[Federal Register Volume 89, Number 147 (Wednesday, July 31, 2024)]
[Notices]
[Pages 61430-61432]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-16877]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

[Docket No. FDA-2024-N-3382]


Food Safety Modernization Act Domestic and Foreign Facility 
Reinspection, Recall, and Importer Reinspection Fee Rates for Fiscal 
Year 2025

AGENCY: Food and Drug Administration, HHS.

ACTION: Notice.

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SUMMARY: The Food and Drug Administration (FDA or Agency) is announcing 
the fiscal year (FY) 2025 fee rates for certain domestic and foreign 
facility reinspections, failures to comply with a recall order, and 
importer reinspections that are authorized by the Federal Food, Drug, 
and Cosmetic Act (FD&C Act), as amended by the FDA Food Safety 
Modernization Act (FSMA).

DATES: These fees apply to the period from October 1, 2024, and will 
remain in effect through September 30, 2025.

FOR FURTHER INFORMATION CONTACT: 
    For questions related to FSMA program fees: 
[email protected].
    For questions related to this notice: Olufunmilayo Ariyo, Office of 
Financial Management, Food and Drug Administration, 10903 New Hampshire 
Ave., Silver Spring, MD 20903, 240-402-4989; or the User Fees Support 
Staff at [email protected].

SUPPLEMENTARY INFORMATION:

I. Background

    Section 107 of the FSMA (Pub. L. 111-353) added section 743 to the 
FD&C Act (21 U.S.C. 379j-31) to provide FDA with the authority to 
assess and collect fees from, in part: (1) the responsible party for 
each domestic facility and the U.S. agent for each foreign facility 
subject to a reinspection to cover reinspection-related costs; (2) the 
responsible party for a domestic facility and an importer who does not 
comply with a recall order to cover food \1\ recall activities 
associated with such order; and (3) each importer subject to a 
reinspection to cover reinspection-related costs (sections 
743(a)(1)(A), (B), and (D) of the FD&C Act). Section 743 of the FD&C 
Act directs FDA to establish fees for each of these activities based on 
an estimate of 100 percent of the costs of each activity for each year 
(sections 743(b)(2)(A)(i), (ii), and (iv)), and these fees must be made 
available solely to pay for the costs of each activity for which the 
fee was incurred (section 743(b)(3)). These fees are effective on 
October 1, 2024, and will remain in effect through September 30, 2025. 
Section 743(b)(2)(B)(iii) of the FD&C Act directs FDA to develop a 
proposed set of guidelines in consideration of the burden of fee 
amounts on small businesses. As a first step in developing these 
guidelines, FDA invited public comment on the potential impact of the 
fees authorized by section 743 of the FD&C Act on small businesses (76 
FR 45818, August 1, 2011). The comment period for this request ended 
November 30, 2011. As stated in FDA's October 2011 ``Guidance for 
Industry: Implementation of the Fee Provisions of Section 107 of the 
FDA Food Safety Modernization Act'' (https://www.fda.gov/regulatory-information/search-fda-guidance-documents/guidance-industry-implementation-fee-provisions-section-107-fda-food-safety-modernization-act), because FDA recognizes that for small businesses 
the full cost recovery of FDA reinspection or recall oversight could 
impose severe economic hardship, FDA intends to consider reducing 
certain fees for those firms. FDA does not intend to issue invoices for 
reinspection or recall order fees until FDA publishes a guidance 
document outlining the process through which firms may request a 
reduction in fees.
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    \1\ The term ``food'' for purposes of this document has the same 
meaning as such term in section 201(f) of the FD&C Act (21 U.S.C. 
321(f)).
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    In addition, as stated in the October 2011 Guidance, FDA is in the 
process of considering various issues associated with the assessment 
and collection of importer reinspection fees. The fee rates set forth 
in this notice will be used to determine any importer reinspection fees 
assessed in FY 2025.

II. Estimating the Average Cost of a Supported Direct FDA Work Hour for 
FY 2025

    FDA is required to estimate 100 percent of its costs for each 
activity in order to establish fee rates for FY 2025. 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 the remaining funds (operating funds) 
available to FDA are used to support FDA employees by paying for rent, 
travel, utility, information technology (IT), and other operating 
costs.

A. Estimating the Full Cost per Direct Work Hour in FY 2025

    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, nonpayroll, and rent.
    We have used an average of past year cost elements to predict the 
FY 2025 cost. The FY 2025 FDA-wide average cost for payroll (salaries 
and benefits) is

[[Page 61431]]

$213,556; non-payroll (including equipment, supplies, IT, general and 
administrative overhead) is $131,739; and rent (including cost 
allocation analysis and adjustments for other rent and rent-related 
costs) is $23,750 per paid staff year, excluding travel costs.
    Summing the average cost of an FTE for payroll, nonpayroll, and 
rent, brings the FY 2025 average fully supported cost to $369,046 \2\ 
per FTE, excluding travel costs. FDA will use this base unit fee in 
determining the hourly fee rate for reinspection and recall order fees 
for FY 2025 prior to including domestic or foreign travel costs as 
applicable for the activity.
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    \2\ Total includes rounding.
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    To calculate an hourly rate, FDA must divide the FY 2025 average 
fully supported cost of $369,046 per FTE by the average number of 
supported direct FDA work hours in FY 2023 (the last fiscal year for 
which data are available). See table 1.

Table 1--Supported Direct FDA Work Hours in a Paid Staff Year in FY 2023
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         Total number of hours in a paid staff year             2,080
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Less:
  11 paid holidays.........................................          -88
  20 days of annual leave..................................         -160
  10 days of sick leave....................................          -80
  12.5 days of training....................................         -100
  22 days of general administration........................         -176
  26.5 days of travel......................................         -212
  2 hours of meetings per week.............................         -104
  Net Supported Direct FDA Work Hours Available for                1,160
   Assignments.............................................
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    Dividing the average fully supported FTE cost in FY 2025 ($369,046) 
by the total number of supported direct work hours available for 
assignment in FY 2023 (1,160) results in an average fully supported 
cost of $318 (rounded to the nearest dollar), excluding inspection 
travel costs, per supported direct work hour in FY 2025.

B. Adjusting FY 2023 Travel Costs for Inflation To Estimate FY 2025 
Travel Costs

    To adjust the hourly rate for FY 2025, FDA must estimate the cost 
of inflation in each year for FY 2024 and FY 2025. 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 2024 inflation rate to be 3.8896 percent; this rate 
was published in the FY 2024 PDUFA user fee rates notice in the Federal 
Register (88 FR 48881, July 28, 2023). Utilizing the method set forth 
in section 736(c)(1) of the FD&C Act, FDA has calculated an inflation 
rate of 3.8896 percent for FY 2024 and 4.1167 percent for FY 2025, and 
FDA intends to use these inflation rates to make inflation adjustments 
for FY 2025 for several of its user fee programs; the derivation of 
this rate will be published in the Federal Register in the FY 2025 
notice for the PDUFA user fee rates.
    The average fully supported cost per supported direct FDA work 
hour, excluding travel costs, of $318 already takes into account 
inflation as the calculation above is based on FY 2025 predicted costs. 
FDA will use this base unit fee in determining the hourly fee rate for 
reinspection and recall order fees for FY 2025 prior to including 
domestic or foreign travel costs as applicable for the activity. In FY 
2023, FDA's Office of Regulatory Affairs (ORA) spent a total of 
$7,463,679 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 8,811 CFSAN and CVM domestic inspections, 
which averages a total of $847 per inspection. These inspections 
average 41.35 hours per inspection. Dividing $847 per inspection by 
41.35 hours per inspection results in a total and an additional cost of 
$20 (rounded to the nearest dollar) per hour spent for domestic 
inspection travel costs in FY 2023. To adjust for the $20 per hour 
additional domestic cost inflation increases for FY 2024 and FY 2025, 
FDA must multiply the FY 2024 PDUFA inflation rate adjustor (1.038896) 
times the FY 2025 PDUFA inflation rate adjustor (1.041167) times the 
$20 additional domestic cost, which results in an estimated cost of $22 
(rounded to the nearest dollar) per paid hour in addition to $318 for a 
total of $340 per paid hour ($318 plus $22) for each direct hour of 
work requiring domestic inspection travel. FDA will use these rates in 
charging fees in FY 2025 when domestic travel is required.
    In FY 2023, ORA spent a total of $2,629,906 on 431 foreign 
inspection trips related to FDA's CFSAN and CVM field activities 
programs, which averaged a total of $6,102 per foreign inspection trip. 
These trips averaged 3 weeks (or 120 paid hours) per trip. Dividing 
$6,102 per trip by 120 hours per trip results in a total and an 
additional cost of $51 (rounded to the nearest dollar) per paid hour 
spent for foreign inspection travel costs in FY 2023. To adjust $51 for 
inflationary increases in FY 2024, and FY 2025, FDA must multiply it by 
the same inflation factors mentioned previously in this document 
(1.038896 and 1.041167), which results in an estimated cost of $55 
(rounded to the nearest dollar) per paid hour in addition to $318 for a 
total of $373 per paid hour ($318 plus $55) for each direct hour of 
work requiring foreign inspection travel. FDA will use these rates in 
charging fees in FY 2025 when foreign travel is required.

                 Table 2--FSMA Fee Schedule for FY 2025
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                                                              Fee rates
                        Fee category                         for FY 2025
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Hourly rate if domestic travel is required.................         $340
Hourly rate if foreign travel is required..................          373
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III. Fees for Reinspections of Domestic or Foreign Facilities Under 
Section 743(a)(1)(A)

A. What will cause this fee to be assessed?

    The fee will be assessed for a reinspection conducted under section 
704 of the FD&C Act (21 U.S.C. 374) to determine whether corrective 
actions have been implemented and are effective and compliance has been 
achieved to the Secretary of Health and Human Services' (the Secretary) 
(and, by delegation, FDA's) satisfaction at a facility that 
manufactures, processes, packs, or holds food for consumption 
necessitated as a result of a previous inspection (also conducted under 
section 704) of this facility, which had a final classification of 
Official Action Indicated (OAI) conducted by or on behalf of FDA, when 
FDA determined the noncompliance was materially related to food safety 
requirements of the FD&C Act. FDA considers such noncompliance to 
include noncompliance with a statutory or regulatory requirement under 
section 402 of the FD&C Act (21 U.S.C. 342) and section 403(w) of the 
FD&C Act (21 U.S.C. 343(w)). However, FDA does not consider 
noncompliance that is materially related to a food safety requirement 
to include circumstances where the noncompliance is of a

[[Page 61432]]

technical nature and not food safety related (e.g., failure to comply 
with a food standard or incorrect font size on a food label). 
Determining when noncompliance, other than under sections 402 and 
403(w) of the FD&C Act, is materially related to a food safety 
requirement of the FD&C Act may depend on the facts of a particular 
situation. FDA intends to issue guidance to provide additional 
information about the circumstances under which FDA would consider 
noncompliance to be materially related to a food safety requirement of 
the FD&C Act.
    Under section 743(a)(1)(A) of the FD&C Act, FDA is directed to 
assess and collect fees from ``the responsible party for each domestic 
facility (as defined in section 415(b) (21 U.S.C. 350d(b))) and the 
U.S. agent for each foreign facility subject to a reinspection'' to 
cover reinspection-related costs.
    Section 743(a)(2)(A)(i) of the FD&C Act defines the term 
``reinspection'' with respect to domestic facilities as ``1 or more 
inspections conducted under section 704 subsequent to an inspection 
conducted under such provision which identified noncompliance 
materially related to a food safety requirement of this Act, 
specifically to determine whether compliance has been achieved to the 
Secretary's satisfaction.''
    The FD&C Act does not contain a definition of ``reinspection'' 
specific to foreign facilities. In order to give meaning to the 
language in section 743(a)(1)(A) of the FD&C Act to collect fees from 
the U.S. agent of a foreign facility subject to a reinspection, the 
Agency is using the following definition of ``reinspection'' for 
purposes of assessing and collecting fees under section 743(a)(1)(A), 
with respect to a foreign facility: ``1 or more inspections conducted 
by officers or employees duly designated by the Secretary subsequent to 
such an inspection which identified noncompliance materially related to 
a food safety requirement of the FD&C Act, specifically to determine 
whether compliance has been achieved to the Secretary's (and, by 
delegation, FDA's) satisfaction.''
    This definition allows FDA to fulfill the mandate to assess and 
collect fees from the U.S. agent of a foreign facility in the event 
that an inspection reveals noncompliance materially related to a food 
safety requirement of the FD&C Act, causing one or more subsequent 
inspections to determine whether compliance has been achieved to the 
Secretary's (and, by delegation, FDA's) satisfaction. By requiring the 
initial inspection to be conducted by officers or employees duly 
designated by the Secretary, the definition ensures that a foreign 
facility would be subject to fees only in the event that FDA, or an 
entity designated to act on its behalf, has made the requisite 
identification at an initial inspection of noncompliance materially 
related to a food safety requirement of the FD&C Act. The definition of 
``reinspection-related costs'' in section 743(a)(2)(B) of the FD&C Act 
relates to both a domestic facility reinspection and a foreign facility 
reinspection, as described in section 743(a)(1)(A).

B. Who will be responsible for paying this fee?

    The FD&C Act states that this fee is to be paid by the responsible 
party for each domestic facility (as defined in section 415(b) of the 
FD&C Act) and by the U.S. agent for each foreign facility (section 
743(a)(1)(A) of the FD&C Act). This is the party to whom FDA will send 
the invoice for any fees that are assessed under this section.

C. How much will this fee be?

    The fee is based on the number of direct hours spent on such 
reinspections, including time spent conducting the physical 
surveillance and/or compliance reinspection at the facility, or 
whatever components of such an inspection are deemed necessary, making 
preparations and arrangements for the reinspection, traveling to and 
from the facility, preparing any reports, analyzing any samples or 
examining any labels if required, and performing other activities as 
part of the OAI reinspection until the facility is again determined to 
be in compliance. The direct hours spent on each such reinspection will 
be billed at the appropriate hourly rate shown in table 2 of this 
document.

IV. Fees for Noncompliance With a Recall Order Under Section 
743(a)(1)(B)

A. What will cause this fee to be assessed?

    The fee will be assessed for not complying with a recall order 
under section 423(d) (21 U.S.C. 350l(d)) or section 412(f) of the FD&C 
Act (21 U.S.C. 350a(f)) to cover food recall activities associated with 
such order performed by the Secretary (and by delegation, FDA) (section 
743(a)(1)(B) of the FD&C Act). Noncompliance may include the following: 
(1) not initiating a recall as ordered by FDA; (2) not conducting the 
recall in the manner specified by FDA in the recall order; or (3) not 
providing FDA with requested information regarding the recall, as 
ordered by FDA.

B. Who will be responsible for paying this fee?

    Section 743(a)(1)(B) of the FD&C Act states that the fee is to be 
paid by the responsible party for a domestic facility (as defined in 
section 415(b) of the FD&C Act) and an importer who does not comply 
with a recall order under section 423 or under section 412(f) of the 
FD&C Act. In other words, the party paying the fee would be the party 
that received the recall order.

C. How much will this fee be?

    The fee is based on the number of direct hours spent taking action 
in response to the firm's failure to comply with a recall order. Types 
of activities could include conducting recall audit checks, reviewing 
periodic status reports, analyzing the status reports and the results 
of the audit checks, conducting inspections, traveling to and from 
locations, and monitoring product disposition. The direct hours spent 
on each such recall will be billed at the appropriate hourly rate shown 
in table 2 of this document.

D. How must the fees be paid?

    An invoice will be sent to the responsible party for paying the fee 
after FDA completes the work on which the invoice is based. Payment 
must be made within 30 days of the invoice date in U.S. currency by 
electronic check, credit card, check, bank draft, U.S. postal money 
order, or wire transfer payable to the order of the Food and Drug 
Administration. Detailed payment information will be included with the 
invoice when it is issued.

V. What are the consequences of not paying these fees?

    Under section 743(e)(2) of the FD&C Act, any fee that is not paid 
within 30 days after it is due shall be treated as a claim of the U.S. 
Government subject to provisions of subchapter II of chapter 37 of 
title 31, United States Code.

    Dated: July 26, 2024.
Lauren K. Roth,
Associate Commissioner for Policy.
[FR Doc. 2024-16877 Filed 7-30-24; 8:45 am]
BILLING CODE 4164-01-P