FSIS maintains an Export 
Library that lists requirements for exported products that foreign 
authorities have officially communicated to FSIS, including labeling 
requirements.\5\ At times, foreign country labeling requirements 
conflict with domestic requirements. FSIS regulations (9 CFR 317.7 and 
381.128) permit export product labels to deviate from FSIS's domestic 
labeling requirements in order to comply with foreign country 
requirements or to be marketed more easily in a foreign country.\6\ 
FSIS IPP verify whether product for export meets requirements listed in 
the Export Library, including

[[Page 56542]]

labeling, when certifying products for export. Verification of foreign 
requirements is ultimately determined by each foreign country's 
competent authority.
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    \5\ The Export Library is available at: https://www.fsis.usda.gov/wps/portal/fsis/topics/international-affairs/exporting-products/export-library-requirements-by-country.
    \6\ Although there is no specific equivalent regulation for egg 
products, FSIS follows the same policy because such products, 
intended exclusively for export, must comply with foreign countries' 
requirements and are therefore not considered misbranded.
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    Second, FSIS is proposing to revise the types of ``special 
statements and claims'' requiring label submission by providing for 
generic approval of three additional types of claims. FSIS has observed 
through its prior label approval system that errors, omissions, and 
misrepresentations are rare on these types of labels. The proposed 
changes are to be made by amending 9 CFR 412.1(e) and 412.2(b).
    The following types of claims would be generically approved:
    a. ``Organic'' claims that appear in a product label's ingredients 
statement, which designate an ingredient as certified ``organic'' under 
AMS's National Organic Program. The ingredients statement on these 
product labels designates specific ingredients as organic (e.g., 
organic garlic). FSIS would no longer require the submission and 
evaluation of supporting documentation to verify that such ingredients 
are indeed certified as organic by an AMS-recognized third-party 
certifier. However, FSIS would continue to require that labels 
certifying a total product as organic to be submitted for FSIS 
evaluation.
    b. ``Geographic landmarks'' displayed on a product label, such as a 
foreign country's flag, monument, or map. For example, the following 
claims displayed on a product label would no longer require sketch 
approval: A polish flag depicted on a Polish sausage product label, or 
an outline of the State of Nevada depicted on a product label for beef 
produced in Nevada.
    c. ``Negative'' claims made on product labels that identify the 
absence of certain ingredients or types of ingredients. For example, 
statements such as ``No MSG Added,'' ``Preservative Free,'' ``No 
Milk,'' ``No Pork,'' or ``Made Without Soy,'' on product labels that do 
not list these ingredients in the ingredients statement would no longer 
have to be evaluated by FSIS before use. However, FSIS evaluation of 
labels that bear negative claims relating to the raising of the animal 
from which the product is derived (e.g., ``no antibiotics 
administered'') or negative claims relating to the use of genetically 
modified ingredients would continue to be required.
    Third, FSIS is proposing to permit generic approval of the labels 
of products that receive voluntary FSIS inspection. FSIS provides 
several types of voluntary inspection services under the authority of 
the Agricultural Marketing Act (AMA) (7 U.S.C. 1621 et seq.), including 
inspection for: Rabbits (9 CFR part 354), certain non-amenable species 
of livestock and poultry animals, such as elk, bison, and migratory 
water fowl (9 CFR part 352, subpart A, and 9 CFR part 362); and 
products containing meat or poultry but are not under FSIS 
jurisdiction, e.g., closed-faced sandwiches (9 CFR 350(c)). At present, 
labels for some products produced under these voluntary inspection 
programs are not covered under the Agency's generic approval 
regulations at 9 CFR 412. FSIS is proposing to permit generic approval 
for them on the same basis as amenable meat, poultry, and egg products 
by amending the relevant program regulations where needed to include 
references to 9 CFR part 412.\7\ For clarity, FSIS will also modify 9 
CFR 352.1 to update the section heading and remove unnecessary 
language.
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    \7\ The regulations providing for voluntary inspection of non-
FSIS-jurisdiction products that contain meat or poultry (9 CFR 
350(c)) and products containing non-amenable species of poultry (9 
CFR part 362) already adopt 9 CFR part 412 by reference. For this 
reason, FSIS does not need to make additional regulatory changes to 
these parts in order to permit generic approval of labels for 
products receiving these services.
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    Finally, FSIS is proposing to cease evaluating generically approved 
labels submitted voluntarily to LPDS for review. In the 2013 rulemaking 
that expanded the categories of labels eligible for generic approval, 
commenters requested to be allowed to continue submitting generic 
labels for FSIS guidance, evaluation, and approval. FSIS agreed to 
continue evaluating generic labels that were submitted, giving such 
labels secondary priority after labels requiring evaluation. Since the 
2013 final rule, producers have become more familiar with FSIS's 
generic labeling requirements, and FSIS has provided additional 
guidance to assist them in designing compliant labels. Therefore, 
FSIS's evaluation of otherwise generic labels no longer represents an 
efficient use of Agency resources.
    Comprehensive labeling guidance, including the FSIS Compliance 
Guideline for Label Approval,\8\ is available at FSIS's website.\9\ 
Information available includes a PowerPoint presentation titled 
``Labeling 101,'' \10\ which is used by the Agency as a teaching tool 
at workshops on meat and poultry label requirements. FSIS also provides 
guidance on allergen labeling and nutrition labeling,\11\ a Label 
Submission Checklist,\12\ a glossary of meat and poultry labeling 
terms,\13\ the Policy Book, and questions and answers on various 
topics, such as generic approval, and the labeling of ingredients.\14\
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    \8\ Available at: https://www.fsis.usda.gov/wps/wcm/connect/bf170761-33e3-4a2d-8f86-940c2698e2c5/Label-Approval-Guide.pdf?MOD=AJPERES.
    \9\ Available at: https://www.fsis.usda.gov/wps/portal/fsis/topics/regulatory-compliance/labeling.
    \10\ Available at: https://www.fsis.usda.gov/wps/portal/fsis/topics/regulatory-compliance/labeling/labeling-policies/basics-of-labeling/basics-labeling.
    \11\ Available at: https://www.fsis.usda.gov/wps/portal/fsis/topics/regulatory-compliance/labeling/labeling-policies/nutrition-labeling-policies/nutrition-labeling.
    \12\ Available at: https://www.fsis.usda.gov/wps/portal/fsis/topics/regulatory-compliance/labeling/labeling-procedures/label-submission-checklist.
    \13\ Available at: https://www.fsis.usda.gov/wps/portal/fsis/topics/food-safety-education/get-answers/food-safety-fact-sheets/food-labeling/meat-and-poultry-labeling-terms/meat-and-poultry-labeling-terms.
    \14\ Available at: https://www.fsis.usda.gov/wps/wcm/connect/bf170761-33e3-4a2d-8f86-940c2698e2c5/Label-Approval-Guide.pdf?MOD=AJPERES.
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    FSIS will continue to conduct outreach to assist label submitters 
with labeling compliance in the form of webinars, industry group 
meetings, training for inspectors, guidance documents published on the 
FSIS website, and archived public askFSIS questions. Additionally, FSIS 
provides significant resources to assist label submitters on labels 
that require FSIS approval prior to use. These include askFSIS, a web 
portal that allows industry, IPP, and other stakeholders to submit 
technical and policy-related questions directly to OPPD.\15\ 
Establishments may also contact FSIS for assistance with labeling 
questions. FSIS offers resources to assist small and very small plants, 
including the Small Plant Help Desk, which may be contacted by phone or 
email and answers questions on FSIS requirements.\16\
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    \15\ Available at: https://askfsis.custhelp.com/. See also, FSIS 
Directive 5620.1 Rev. 1, Using askFSIS, available at: https://www.fsis.usda.gov/wps/portal/fsis/topics/regulations/directives.
    \16\ The latest information on these resources is available at: 
https://www.fsis.usda.gov/wps/portal/fsis/topics/regulatory-compliance/haccp/resources-and-information/svsp-brochure.
---------------------------------------------------------------------------

    In June 2020, the USDA Office of Inspector General (OIG) concluded 
an audit of FSIS product labeling oversight (OIG audit #24601-0002-23, 
``Controls Over Meat, Poultry, and Egg Product Labels'').\17\ In 
response to the audit recommendations concerning FSIS oversight of 
generic labeling, the Agency agreed that it would continue to enhance 
its outreach efforts to ensure establishments are aware of applicable 
mandatory labeling features for generic

[[Page 56543]]

labels. FSIS also agreed to update its internal policies to improve IPP 
label verification activities. Such verification activities are 
described in section III. ``Surveillance and Enforcement'' below. FSIS 
does not believe that the audit's findings or FSIS's responses to the 
audit affect this proposal.
---------------------------------------------------------------------------

    \17\ The audit report is available at: https://www.usda.gov/oig/webdocs/24601-0002-23.pdf.
---------------------------------------------------------------------------

III. Surveillance and Enforcement

    Official establishments are required to label meat, poultry, and 
egg products with labels that are neither false nor misleading and that 
comply with FSIS's regulations. This is true whether the labels require 
sketch approval or may be generically approved. Establishments are 
required to keep records of all labels in accordance with 9 CFR 
320.1(b)(10) for meat products, 9 CFR 381.175(b)(6) for poultry 
products, and 9 CFR 590.200(c) for egg products. These records must 
include a copy of the final label, the product formulation, processing 
procedures, and any supporting documentation needed to show that the 
label complies with the Federal meat, poultry, and egg regulations. 
Such records must be made available to any duly authorized 
representative of the Secretary upon request (9 CFR 320.4 and 
590.200(b)).
    IPP periodically perform a General Labeling Task assigned through 
FSIS's Public Health Inspection System (PHIS) as part of their regular 
label verification activities. This task is described in FSIS Directive 
7221.1, Prior Labeling Approval. It includes verifying that 
establishments maintain records of the selected labels in accordance 
with 9 CFR 320.1(b)(10), 381.175(b)(6), and 590.200(c). IPP also verify 
that final labels applied to product contain all mandatory labeling 
features and are otherwise in compliance with the applicable 
regulations by evaluating establishments' labeling records and the 
labels themselves (e.g., to verify that the ingredients statement on 
the label matches the product formula).
    IPP document in PHIS any noncompliance found, e.g., if a required 
labeling feature is missing or if a label requires LPDS evaluation but 
such evaluation is not documented in the records.\18\ Establishments 
may take corrective action by obtaining label approval through LPDS, 
bringing the labels into compliance with a pressure sensitive sticker, 
or by replacing the noncompliant labels with labels that have received 
prior approval and are in compliance with FSIS's regulations. Final 
labels that are not in compliance with the regulations may still be 
granted temporary approval under the conditions listed in 9 CFR 
412.1(f). IPP will retain any product bearing a label not in compliance 
with regulatory requirements as well as those that require, but have 
not received, LPDS approval. Pursuant to 9 CFR 500.8, FSIS may rescind 
approval of any false or misleading labels.\19\
---------------------------------------------------------------------------

    \18\ If IPP are not performing the General Labeling task but 
observe a product label that is not in compliance with Federal meat 
and poultry regulations, they will initiate a directed General 
Labeling task, retain affected product, and document the 
noncompliance in PHIS as described above.
    \19\ If FSIS rescinds or refuses to approve a label, it must 
explain its reasoning in a written notice, provide an opportunity 
for the establishment to modify the label, and advise the 
establishment of its appeal rights (9 CFR 500.8(b)).
---------------------------------------------------------------------------

    FSIS relies on these verification tasks, in addition to evaluation 
by LPDS, to ensure that meat, poultry, and egg product labels are 
truthful and not misleading. Designating some product labels as 
generically approved, while maintaining inspection activities for all 
labels, promotes the effective use of Agency resources. This expansion 
of generic label approval will not affect consumer protection because 
FSIS will continue to evaluate labeling that has consumer safety or 
economic implications, e.g., special statements and claims and requests 
for temporary approval. For example, FSIS will continue to review 
labeling that claims product is organic or all natural, makes 
statements regarding the raising of the animals from which products 
were derived, displays nutrition factual statements (e.g., 10 g protein 
per serving) on the label, or includes certified claims (e.g., 
``Certified Gluten Free'') on the label.\20\
---------------------------------------------------------------------------

    \20\ For an extensive list of labeling that requires FSIS 
approval, see the FSIS Compliance Guideline for Label Approval. 
Available at: https://www.fsis.usda.gov/wps/wcm/connect/bf170761-33e3-4a2d-8f86-940c2698e2c5/Label-Approval-Guide.pdf?MOD=AJPERES.
---------------------------------------------------------------------------

    FSIS invites public comment on these proposed changes and requests 
data and additional suggestions for ways to make FSIS's generic 
labeling program more effective and efficient. FSIS considered three 
alternatives to this proposal: Taking no action; the proposed rule, 
except industry would still have the option to have LPDS evaluate 
labels that would otherwise be generically approved; and allowing all 
labels to be generically approved. Although FSIS ultimately decided on 
the current proposal, the Agency will continue to consider the 
alternatives described below (under the section titled ``Alternative 
Regulatory Approaches'') based on the information received.

IV. Executive Orders 12866 and 13563

    Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess 
all costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). E.O. 
13563 emphasizes the importance of quantifying both costs and benefits, 
of reducing costs, of harmonizing rules, and of promoting flexibility. 
This proposed rule has been designated a ``significant'' regulatory 
action under section 3(f) of E.O. 12866. Accordingly, the rule has been 
reviewed by the Office of Management and Budget under E.O. 12866.

Need for the Rule

    The proposed rule would expand the types of meat, poultry and egg 
product labels that can be generically approved by FSIS. This would 
reduce the number of labels evaluated by FSIS and reduce the costs to 
industry. The labels submitted for FSIS evaluation are becoming more 
complex and more time-consuming for industry to prepare and for FSIS to 
evaluate. The proposed rule would improve the efficiency of the label 
approval system by expanding generic labeling and making the system 
more convenient and cost efficient for the industry. This proposed rule 
also would enhance market efficiency by promoting a faster introduction 
of new products into the marketplace to meet consumer demand.

Baseline

    Based on FSIS's Label Submission and Approval System (LSAS) \21\ 
data, FSIS evaluated 15,459 unique labels during the 2019 fiscal year 
(FY). Of these, 5,229 (33.8 percent) would have been generically 
approved under the proposed rule. This amount (5,229) includes 632 
labels currently eligible for generic approval, which firms voluntarily 
submitted for FSIS review. Many of the 15,459 labels were evaluated by 
FSIS more than once because they were returned to the producer to 
primarily make other types of corrections and then resubmitted for FSIS 
evaluation. FSIS has observed through its prior label approval system 
that corrections on the types of claims FSIS is proposing to 
generically approve are rare. In FY 2019, there were 26,158

[[Page 56544]]

label adjudications, which included each time a label was evaluated. 
See Table 2 below for additional details.
---------------------------------------------------------------------------

    \21\ FSIS's Label Submission and Approval System (LSAS) is a 
web-based software application that integrates and implements an 
electronic label application process for establishments to submit 
label applications to FSIS.

                           Table 2--Label Evaluations and Adjudications, FY 2016-2019
                                               [Pre proposed rule]
----------------------------------------------------------------------------------------------------------------
                   FSIS labels                         2016            2017            2018            2019
----------------------------------------------------------------------------------------------------------------
Labels FSIS Would Not have Evaluated Under the             8,534           5,812           6,025           5,229
 Proposed Rule..................................
    Total Labels FSIS Evaluated *...............          22,846          17,958          17,635          15,459
    Total Label Adjudications **................          30,857          25,125          27,580          26,158
----------------------------------------------------------------------------------------------------------------
* This is the total number of labels FSIS evaluated, including the labels that would have been generically
  approved under the proposed rule.
** Label adjudications include some labels being revaluated.

    FSIS expanded the types of labels and label changes that may be 
generically approved several times, starting in 1983 when the Agency 
evaluated 130,000 labels. In 1991, the number of labels evaluated 
peaked at 167,500. The 1995 final rule (60 FR 67444) amended the prior 
label approval process by expanding the types of labels and label 
changes that may be generically approved. From 2003-2010, the number of 
label adjudication per year averaged 57,457, with a minimum of 43,255 
in 2003 and a maximum of 66,061 in 2010. The 2013 final rule (78 FR 
66826, November 7, 2013) further expanded generic labeling, decreasing 
the number of label adjudications to 30,857 in FY 2016 (Table 2). FSIS 
also proposed to permit generic approval for certain egg product labels 
in 2018 (83 FR 6314, February, 13, 2018).
    The number of FSIS label adjudications decreased after the 
expansions of generically approved labels. However, the remaining label 
submissions after each expansion are more time-consuming for industry 
to prepare and for FSIS to evaluate. This is because the labels 
requiring submission after each expansion are generally more complex, 
with special statements or claims that require FSIS to evaluate a 
significant amount of supporting documentation.

Expected Costs of the Proposed Rule

    The proposed rule would not impose any new cost on producers that 
submit labels for FSIS evaluation. Instead, the proposed rule would 
reduce the regulatory burden on producers that currently submit labels 
for evaluation and does not change the recordkeeping requirements. 
Producers already are using generically approved labels and maintaining 
all labeling records, and thus are experienced in submitting labels for 
FSIS evaluation.

Expected Benefits of the Proposed Rule Industry Impacts

    Industry would realize cost savings from the reduction in FSIS 
label submissions under the proposed rule. Industry is required to use 
FSIS Form 7234-1 (OMB control number: 0583-0092) for the initial FSIS 
label submission. The estimated time to complete this form is 75 
minutes per response, which includes reviewing instructions, searching 
existing data sources, gathering and maintaining the data needed 
(recordkeeping), and completing and reviewing the collection of 
information.\22\ FSIS estimates 15 minutes of the 75 minutes are 
dedicated to recordkeeping. The recordkeeping time is not included in 
the proposed rule's regulatory impact analysis because the 
recordkeeping requirements are not changing under the proposed rule; 
that is, even if the establishment does not need to submit the label to 
FSIS, the establishment is still required to maintain records to 
support the label. Therefore, the average industry time to prepare one 
label submission for FSIS evaluation is 60 minutes (75 minutes-15 
minutes). FSIS also assumed food scientists and technologists would 
perform this work at a mean hourly wage of $36.63.\23\ A benefits and 
overhead factor of two \24\ was applied to estimate the total labor 
cost per label submission of $73.26.
---------------------------------------------------------------------------

    \22\ FSIS Form 7234-1 Application for Approval of Labels, 
Marking or Device. Last modified 11/16/2011. Available at: https://www.fsis.usda.gov/wps/portal/fsis/forms/.
    \23\ BLS Occupational Employment Statistics, Occupational 
Employment and Wages, May 2019. 19-1021 Food Scientists and 
Technologists. <https://www.bls.gov/news.release/pdf/ocwage.pdfoes/current/oes191012.htm#nat Accessed on 4/30/2020. Last 
Modified 03/30/2020.
    \24\ To be consistent with analyses done by the Department of 
Health and Human Services, this analysis accounts for fringe 
benefits and overhead by multiplying wages by a factor of 2.
---------------------------------------------------------------------------

    To determine the annual reduction of label submissions, FSIS relied 
on the average number of labels that FSIS would not have evaluated 
under the proposed rule from 2016 to 2019, which was 6,400 labels, 
((8,534 + 5,812 + 6,025 + 5,229)/4), Table 2. Accordingly, FSIS 
estimates a decrease of 64,000 label evaluations over 10 years under 
the proposed rule (6,400 * 10). As shown in Table 3, FSIS estimates 
that industry would realize a discounted cost savings of $3,293,105 (at 
a 7 percent discount rate) and $3,999,505 (at a 3 percent discount 
rate) by FSIS generically approving an additional 64,000 labels over a 
10-year period. The cost savings would be $468,864 when annualized at 
the 7 and 3 percent discount rate, over 10 years.

                Table 3--Estimated Industry Cost Savings
                             [2019 Dollars]
------------------------------------------------------------------------
                                           Present value   Present value
Total industry cost savings from reduced   cost savings    cost savings
     need for FSIS label evaluation            at 7%           at 3%
------------------------------------------------------------------------
Total over 10 years.....................      $3,293,105      $3,999,505
Annualized total over 10 years..........         468,864         468,864
------------------------------------------------------------------------


[[Page 56545]]

Agency Impacts

    During FY 2019, FSIS employed 14 labeling analysts in LPDS with an 
average hourly salary of $64.75 (($47.52 * 36.25%) + 47.52 = $64.75 for 
a GS-13 step 1,\25\ with an adjusted benefits factor of 36.25 
percent).\26\ On average, LPDS analysts evaluate labels four hours per 
day, five days a week, at a cost of $18,130 per week. If the proposed 
rule is adopted, LPDS analysts would evaluate labels for three hours 
per day, five days a week, at a cost of $13,598 per week, because of 
the reduction in labels submitted to FSIS.
---------------------------------------------------------------------------

    \25\ Salary Table 2019-DCB for the locality pay area of 
Washington-Baltimore-Arlington, DC-MD-VA-WV-PA. Effective January 
2019. Available at: https://www.opm.gov/policy-data-oversight/pay-leave/salaries-wages/salary-tables/pdf/2019/DCB_h.pdf.
    \26\ Nussle, Jim. (2008). M-08-13: MEMORANDUM FOR THE HEADS OF 
EXECUTIVE DEPARTMENTS AND AGENCIES. Executive Office of the 
President. Available at: https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/memoranda/2008/m08-13.pdf.
---------------------------------------------------------------------------

    If this proposed rule is adopted, the Agency would realize a 
discounted cost savings of $1,655,388 (at a 7 percent discount rate) 
and $2,010,484 (at a 3 percent discount rate) for adjudicating fewer 
labels over a 10-year period. The cost savings would be $235,690 when 
annualized at the 7 and 3 percent discount rate over 10 years. See 
Table 4 for additional details. However, this cost savings from fewer 
staff hours dedicated towards adjudicating labels would be redirected 
towards other Agency priority initiatives, such as developing and 
updating policy and guidance documents, answering questions from 
askFSIS and other sources, and performing outreach activities. We also 
anticipate an overall faster label review process from the decline in 
LPDS label evaluations. This would allow new labels to enter the market 
faster.

                 Table 4--Estimated Agency Cost Savings
                             [2019 Dollars]
------------------------------------------------------------------------
                                           Present value   Present value
 Total agency cost savings from reduced    cost savings    cost savings
     need for FSIS label evaluation            at 7%           at 3%
------------------------------------------------------------------------
Total over 10 years.....................      $1,655,388      $2,010,484
Annualized total over 10 years..........         235,690         235,690
------------------------------------------------------------------------

Net Benefits

    This proposed rule would be net beneficial because it would reduce 
the costs to establishments, from submitting fewer labels for FSIS 
evaluation, while imposing no additional cost burden. The net benefit 
derived from the proposed rule is estimated to be $4,948,493 
($3,293,105 in establishment savings plus $1,655,388 in Agency savings) 
discounted at the 7 percent discount rate over a 10-year period. When 
annualized at the 7 percent discount rate over 10 years, the net cost 
savings is estimated to be $704,554. See Table 5 for details.

                 Table 5--Estimated Agency Cost Savings
                             [2019 Dollars]
------------------------------------------------------------------------
 Total agency and industry cost savings    Present value   Present value
    from reduced need for FSIS label       cost savings    cost savings
               evaluation                      at 7%           at 3%
------------------------------------------------------------------------
Total over 10 years.....................      $4,948,493      $6,009,989
Annualized total over 10 years..........         704,554         704,554
------------------------------------------------------------------------

Alternative Regulatory Approaches

    The Agency considered three alternatives to the proposed rule. The 
proposed rule was chosen as the least burdensome regulatory approach. 
The summary of the costs and benefits for the considered alternatives 
are outlined in Table 6 below.

                                   Table 6--Regulatory Alternatives Considered
----------------------------------------------------------------------------------------------------------------
           Alternative                      Benefits                    Costs                  Net benefit
----------------------------------------------------------------------------------------------------------------
(1) Take No Action...............  No Benefit...............  No potential industry or  Net benefits are less
                                                               Agency cost savings.      than alternative 3.
(2) The Proposed Rule, Except      Industry could benefit     Potential for             Net benefits are less
 Industry Would Still Have the      from additional FSIS       inefficient use of        than alternative 3.
 Option to Have LPDS Evaluate       evaluation.                Agency resources.         Although industry could
 Labels that Would Otherwise be                                Industry would also       marginally benefit from
 Generically Approved.                                         incur costs of            additional FSIS
                                                               submitting the labels     evaluation, sufficient
                                                               and waiting for FSIS      guidance is available
                                                               evaluation.               for labels that can be
                                                                                         generically approved.
                                                                                         Also, industry and the
                                                                                         Agency would incur
                                                                                         costs from submitting
                                                                                         and evaluating such
                                                                                         labels.

[[Page 56546]]

 
(3) The Proposed Rule............  Potential industry cost    No Cost.................  Net benefits are
                                    savings of $468,864 and                              $704,554 annualized at
                                    Agency cost savings of                               the 7 percent discount
                                    $235,690, annualized at                              rate over 10 years.
                                    the 7 percent discount
                                    rate over 10 years.
(4) Allow All FSIS Labels to be    The Agency and industry    Costs include             Net benefits are less
 Generically Approved.              would benefit from time    potentially increasing    than alternative 3 as
                                    savings by eliminating     the number of             the potential costs of
                                    FSIS label evaluation.     misbranded products.      misbranded products
                                                                                         from eliminating FSIS
                                                                                         label evaluation
                                                                                         outweighs the time
                                                                                         savings benefit.
----------------------------------------------------------------------------------------------------------------

Alternative 1--No Action (Baseline)

    FSIS considered keeping the current regulations and taking no 
action. Taking no action would mean that industry and the Agency would 
not experience costs savings from the reduction of labels submitted for 
FSIS evaluation under the proposed rule. Industry would therefore not 
realize the estimated reduction of 64,000 label submissions over 10 
years and would not experience an annualized cost savings of $468,864 
at the 7 percent discount rate over 10 years. The Agency would not 
experience time savings from the reduction of label evaluations. 
Therefore, the Agency rejects this alternative.

Alternative 2--The Proposed Rule, Except Industry Would Still Have the 
Option To Have LPDS Evaluate Labels That Would Otherwise be Generically 
Approved

    FSIS considered an alternative of proposing the same generically 
approved label categories except FSIS would continue to evaluate those 
labels that would otherwise be generically approved. Currently, 
industry can submit labels that can be generically approved for 
voluntary FSIS evaluation, although this evaluation is not needed prior 
to entering the market. When industry submits these types of labels for 
voluntary FSIS evaluation, they are reviewed with a lower priority than 
other labels, and thus take more time for FSIS to approve. Although 
industry may marginally benefit from the additional FSIS evaluation, 
the process is inefficient and raises unnecessary costs. Industry could 
more quickly get FSIS assistance on these types of labels through other 
guidance, such as askFSIS.
    In addition, FSIS would have to take the time to process and 
evaluate these labels, when reviewer time could be spent on higher 
priorities, such as food safety and policy related issues (e.g., 
concerning allergens). Industry would also incur costs in preparing and 
submitting the labels for FSIS evaluation while they could get FSIS 
help through other outlets without incurring these expenses. For these 
reasons, FSIS rejects this alternative.

Alternative 3--The Proposed Rule

    The proposed rule yields cost savings for both the industry and the 
Agency. There is no additional cost burden from the proposed rule. The 
potential cost savings for industry is $468,864, annualized at the 7 
percent discount rate over 10 years. This covers the time industry 
saves from not preparing and submitting the labels for FSIS evaluation.
    The potential cost savings for FSIS is $235,690, annualized at the 
7 percent discount rate over 10 years. This covers the time FSIS saves 
from not evaluating the proposed generically approved labels. Since 
there is no additional burden for this proposed rule, FSIS determined 
this to be the preferred alternative.

Alternative 4--All Labels Are Generically Approved

    FSIS also considered an alternative that would allow all labels to 
be generically approved, requiring no prior approval by FSIS. This 
alternative may increase the number of misbranded products going into 
commerce, as LPDS would no longer verify the information on complex 
labels. An increase in misbranded products that contain incorrect, 
false, or misleading information may result in a loss of consumer 
confidence in information on food labels. There is also cost associated 
with discarding and reprinting misbranded labels that the industry may 
suffer. Therefore, FSIS believes the labels that would still require 
prior evaluation under the proposed rule, such as labels with animal 
raising or natural claims, benefit from LPDS evaluation due to the 
complex nature and need for supporting documentation of these claims.
    This alternative would yield time savings for industry from no 
longer preparing and submitting labels for FSIS evaluation. FSIS would 
also experience time savings from no longer evaluating these labels. 
However, the potential costs of misbranded products entering commerce, 
resulting from the elimination of all LPDS label evaluation, would 
outweigh the benefits of the time savings.

V. Regulatory Flexibility Act Assessment

    The FSIS Administrator has made a preliminary determination that 
this proposed rule would not have a significant economic impact on a 
substantial number of small entities in the United States, as defined 
by the Regulatory Flexibility Act (5 U.S.C. 601). This determination 
was made because small producers would experience costs savings from 
the reduced number of label submissions for FSIS evaluation.
    Based on LSAS and the Public Health Information System (PHIS) \27\ 
data, FSIS estimates 92.3 percent (4,825/5,229) of the label 
submissions in 2019, which would have been generically approved under 
the proposed rule, are from small or very small Hazard Analysis and 
Critical Control Point (HACCP) sized establishments. Under the HACCP 
size definitions, large establishments have 500 or more employees and 
small establishments have fewer than 500 but more than 10 employees. 
Very small establishments have fewer than 10 employees or annual sales 
of less than $2.5 million. Small and very small establishments, like 
large establishments, follow the same standards for generic and sketch 
approval of labels. Small and very small producers, therefore, would 
not be disadvantaged because the proposed

[[Page 56547]]

rule would minimize the regulatory burden on all producers.
---------------------------------------------------------------------------

    \27\ PHIS is FSIS's electronic data analytic system, used to 
collect, consolidate, and analyze data in order to improve public 
health.
---------------------------------------------------------------------------

    Based on 2019 LSAS data, about 12 percent (627/5,229) of labels 
that would have been generically approved under the proposed rule, were 
submitted from 19 label consultant firms. These firms are very small, 
usually having one to four employees. Many of these firms provide a 
range of services, including label courier services, label consultation 
and regulatory compliance, or label design. This proposed rule may 
impact their label courier business. However, the impact on these firms 
is small as their other business, such as label consultations, would 
not be affected. Therefore, this proposed rule would not have a 
significant economic impact on the small label consultant firms.

VI. Executive Order 13771

    Consistent with E.O. 13771 (82 FR 9339, February 3, 2017), FSIS has 
estimated that this proposed rule would yield cost savings. Assuming a 
7 percent discount rate, a perpetual time horizon, and a starting year 
of 2021, the proposed rule, if finalized, is estimated to yield 
approximately $502,337 (2016$) in annual cost savings. Therefore, if 
finalized as proposed, this rule would be an E.O. 13771 deregulatory 
action.

VII. Paperwork Reduction Act

    FSIS has reviewed the paperwork and recordkeeping requirements in 
this proposed rule in accordance with the Paperwork Reduction Act (44 
U.S.C. 3501, et seq.). The Administrator has determined that the 
proposed rule would not create any additional collection, paperwork, or 
recordkeeping burdens.
    FSIS is proposing to expand the circumstances under which it will 
generically approve the labels of meat, poultry, and processed egg 
products. Under this final rule, more official and foreign 
establishments will be able to use the generic approval of product 
labels. As a result, fewer labels will need to be submitted and 
evaluated by FSIS. The relevant information collection, 0583-0092, 
Marking, Labeling, and Packaging, will have a net reduction of 6,400 
burden hours because of the increased use of generic labeling.

VIII. E-Government Act

    FSIS and USDA are committed to achieving the purposes of the E-
Government Act (44 U.S.C. 3601, et seq.) by, among other things, 
promoting the use of the internet and other information technologies 
and providing increased opportunities for citizen access to Government 
information and services, and for other purposes.

IX. Executive Order 12988, Civil Justice Reform

    This proposed rule has been reviewed under Executive Order 12988, 
Civil Justice Reform. Under this rule: (1) All State and local laws and 
regulations that are inconsistent with this rule will be preempted; (2) 
no retroactive effect will be given to this rule; and (3) no 
administrative proceedings will be required before parties may file 
suit in court challenging this rule.

X. Executive Order 13175, Consultation and Coordination With Indian 
Tribal Governments

    This rule has been reviewed in accordance with the requirements of 
Executive Order 13175, Consultation and Coordination with Indian Tribal 
Governments. Executive Order 13175 requires Federal agencies to consult 
and coordinate with tribes on a government-to-government basis on 
policies that have tribal implications, including regulations, 
legislative comments or proposed legislation, and other policy 
statements or actions that have substantial direct effects on one or 
more Indian tribes, on the relationship between the Federal Government 
and Indian tribes or on the distribution of power and responsibilities 
between the Federal Government and Indian tribes.
    The USDA's Office of Tribal Relations (OTR) has assessed the impact 
of this rule on Indian tribes and determined that this rule does not to 
our knowledge, have tribal implications that require tribal 
consultation. If a tribe requests consultation, FSIS will work with the 
OTR to ensure meaningful consultation is provided where changes, 
additions, and modifications identified herein are not expressly 
mandated by Congress.

XI. USDA Non-Discrimination Statement

    In accordance with Federal civil rights law and U.S. Department of 
Agriculture (USDA) civil rights regulations and policies, the USDA, its 
Agencies, offices, and employees, and institutions participating in or 
administering USDA programs are prohibited from discriminating based on 
race, color, national origin, religion, sex, gender identity (including 
gender expression), sexual orientation, disability, age, marital 
status, family/parental status, income derived from a public assistance 
program, political beliefs, or reprisal or retaliation for prior civil 
rights activity, in any program or activity conducted or funded by USDA 
(not all bases apply to all programs). Remedies and complaint filing 
deadlines vary by program or incident.

How To File a Complaint of Discrimination

    To file a complaint of discrimination, complete the USDA Program 
Discrimination Complaint Form, which may be accessed online at http://www.ocio.usda.gov/sites/default/files/docs/2012/Complain_combined_6_8_12.pdf, or write a letter signed by you or your 
authorized representative.
    Send your completed complaint form or letter to USDA by mail, fax, 
or email:
    Mail: U.S. Department of Agriculture, Director, Office of 
Adjudication, 1400 Independence Avenue SW, Washington, DC 20250-9410.
    Fax: (202) 690-7442.
    Email: [email protected].
    Persons with disabilities who require alternative means for 
communication (Braille, large print, audiotape, etc.), should contact 
USDA's TARGET Center at (202) 720-2600 (voice and TDD).

XIII. Environmental Impact

    Each USDA agency is required to comply with 7 CFR part 1b of the 
Departmental regulations, which supplements the National Environmental 
Policy Act regulations published by the Council on Environmental 
Quality. Under these regulations, actions of certain USDA agencies and 
agency units are categorically excluded from the preparation of an 
Environmental Assessment (EA) or an Environmental Impact Statement 
(EIS) unless the agency head determines that an action may have a 
significant environmental effect (7 CFR 1b.4(b)). FSIS is among the 
agencies categorically excluded from the preparation of an EA or EIS (7 
CFR 1b.4(b)(6)).
    FSIS has determined that this proposed rule, which would refine the 
Agency's existing label approval program, will not create any 
extraordinary circumstances that would result in this normally excluded 
action having a significant individual or cumulative effect on the 
human environment. Therefore, this action is appropriately subject to 
the categorical exclusion from the preparation of an environmental 
assessment or environmental impact statement provided under 7 CFR 
1b.4(6) of the U.S. Department of Agriculture regulations.

XIII. Congressional Review Act

    Pursuant to the Congressional Review Act at 5 U.S.C. 801 et seq., 
the Office of Information and Regulatory Affairs has determined that 
this document is not a

[[Page 56548]]

``major rule,'' as defined by 5 U.S.C. 804(2).

XIV. Additional Public Notification

    Public awareness of all segments of rulemaking and policy 
development is important. Consequently, FSIS will announce this Federal 
Register publication on-line through the FSIS web page located at: 
http://www.fsis.usda.gov/federal-register.
    FSIS will also announce and provide a link to it through the FSIS 
Constituent Update, which is used to provide information regarding FSIS 
policies, procedures, regulations, Federal Register notices, FSIS 
public meetings, and other types of information that could affect or 
would be of interest to our constituents and stakeholders. The 
Constituent Update is available on the FSIS web page. Through the web 
page, FSIS is able to provide information to a much broader, more 
diverse audience. In addition, FSIS offers an email subscription 
service which provides automatic and customized access to selected food 
safety news and information. This service is available at: http://www.fsis.usda.gov/subscribe. Options range from recalls to export 
information, regulations, directives, and notices. Customers can add or 
delete subscriptions themselves and have the option to password protect 
their accounts.

List of Subjects

9 CFR Part 352

    Food labeling, Meat inspection, Reporting and recordkeeping 
requirements.

9 CFR Part 354

    Administrative practice and procedure, Animal diseases, Food 
labeling, Meat inspection, Rabbits and rabbit products, Reporting and 
recordkeeping requirements, Signs and symbols.

9 CFR Part 412

    Food labeling, Food packaging, Meat and meat products, Meat 
inspection, Poultry and poultry products, Reporting and recordkeeping 
requirements.
    For the reasons set forth in the preamble, FSIS is proposing to 
amend 9 CFR Chapter III as follows:

PART 352--EXOTIC ANIMALS AND HORSES; VOLUNTARY INSPECTION

0
1. The authority citation for part 352 continues to read as follows:

    Authority: 7 U.S.C. 1622, 1624; 7 CFR 2.17(g) and (i), 2.55.

0
2. In Sec.  352.7:
0
a. Revise the section heading;
0
b. Remove from the introductory text the phrase ``Wording and form of 
inspection mark.''; and
0
c. Add a sentence at the end of the introductory text.

    The revision and addition read as follows:


Sec.  352.7  Marking and labeling of inspected products.

* * * * *
    All labels intended for use on inspected and passed exotic animal 
products must be approved in accordance with Part 412 of this chapter.
* * * * *

PART 354--VOLUNTARY INSPECTION OF RABBITS AND EDIBLE PRODUCTS 
THEREOF

0
3. The authority citation for part 354 continues to read as follows:

    Authority: 7 U.S.C. 1622, 1624; 7 CFR 2.17(g) and (i), 2.55.

0
4. Revise Sec.  354.60 to read as follows:


Sec.  354.60  Approval of official identification.

    All labels intended for use on inspected and passed rabbit products 
which bear any official identification must be approved in accordance 
with Part 412 of this chapter.

PART 412--LABEL APPROVAL

0
5. The authority citation for part 412 continues to read as follows:

    Authority: 21 U.S.C. 451-470, 601-695; 7 CFR 218, 2.53.

0
6. In Sec.  412.1, remove and reserve paragraph (c)(2) and revise 
paragraph (e) to read as follows:


Sec.  412.1  Label approval.

* * * * *
    (e) ``Special statements and claims'' are statements, claims, 
logos, trademarks, and other symbols on labels as defined in this 
paragraph.
    (1) The following are considered special statements and claims:
    (i) Those not defined in the Federal meat and poultry products 
inspection regulations or the Food Standards and Labeling Policy Book;
    (ii) ``Natural'' claims, regardless of whether they are defined in 
the Food Standards and Labeling Policy Book.
    (iii) Health claims (including graphic representations of hearts), 
ingredient and processing method claims (e.g., high-pressure 
processing), structure-function claims, claims regarding the raising of 
animals (e.g., ``no antibiotics administered''), products labeled as 
organic (except for those where only individual ingredients are labeled 
as organic), and instructional or disclaimer statements concerning 
pathogens (e.g., ``for cooking only'' or ``not tested for E. coli 
O157:H7'').
    (2) The following are not considered special statements and claims:
    (i) Allergen statements (e.g., ``contains soy'') applied in 
accordance with the Food Allergen Labeling and Consumer Protection Act.
    (ii) Negative claims regarding ingredients not listed in the 
ingredients statement (i.e., ``No MSG Added,'' ``Preservative Free,'' 
``No Milk,'' ``No Pork,'' or ``Made Without Soy'').
    (iii) Statements that characterize a product's nutrient content in 
compliance with Title 9 of the CFR, such as ``low fat.''
    (iv) Claims related to geographical significance, such as ``German 
Brand Made in the US,'' or those that make a country of origin 
statement on the label of any meat or poultry product ``covered 
commodity,'' or displays of geographic landmarks, such as a foreign 
country's flag, monument, or map.
* * * * *
0
7. Revise Sec.  412.2(b) to read as follows:


Sec.  412.2  Approval of generic labels.

* * * * *
    (b) Generically approved labels are labels that bear all applicable 
mandatory labeling features (i.e., product name, handling statement, 
ingredients statement, the name and place of business of the 
manufacturer, packer or distributor, net weight, legend, safe handling 
instructions, and nutrition labeling) in accordance with Federal 
regulations and do not bear special statements and claims as defined in 
paragraph 412.1(e) of this part.

    Done at Washington, DC.
Paul Kiecker,
Administrator.
[FR Doc. 2020-17340 Filed 9-11-20; 8:45 am]
BILLING CODE 3410-DM-P