Federal Register, Volume 81 Issue 240 (Wednesday, December 14, 2016)
[Federal Register Volume 81, Number 240 (Wednesday, December 14, 2016)]
[Rules and Regulations]
[Pages 90186-90194]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-30033]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Food and Drug Administration
21 CFR Part 1
[Docket No. FDA-2011-N-0146]
RIN 0910-AH23
Amendments to Accreditation of Third-Party Certification Bodies
To Conduct Food Safety Audits and To Issue Certifications To Provide
for the User Fee Program
AGENCY: Food and Drug Administration, HHS.
ACTION: Final rule.
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SUMMARY: The Food and Drug Administration (FDA, the Agency, or we) is
amending its regulations on accreditation of third-party certification
bodies to conduct food safety audits and to issue certifications to
provide for a reimbursement (user fee) program to assess fees for the
work FDA performs to establish and administer the third-party
certification program under the FDA Food Safety Modernization Act
(FSMA).
DATES: This rule is effective January 13, 2017.
FOR FURTHER INFORMATION CONTACT: Sylvia Kim, Office of Foods and
Veterinary Medicine, Food and Drug Administration, 10903 New Hampshire
Ave., Bldg. 1, Rm. 3212, Silver Spring, MD 20993-0002, 301-796-7599.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Background
A. FDA Food Safety Modernization Act and Section 808 of the
Federal Food, Drug, and Cosmetics Act
B. Third-Party Certification Regulation
C. Purpose of This Rulemaking
D. The Proposed Rule
E. Public Comments
II. Legal Authority
III. Comments on Who Is Subject to a User Fee Under This Subpart
(Sec. 1.700)
IV. Comments on What User Fees Are Established Under This Subpart
(Sec. 1.705)
V. Comments on How Will FDA Notify the Public About the Fee Schedule
(Sec. 1.710)
VI. Comments on When a User Fee Required by This Subpart Must Be
Submitted (Sec. 1.715)
VII. Comments on Whether User Fees Under This Subpart Are Refundable
(Sec. 1.720)
VIII. Comments on the Consequences of Not Paying a User Fee Under
This Subpart on Time (Sec. 1.725)
IX. Comments on Possible Exemptions
X. Economic Analysis of Impacts
XI. Paperwork Reduction Act of 1995
XII. Analysis of Environmental Impact
XIII. Federalism
[[Page 90187]]
XIV. References
I. Background
A. FDA Food Safety Modernization Act and Section 808 of the Federal
Food, Drug, and Cosmetics Act
FSMA (Pub. L. 111-353), signed into law by President Obama on
January 4, 2011, is intended to allow FDA to better protect public
health by helping to ensure the safety and security of the food supply.
FSMA enables us to focus more on preventing food safety problems rather
than relying primarily on reacting to problems after they occur. The
law also provides new enforcement authorities to help achieve higher
rates of compliance with risk-based, prevention-oriented safety
standards and to better respond to and contain problems when they do
occur. In addition, the law contains important new tools to better
ensure the safety of imported foods and encourages partnerships with
State, local, tribal, and territorial authorities and international
collaborations with foreign regulatory counterparts.
FSMA added section 808 to the FD&C Act (21 U.S.C. 384d), which
directs FDA to establish a program for accreditation of third-party
certification bodies \1\ to conduct food safety audits and to certify
that eligible foreign entities (including registered foreign food
facilities) and food produced by such entities meet applicable FDA food
safety requirements. FSMA specifies two uses for the food and facility
certifications issued by accredited third-party certification bodies
under this program. First, facility certifications will be used by
importers that want to establish eligibility for the Voluntary
Qualified Importer Program (VQIP) under section 806 of the FD&C Act (21
U.S.C. 384b). VQIP offers participating importers expedited review and
entry of food that is part of VQIP. Second, section 801(q) of the FD&C
Act (21 U.S.C. 381(q)) gives FDA the authority to make a risk-based
determination to require, as a condition of admissibility, that a food
imported or offered for import into the United States be accompanied by
a certification or other assurance that the food meets the applicable
requirements of the FD&C Act. The authority to mandate import
certification for food, based on risk, is one of the tools we can use
to help prevent potentially harmful food from reaching U.S. consumers.
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\1\ For the reasons explained in the third-party certification
final rule (80 FR 74570 at 74578-74579, November 27, 2015), and for
consistency with the implementing regulations for the third-party
certification program in 21 CFR parts 1, 11, and 16, this final rule
uses the term ``third-party certification body'' rather than the
term ``third-party auditor/certification body'' that was used in the
proposed rule.
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B. Third-Party Certification Regulation
On November 27, 2015, FDA published in the Federal Register a final
rule, ``Accreditation of Third-Party Certification Bodies to Conduct
Food Safety Audits and to Issue Certifications'' (third-party
certification regulation), to implement section 808 of the FD&C Act on
accreditation of third-party certification bodies to conduct food
safety audits of eligible foreign entities (including registered
foreign food facilities) and to issue certifications of foreign food
facilities and foods for humans and animals for purposes of sections
801(q) and 806 of the FD&C Act (80 FR 74570). The third-party
certification regulation establishes the framework, procedures, and
requirements for accreditation bodies and third-party certification
bodies for purposes of the program under section 808 of the FD&C Act.
It sets requirements for the legal authority, competency, capacity,
conflict of interest safeguards, quality assurance, and records
procedures that accreditation bodies must demonstrate that they have to
qualify for recognition. Accreditation bodies also must demonstrate
capability to meet the applicable program requirements of the third-
party certification regulation that would apply upon recognition.
Additionally, the regulation establishes requirements for the legal
authority, competency, capacity, conflict of interest safeguards,
quality assurance, and records procedures that third-party
certification bodies must demonstrate that they have to qualify for
accreditation. Third-party certification bodies also must demonstrate
capability to meet the applicable program requirements of the third-
party certification regulation that would apply upon accreditation.
Under FSMA section 307 (21 U.S.C. 384d), accredited third-party
certification bodies must perform unannounced facility audits conducted
under the third-party certification program, notify FDA upon
discovering a condition that could cause or contribute to a serious
risk to the public health, and submit to FDA reports of regulatory
audits conducted for certification purposes. The regulation includes
stringent requirements to prevent conflicts of interest from
influencing the decisions of recognized accreditation bodies and
accredited third-party certification bodies.
C. Purpose of This Rulemaking
This rulemaking implements section 808(c)(8) of the FD&C Act to
establish a reimbursement (user fee) program to assess fees and require
reimbursement for the work we perform to establish and administer the
third-party certification program. In this document, we amend the
third-party certification regulation (21 CFR part 1, subpart M) to
provide for the assessment of user fees on accreditation bodies that
include application fees for accreditation bodies seeking FDA
recognition and annual monitoring fees, once recognized. We also
provide for the assessment of user fees that include application fees
for only those third-party certification bodies that seek FDA direct
accreditation and annual monitoring fees for any third-party
certification body participating in FDA's program, whether accredited
directly by FDA or by an FDA-recognized accreditation body.
D. The Proposed Rule
FDA published a proposed rule titled ``User Fee Program to Provide
for Accreditation of Third-Party Auditors/Certification Bodies to
Conduct Food Safety Audits and To Issue Certifications'' on July 24,
2015 (80 FR 43987). The proposed rule on the third-party certification
program user fees includes the following: (1) Who would be subject to a
user fee; (2) how user fees would be computed; (3) how FDA would notify
the public about annual fee rates; (4) how the user fee would be
collected; and (5) what the consequences would be for not paying a user
fee. The comment period closed on October 7, 2015.
E. Public Comments
FDA received comments from accreditation bodies, certification
bodies, foreign governments, industry associations, consumer groups,
and members of industry. In the remainder of this document, we describe
the comments that are within the scope of this rulemaking, respond to
them, and explain any revisions we made from the proposed rule.
II. Legal Authority
Section 307 of FSMA, Accreditation of Third-Party Auditors, amends
the FD&C Act to create a new provision, section 808, under the same
name. Section 808 of the FD&C Act directs us to establish a new program
for accreditation of third-party certification bodies conducting food
safety audits and issuing food and facility certifications to eligible
foreign entities (including registered foreign food
[[Page 90188]]
facilities) that meet the applicable food safety requirements. Under
this provision, we will recognize accreditation bodies to accredit
third-party certification bodies, except for limited circumstances in
which we may directly accredit third-party certification bodies to
participate in the third-party certification program.
Our authority for this rule is derived in part from section
808(c)(8) of the FD&C Act, which requires us to establish by regulation
a reimbursement (user fee) program by which we assess fees and require
accredited third-party certification bodies and audit agents to
reimburse us for the work performed to establish and administer the
third-party certification program under section 808. Accordingly,
section 808(c)(8) of the FD&C Act authorizes us to assess fees and
require reimbursement from accreditation bodies applying for
recognition under section 808, third-party certification bodies
applying for direct accreditation under section 808, and recognized
accreditation bodies and accredited third-party certification bodies
participating in the third-party certification program under section
808.
Further, section 701(a) of the FD&C Act (21 U.S.C. 371(a))
authorizes us to issue regulations for the efficient enforcement of the
FD&C Act, including this rule establishing a user fee program for the
third-party certification program under section 808 of the FD&C Act.
Thus, FDA has the authority to issue this rule under sections 808 and
701(a) of the FD&C Act.
III. Comments on Who Is Subject to a User Fee Under This Subpart (Sec.
1.700)
We proposed in Sec. 1.700 that four main groups would be subject
to a user fee under the regulation: (a) Accreditation bodies submitting
applications, including renewal applications, for recognition in the
third-party certification program; (b) recognized accreditation bodies
participating in the third-party certification program; (c) third-party
certification bodies submitting applications, including renewal
applications, for direct accreditation; and (d) accredited third-party
certification bodies participating in the third-party certification
program. On our own initiative, and consistent with the third-party
certification regulation, in this final rule we are using the term
``third-party certification body'' rather than the term ``third-party
auditor/certification body'' that was used in the proposed rule.
Additionally, in the proposed rule we noted that the proposed user
fee program would not recover all costs associated with the
establishment and administration of the third-party certification
program, such as the costs of any work by FDA in reviewing requests for
reconsideration and waivers, revoking recognition of accreditation
bodies, or withdrawing accreditation of third-party certification
bodies, where necessary (80 FR 43987 at 43989). We also identified some
of FDA's initial startup costs that would not be fully recouped, such
as for some previously incurred costs for training employees and
developing the third-party certification program IT portal that will
accept applications for recognition and for direct accreditation and
submissions from recognized accreditation bodies and accredited third-
party certification bodies. We solicited comment on whether the costs
for activities other than application processing and monitoring (i.e.,
unaccounted for costs) should be paid for through user fees and if so,
to whom should the fees be charged and how should the fees be
calculated.
FDA received no adverse comments specific to our proposal to assess
user fees on accreditation bodies submitting applications to FDA for
recognition, third-party certification bodies submitting applications
to FDA for direct accreditation, and recognized accreditation bodies
and accredited third-party certification bodies participating in the
program.
(Comment 1) In response to our request for comments on unaccounted
for costs, some comments suggest that these costs should be recouped
through fees paid by recognized accreditation bodies and accredited
third-party certification bodies. Some comments opine that
accreditation bodies should be responsible for paying any additional
user fees related to maintenance of a database for recognized
accreditation bodies and accredited certification bodies for the third-
party certification bodies they accredit under the FDA program, as some
accreditation bodies already invoice the certification bodies for these
services. The comments do not address the feasibility of calculating or
collecting such fees.
(Response 1) We decline the suggestion to assess additional fees on
recognized accreditation bodies and accredited third-party
certification bodies. Section 808(c)(8) of the FD&C Act requires us to
establish a user fee program that assesses fees to reimburse FDA for
the work in establishing and administering the third-party
certification program. The statute further provides that FDA must not
generate surplus revenue from the user fee program.
In implementing this provision, FDA is estimating the average costs
of work it will perform to establish the program by recognizing
accreditation bodies under section 808(b)(1) of the FD&C Act to
accredit third-party certification bodies to participate in the third-
party certification program (and, in limited circumstances under
section 808(b)(1)(A)(ii), to directly accredit third-party
certification bodies). Additionally, FDA is estimating the average
costs of work it will perform in administering the program through
monitoring, under section 808(f) of the FD&C Act, of recognized
accreditation bodies and accredited third-party certification bodies,
including through onsite audits of eligible entities issued
certifications. The user fee program gives us flexibility to adjust
estimates of the number of hours various activities will require and
the hourly rates for performing the work, which will allow us to ensure
that we are not generating a surplus.
We do not think it would be feasible at this time to accurately
calculate and collect fees for all additional unaccounted for costs.
For example, we do not have information on the number of, if any,
waiver requests, revocations, and withdrawals we may get. It would be
difficult to project a fee based on this limited information and assess
it on accreditation bodies and certification bodies.
Additionally, it would be difficult to fairly distribute a fee for
startup costs to future participants. We also do not want to
disincentivize early participants from applying by imposing higher fees
early on to cover initial program start-up costs related to setting up
an IT portal or training employees.
(Comment 2) Some comments agree that both accreditation bodies and
certification bodies are the appropriate parties to be assessed fees.
(Response 2) We agree and are finalizing Sec. 1.700 as proposed,
with conforming editorial changes as discussed previously.
IV. Comments on What User Fees Are Established Under This Subpart
(Sec. 1.705)
Under the proposed user fee program we would assess user fees for
two types of activities: (1) Application review; and (2) performance
monitoring.
We proposed in Sec. 1.705(a) that application fees would be
assessed on accreditation bodies seeking FDA recognition or renewal of
recognition and on third-party certification bodies seeking direct
accreditation (and renewal of direct accreditation) by FDA. The
application fees would be based on
[[Page 90189]]
the estimated average cost of the work FDA performs in reviewing and
evaluating each type of application. To calculate the estimated average
cost of reviewing applications for recognition and for direct
accreditation, we estimated the average number of hours it would take
for FDA to conduct the relevant activities and multiplied that by the
appropriate fully supported full time equivalent (FTE) hourly rate to
derive flat rates for reviews of each of the following types of
applications: (1) Initial applications for recognition of accreditation
bodies; (2) applications for renewal of recognition; (3) initial
applications for direct accreditation of third-party certification
bodies; and (4) applications for renewal of direct accreditation.
We requested comment on an alternative approach for calculating
application fees by tracking the actual number of hours it takes FDA
staff to conduct relevant activities for each applicant, multiply that
number by the fully supported FTE hourly rate calculated by the Agency
for the applicable fiscal year, and then bill each applicant separately
for the actual application costs attributable to it.
We requested comment on whether the proposed or alternative
approach would create more favorable incentives for quality of the
application. For the alternative approach, we specifically requested
comment on possible consequences we should impose for not paying the
application fee on time, since with this approach we would likely not
be able to bill the applicant until after it learns whether it is
accepted into the program. We also requested comment on whether we
should adopt the alternative approach for a portion of the application
review process (e.g., the onsite audit portion), while maintaining a
flat fee for other portions (e.g., the paper application review).
Under proposed Sec. 1.705(b), recognized accreditation bodies
would be subject to an annual fee for the estimated average cost of the
work FDA performs to monitor performance of recognized accreditation
bodies under Sec. 1.633. Under Sec. 1.633(a), FDA will periodically
evaluate the performance of each recognized accreditation body at least
4 years after the date of recognition for a 5-year term of recognition,
or by no later than the mid-term point for a term of recognition of
less than 5 years. We would estimate the average number of hours it
would take for FDA to conduct relevant activities and multiply that by
the appropriate fully supported FTE hourly rate for the applicable
fiscal year. To calculate the annual fee for each recognized
accreditation body, FDA would take the estimated average cost of work
FDA performs to monitor performance of a single recognized
accreditation body and annualize that over the average term of
recognition (e.g., 5 years).
The proposed user fee program also would assess fees for the
estimated average cost for the work FDA will perform in monitoring the
performance of third-party certification bodies accredited by FDA-
recognized accreditation bodies, and third-party certification bodies
directly accredited by FDA. We estimated the average number of hours it
would take for FDA to conduct relevant monitoring activities for each,
including a representative sample of onsite audits, and multiplied that
by the appropriate fully supported FTE hourly rate. We further proposed
that these monitoring fees would be annualized over the length of the
term of accreditation (e.g., 4 years).
In developing the proposed rule, we also considered annualizing the
cost of application review over the length of the term of recognition
(e.g., 5 years) or direct accreditation (e.g., 4 years), adjusting for
inflation, and adding this to the annual fee funding FDA's monitoring
activities. We tentatively concluded in the proposed rule that this
alternative fee structure could potentially reimburse FDA less for work
performed and could also lead to more lower-quality applications. We
requested comment on the proposed annual fee structure, the alternative
annual fee structure described in the proposed rule, and any other
alternative fee structures that may be simpler or more consistent with
industry practice.
(Comment 3) Some comments propose a different approach whereby FDA
would establish one application fee for accreditation bodies which
encompasses all of the anticipated costs (and specify what those costs
are for each part of the assessment process) and then provide for
reimbursements upon completion of the process for costs that were not
incurred. The comment suggests that this would create incentives for an
accreditation body to have a well-documented and implemented
accreditation process and to cooperate fully to facilitate the
assessment by FDA. Some comments request that we simplify the user fee
program, but do not provide suggestions as to what changes would
simplify the program.
(Response 3) We decline to accept the alternative approach, for a
couple of reasons: First, we expect that the costs for reviewing
applications for recognition will not vary significantly among the
accreditation bodies, because we expect most, if not all, of the
accreditation bodies that seek recognition under the third-party
certification program will use documentation of their conformance with
International Organization for Standardization (ISO) and the
International Electrotechnical Commission (IEC) 17011:2004, Conformity
assessment--General requirements for accreditation bodies accrediting
conformity assessment bodies (ISO/IEC 17011:2004) (Ref. 1) to support
their applications. This will allow FDA to use a common approach in
reviewing accreditation body applications and, as a result, will help
keep the costs of application review fairly steady and predictable
across applications, making the alternative approach unnecessary.
Second, in authorizing FDA to assess fees and recover the costs
associated with establishing and administering the third-party
certification program, section 808(c)(8) of the FD&C Act helps to
ensure that FDA has a stable funding base for the program. The
alternative approach would limit our ability to develop and execute
program plans or to sustain program services and operations at
predictable levels. Third, the alternative approach would be
administratively burdensome and would generate new administrative costs
associated with providing a series of reimbursements at various steps
in the processing of a single application. The net result would be to
drive up program costs, which would increase user fee rates.
With respect to the comments requesting that we simplify the user
fee program, we decline to adopt a different approach absent any
feasible suggestions as to what changes would simplify the program.
Further, the approach we have established in this final rule limits the
types of fees that are assessed to just application fees and annual
fees. Our approach is designed to be simple. It is similar to the fee
structure used by several accreditation bodies, who charge third-party
certification bodies initial fees and annual fees (Ref. 2).
(Comment 4) Some comments recommend that the recognized
accreditation bodies and accredited third-party certification bodies
pay for monitoring as it is conducted. The comments note that for a
recognized accreditation body this would assume that the level of
monitoring would be related to its performance, the number of third-
party certification bodies it accredited, and their performance. The
comments further assert that the level of
[[Page 90190]]
monitoring FDA performs for an accredited third-party certification
body would be based on its performance, the number of clients that the
accredited third-party certification body has certified, and their
performance.
(Response 4) We disagree. As explained in Response 3, the user fee
program is designed to provide FDA a stable funding base for operating
the program. The proposed approach of paying for monitoring as it is
conducted would not offer stability and predictability for FDA or for
recognized accreditation bodies and accredited certification bodies. In
addition, we note that the number of certification bodies the
accreditation body has accredited under the program is only one of
several factors we may consider in developing our plans for monitoring
a recognized accreditation body. Under Sec. 1.633(b) we may elect to
observe a representative sample of certification bodies the recognized
accreditation body accredited when conducting an assessment of its
accreditation body. The size of the representative sample may depend on
a number of factors including the scope of accreditation of the
certification bodies accredited by the accreditation body, how many
years the accreditation body has been in the program, how many prior
assessments of the accreditation body we have performed, and the length
of time since any prior assessments, in addition to the number of
third-party certification bodies it has accredited. Similarly, when
monitoring an accredited third-party certification body under Sec.
1.662 we may elect to observe regulatory audits the accredited third-
party certification body performs, and we will base our decision
regarding how many onsite observations to conduct based on a number of
factors such as how many years the certification body has been in the
program, how many prior assessments we have performed and the length of
time since the last assessment, in addition to the number of eligible
entities the certification body certifies. Further, we do not
anticipate that the cost of monitoring will vary greatly among
accreditation bodies or among certification bodies. We note that the
third-party certification regulations allow recognized accreditation
bodies and accredited third-party certification bodies to use
documentation of their conformance with applicable ISO/IEC standards,
which we expect will allow FDA greater consistency and efficiency in
conducting monitoring activities.
(Comment 5) Some comments recommend that FDA establish application
and monitoring fees that relate to costs for the services by FDA and
that these be paid in the years the services are provided, rather than
annualized fees.
(Response 5) We decline the recommendation to change the fee
structure from an estimated average cost to a pay-as-you go system. As
explained in Response 3, the estimated average cost approach to the fee
assessments provides prospective applicants, participants, and FDA
predictability that allows for proper planning and budgeting. The
monitoring fee is structured to annualize the payments for the total
cost of monitoring recognized accreditation bodies and accredited
third-party certification bodies, which provides predictability that
helps accreditation bodies, third-party certification bodies, and FDA
in planning and budgeting. Additionally, the recommended approach would
be administratively burdensome and would generate new administrative
costs associated with billing for various monitoring activities across
the duration of each accreditation body's recognition and each third-
party certification body's accreditation. The net result would be to
drive up program costs, which would increase user fee rates. Further,
we do not think that system suggested in the comment would be
particularly beneficial to participants, since we do not anticipate
that there will be much variability in the cost of monitoring services.
We note that the user fee program is flexible. The fee rates are
adjusted annually, as appropriate, so estimates regarding the cost of
monitoring will be refined regularly.
V. Comments on How Will FDA Notify the Public About the Fee Schedule
(Sec. 1.710)
We proposed to notify the public of the fee schedule annually prior
to the beginning of the fiscal year for which the fees apply. We
further proposed that each new fee schedule would be calculated based
on the parameters in the proposed rulemaking and adjusted for
improvements in the cost to FDA of performing relevant work for the
upcoming year and inflation. At our own initiative, we revised proposed
Sec. 1.710 to create an exception to the requirement to provide notice
prior to the start of the fiscal year for which the fees apply, in
order to provide notice of the FSMA Third-Party Certification Program
User Fee Rate for FY 2017, which is published elsewhere in this issue
of the Federal Register. The notice for fiscal year (FY) 2017 sets the
application fee rate for accreditation bodies applying for recognition.
The rate will be effective on January 13, 2017, and will allow
accreditation bodies to apply to participate in the third-party
certification program prior to the start of FY 2018.
(Comment 6) Several comments address user fee costs. Some raise
general concerns that user fees may serve as a disincentive to program
participation by accreditation bodies and third-party certification
bodies, especially during the initial phase of the program. One such
comment characterized the estimated user fee amounts as ``somewhat
high.'' Other comments noted the proposed fees were reasonably aligned
with the third-party certification body fees assessed under the Global
Food Safety Initiative (GFSI). (By way of background, a group of
international retailers established GFSI in 2000 with the goal of
reducing the need for duplicative third-party audits by benchmarking
private food safety schemes against a harmonized set of criteria for
food safety and management systems.)
(Response 6) With respect to the comments suggesting that user fees
may serve as a disincentive to program participation by accreditation
bodies and third-party certification bodies, we note that the FD&C Act
requires us to establish by regulation a user fee program by which we
assess fees and require accredited third-party auditors and audit
agents to reimburse us for the work performed to establish and
administer the third-party accreditation program under section 808 of
the FD&C Act. With respect to comments suggesting that the estimated
user fee rates in the proposed rule may be too high, we disagree. We
have designed the proposed user fee program to be flexible--that is, we
expect that the estimates of the number of FTE hours used to calculate
the actual user fees for accreditation bodies and third-party
certification bodies will be informed by FDA's experience with the
program each year (80 FR 43987 at 43990). Once the program begins we
will update the estimates used to calculate the annual user fees as
appropriate on a yearly basis. For example, if we determine it takes
less time, on average, for us to prepare written reports documenting
our onsite assessments of recognized accreditation bodies, we will use
that information to decrease the fee for the following year.
(Comment 7) Some comments contend that the third-party
certification program user fees and the indirect costs of complying
with the third-party certification regulation will be passed down to
food firms, negatively impacting the number of foreign food facilities
that will become certified under the program and resulting in
[[Page 90191]]
further proliferation of the multitude of audit schemes.
(Response 7) The comments did not provide any data to support
assertions regarding the indirect impacts of the proposed rule on
dynamics of markets for third-party audits of foreign food facilities
and private audit standards. Absent data or other information to
support changes to the proposal, we are not modifying Sec. 1.710 in
anticipation of possible market forces on third-party audits and
private audit schemes.
(Comment 8) Some comments discourage FDA from annually reviewing
its fees for at least one 5-year cycle because fluctuations in the fees
could significantly disadvantage accreditation bodies or third-party
certification bodies that enter the program early.
(Response 8) We disagree with the suggestion to review fees less
frequently than annually. Section 808(c)(8) of the FD&C Act provides
that FDA shall not generate a surplus from the user fee program. By
annually reviewing (and, if appropriate, adjusting) the fee rates, we
can help ensure that we do not generate a surplus.
VI. Comments on When a User Fee Required by This Subpart Must Be
Submitted (Sec. 1.715)
We proposed to require accreditation bodies applying for
recognition and third-party certification bodies applying for direct
accreditation to submit their application fees concurrently with
submitting an application, including a renewal application. We also
proposed that recognized accreditation bodies and accredited third-
party certification bodies subject to an annual fee must submit payment
within 30 days of receiving billing for the fee.
(Comment 9) Some comments support having initial and renewal
application fees paid upon application. The comments also assert that
FDA should not review any applications until payment has been received.
(Response 9) We agree and are maintaining these requirements in the
final rule.
VII. Comments on Whether User Fees Under This Subpart Are Refundable
(Sec. 1.720)
Under proposed Sec. 1.720, user fees would not be refundable. We
requested comment on whether we should consider refund requests under
this program, and if so, under what circumstances.
At our own initiative, we are revising Sec. 1.720 to clarify that
we will not refund any fees accompanying completed applications or
annual user fees. However, user fees submitted with applications will
not be considered to have been accepted until the application is
complete and ready for FDA review. Applications for recognition and
direct accreditation will not be substantively reviewed by FDA until a
completed submission with all of the required elements is received in
accordance with Sec. Sec. 1.631(a) and 1.671(a).
(Comment 10) Some comments recommend that FDA charge a flat fee for
the application fees, but provide for refunds of portions of the
initial application and renewal application fees if we do not incur all
the anticipated costs during review of the application. This would
ensure that FDA has adequate funding to cover costs up front without
overburdening accreditation bodies or third-party certification bodies
financially if we don't end up using all the costs.
(Response 10) We disagree with providing a refund as described by
the comment. As noted in Response 3, we anticipate that costs for
reviewing applications for recognition will not vary significantly
among the accreditation bodies. In addition, it would be
administratively burdensome to track and process refunds at various
stages of the application process for each applicant and would
potentially drive up the costs of the program.
VIII. Comments on the Consequences of Not Paying a User Fee Under This
Subpart on Time (Sec. 1.725)
In proposed Sec. 1.725(a), we proposed that applications would not
be considered complete until FDA receives the application fee. In
proposed Sec. 1.725(b), we proposed that a recognized accreditation
body that fails to submit its annual user fee within 30 days of the due
date would have its recognition suspended. We proposed that FDA would
notify the accreditation body electronically that its recognition is
suspended and would notify the public of the suspension on the Web site
that lists the recognized accreditation bodies. We requested comment on
our tentative conclusion that there is no reason for the process of
notifying the accreditation body and the public of suspension to differ
from the process of notifying the accreditation body and the public of
revocation in these respects. We also requested comment on whether FDA
should notify a certification body if the recognition of its
accreditation body has been suspended.
We further proposed that while an accreditation body's recognition
is suspended, it will not be able to accredit additional third-party
certification bodies. However, we proposed that any certification
bodies accredited by such accreditation body prior to the suspension
would be unaffected by the suspension, as would any food or facility
certification issued by such certification body. We also proposed that
if payment is not received within 90 days of the payment due date, FDA
would revoke the accreditation body's recognition and provide notice of
such revocation in accordance with the procedures in Sec. 1.634.
Accordingly, we proposed to amend Sec. 1.634(a)(4) by adding proposed
Sec. 1.634(a)(4)(iii), which would explicitly include failure to pay
the annual user fee within 90 days of the payment due date as a basis
for revoking an accreditation body's recognition.
In proposed Sec. 1.725(c), we proposed that an accredited third-
party certification body that fails to submit its annual user fee
within 30 days of the due date would have its accreditation suspended.
We proposed that FDA would electronically notify the certification body
that its accreditation is suspended and would notify the public of the
suspension on the Web site that lists the recognized accreditation
bodies and accredited third-party certification bodies. While a
certification body's accreditation is suspended, it would not be
allowed to issue food or facility certifications as part of FDA's
third-party certification program. However, we proposed that food or
facility certifications issued by a certification body prior to the
suspension of its accreditation would remain in effect. We proposed
that if payment is not received within 90 days of the payment due date,
FDA would withdraw the third-party certification body's accreditation
under Sec. 1.664(a), and provide notice of such withdrawal in
accordance with the procedures in Sec. 1.664. Accordingly, we proposed
to amend Sec. 1.664(a) by adding proposed Sec. 1.664(a)(4), which
would explicitly include failure to pay the annual user fee within 90
days of the payment due date as a basis for withdrawal of
accreditation. We requested comment on whether the consequences of a
third-party certification body failing to pay a user fee by the due
date are appropriate.
(Comment 11) Some comments agree with FDA's proposal to suspend an
accreditation body's recognition or a third-party certification body's
accreditation if it fails to submit its annual user fee within 30 days
of the payment due date and to revoke the accreditation body's
recognition or withdraw a certification body's accreditation if it
fails to submit its annual user fee within 90 days of the payment due
date.
[[Page 90192]]
(Response 11) We agree and are retaining these provisions in the
final rule.
(Comment 12) One comment recommends that notice of the suspension
or revocation on FDA's Web site differentiate between suspension and
revocation for financial reasons and suspension or revocation for
failure to conform to requirements.
(Response 12) We agree with respect to notice of revocation or
withdrawal. In accordance with Sec. Sec. 1.634(f) and 1.664(h), FDA
will provide the basis for revocation of recognition and for withdrawal
of accreditation on its Web site, as applicable. With respect to
suspension of recognition or accreditation by FDA, failure to pay the
user fee would be the only reason for FDA suspension.
(Comment 13) One comment recommends that FDA should notify a third-
party certification body if its accreditation body's recognition has
been suspended and that FDA should notify an accreditation body if a
third-party certification body accredited by that accreditation body is
suspended.
(Response 13) At this time FDA has determined that, unlike notice
of withdrawal of accreditation and notice of revocation of recognition,
notice of suspension is not essential to the operation of an accredited
certification body or a recognized accreditation body. For example,
accredited certification bodies would remain accredited even if their
accreditation body had their recognition suspended. Further, we note
that FDA's electronic portal for the third-party certification program
currently does not have the capability to provide notice of suspension.
We will consider the feasibility of adding this capability as resources
allow.
IX. Comments on Possible Exemptions
We did not propose a small business exemption or reduction in the
proposed rule because no statutory requirement to establish or consider
an exemption or reduction in user fees exists in section 808 of the
FD&C Act. However, we requested comment on whether we should account
for small businesses in other ways, including whether an exemption or
fee reduction would be appropriate. We requested that comments in favor
of an exemption or fee reduction for small businesses state who should
be eligible for an exemption or fee reduction; if recommending a fee
reduction, how much of a reduction should be granted; and why.
(Comment 14) Some comments recommend that there be no exemption or
reduced fee for small businesses or entities because the costs to FDA
for performing the work activities are not lower for small businesses
or entities. Other comments recommend that the user fees for public-
sector and private-sector accreditation bodies or third-party
certification bodies be the same because the costs to FDA are not lower
for one group compared to the other. Some comments recommend that the
program offer reduced fees or exemptions for small businesses to be
consistent with the principles embedded in FSMA. Other comments request
a reduction in fees or an exemption for public-sector accreditation
bodies or third-party certification bodies.
(Response 14) We agree that there be no exemptions or reduced fees
for small businesses or entities or for public-sector entities. Section
808(c)(8) of the FD&C Act makes no distinction between public and
private bodies for purposes of the user fee program, and, as noted
previously, contains no requirement to establish or consider an
exemption or reduction in user fees. As explained in Responses 3 and 4,
we agree that the cost to FDA for performing the application review and
monitoring will not vary greatly across entities participating in the
third-party certification program, regardless of the entity's size or
public versus private status. Moreover, creating exemptions or fee
reductions would hinder FDA's ability to create a stable funding base
for the third-party certification program.
X. Economic Analysis of Impacts
We have examined the impacts of the final rule under Executive
Order 12866, Executive Order 13563, the Regulatory Flexibility Act (5
U.S.C. 601-612), and the Unfunded Mandates Reform Act of 1995 (Pub. L.
104-4). Executive Orders 12866 and 13563 direct us to assess all costs
and benefits of available regulatory alternatives and, when regulation
is necessary, to select regulatory approaches that maximize net
benefits (including potential economic, environmental, public health
and safety, and other advantages; distributive impacts; and equity). We
believe that this final rule is not a significant regulatory action as
defined by Executive Order 12866.
The Regulatory Flexibility Act requires us to analyze regulatory
options that would minimize any significant impact of a rule on small
entities. This rule demonstrates how user fees will be calculated and
assessed for different activities FDA conducts under FDA's third-party
accreditation program. This rule does not require action by entities
affected by the Third-Party Certification regulation; it merely
provides additional information so that affected entities can make an
informed decision on whether to participate in FDA's third-party
certification program. FDA analyzed the costs and benefits of FDA's
third-party certification program including imposition of user fees
resulting from participating in the third-party certification program
in the regulatory impact analysis of the Third-Party Certification
final rule. Therefore because this rule does not require actions by
affected entities, we certify that the final rule will not have a
significant economic impact on a substantial number of small entities.
The Unfunded Mandates Reform Act of 1995 (section 202(a)) requires
us to prepare a written statement, which includes an assessment of
anticipated costs and benefits, before issuing ``any rule that includes
any Federal mandate that may result in the expenditure by State, local,
and tribal governments, in the aggregate, or by the private sector, of
$100,000,000 or more (adjusted annually for inflation) in any one
year.'' The current threshold after adjustment for inflation is $146
million, using the most current (2015) Implicit Price Deflator for the
Gross Domestic Product. This final rule would not result in an
expenditure in any year that meets or exceeds this amount.
The full analysis of the economic impacts of the Third-Party
Certification regulation is available at https://www.regulations.gov
under the docket number (FDA-2011-N-0146) for this final rule (Ref. 3)
and at http://www.fda.gov/AboutFDA/ReportsManualsForms/Reports/EconomicAnalyses/default.htm.
XI. Paperwork Reduction Act of 1995
This rule contains no collection of information. Therefore,
clearance by OMB under the Paperwork Reduction Act of 1995 is not
required.
XII. Analysis of Environmental Impact
We previously considered the environmental effects of this rule, as
stated in the proposed rule ``User Fee Program to Provide for
Accreditation of Third-Party Auditors/Certification Bodies to Conduct
Food Safety Audits and To Issue Certifications'' published on July 24,
2015 (80 FR 43987). We stated that we had determined, under 21 CFR
25.30(h), that this action ``is of a type that does not individually or
cumulatively have a significant effect on the human environment'' such
that neither an environmental assessment nor an environmental impact
statement is required. We have not received any new information or
comments that
[[Page 90193]]
would affect our previous determination.
XIII. Federalism
We have analyzed this final rule in accordance with the principles
set forth in Executive Order 13132. FDA has determined that the rule
does not contain policies that have substantial direct effects on the
States, on the relationship between the National Government and the
States, or on the distribution of power and responsibilities among the
various levels of government. Accordingly, we conclude that the rule
does not contain policies that have federalism implications as defined
in the Executive order and, consequently, a federalism summary impact
statement is not required.
XIV. References
The following references are on display in the Division of Dockets
Management (HFA-305), Food and Drug Administration, 5630 Fisher Lane,
Rm. 1061, Rockville, MD 20852 and are available for viewing by
interested persons between 9 a.m. and 4 p.m., Monday through Friday;
they are also available electronically at https://www.regulations.gov.
FDA has verified the Web site addresses, as of the date this document
publishes in the Federal Register, but Web sites are subject to change
over time.
1. International Organization for Standardization/International
Electrotechnical Commission, ISO/IEC ``17011:2004 Conformity
Assessment--General Requirements for Accreditation Bodies
Accrediting Conformity Assessment Bodies,'' Copies are available
from the International Organization for Standardization, 1, rue de
Varembe, Case postale 56, CH-1211 Geneve 20, Switzerland, or on the
Internet at http://www.iso.org/iso/home/store/catalogue_tc/catalogue_detail.htm?csnumber=29332 or may be examined at the
Division of Dockets Management (see ADDRESSES) (Reference Docket No.
FDA-2011-N-0146 and/or RIN 0910-AG66).
2. FDA, ``Preliminary Regulatory Impact Analysis for the
proposed rules on Foreign Supplier Verification Programs (Docket No.
FDA-2011-N-0143) and Accreditation of Third-Party Auditors/
Certification Bodies to Conduct Food Safety Audits and to Issue
Certifications (Docket No. FDA-2011-N-0146) under Executive Order
13563, the Regulatory Flexibility Act (5 U.S.C. 601-612), the
Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4), and the
Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520),'' http://www.fda.gov/downloads/aboutfda/reportsmanualsforms/reports/economicanalyses/ucm363286.pdf, November 2013.
3. FDA, ``Final Regulatory Impact Analysis: Accreditation of
Third-Party Certification Bodies to Conduct Food Safety Audits and
to Issue Certifications,'' http://www.fda.gov/downloads/AboutFDA/ReportsManualsForms/Reports/EconomicAnalyses/UCM471886.pdf, November
2015.
List of Subjects in 21 CFR Part 1
Cosmetics, Drugs, Exports, Food labeling, Imports, Labeling,
Reporting and recordkeeping requirements.
Therefore, under the Federal Food, Drug, and Cosmetic Act and under
authority delegated to the Commissioner of Food and Drugs, 21 CFR part
1 is amended as follows:
PART 1--GENERAL ENFORCEMENT REGULATIONS
0
1. The authority citation for part 1 is revised to read as follows:
Authority: 15 U.S.C. 1333, 1453, 1454, 1455, 4402; 19 U.S.C.
1490, 1491; 21 U.S.C. 321, 331, 332, 333, 334, 335a, 342, 343, 350c,
350d, 350e, 350j, 350k, 352, 355, 360b, 360ccc, 360ccc-1, 360ccc-2,
362, 371, 373, 374, 379j-31, 381, 382, 384a, 384b, 384d, 387, 387a,
387c, 393; 42 U.S.C. 216, 241, 243, 262, 264, 271; Pub. L. 107-188,
116 Stat. 594, 668-69; Pub. L. 111-353, 124 Stat. 3885, 3889.
0
2. In Sec. 1.634, add paragraph (a)(4)(iii) to read as follows:
Sec. 1.634 When will FDA revoke recognition?
(a) * * *
(4) * * *
(iii) Failure to pay the annual user fee within 90 days of the
payment due date, as specified in Sec. 1.725(b)(3).
* * * * *
0
3. In Sec. 1.664, add paragraph (a)(4) to read as follows:
Sec. 1.664 When would FDA withdraw accreditation?
(a) * * *
(4) If payment of the third-party certification body's annual fee
is not received within 90 days of the payment due date, as specified in
Sec. 1.725(c)(3).
* * * * *
0
4. In Subpart M, add an undesignated center heading and Sec. Sec.
1.700 through 1.725 to read as follows:
Requirements for User Fees Under This Subpart
Sec.
1.700 Who is subject to a user fee under this subpart?
1.705 What user fees are established under this subpart?
1.710 How will FDA notify the public about the fee schedule?
1.715 When must a user fee required by this subpart be submitted?
1.720 Are user fees under this subpart refundable?
1.725 What are the consequences of not paying a user fee under this
subpart on time?
Sec. 1.700 Who is subject to a user fee under this subpart?
(a) Accreditation bodies submitting applications or renewal
applications for recognition in the third-party certification program;
(b) Recognized accreditation bodies participating in the third-
party certification program;
(c) Third-party certification bodies submitting applications or
renewal applications for direct accreditation; and
(d) Accredited third-party certification bodies (whether accredited
by recognized accreditation bodies or by FDA through direct
accreditation) participating in the third-party certification program.
Sec. 1.705 What user fees are established under this subpart?
(a) The following application fees:
(1) Accreditation bodies applying for recognition are subject to an
application fee for the estimated average cost of the work FDA performs
in reviewing and evaluating applications for recognition of
accreditation bodies.
(2) Recognized accreditation bodies submitting renewal applications
are subject to a renewal application fee for the estimated average cost
of the work FDA performs in reviewing and evaluating renewal
applications for recognition of accreditation bodies.
(3) Third-party certification bodies applying for direct
accreditation are subject to an application fee for the estimated
average cost of the work FDA performs in reviewing and evaluating
applications for direct accreditation.
(4) Accredited third-party certification bodies applying for
renewal of direct accreditation are subject to an application fee for
the estimated average cost of the work FDA performs in reviewing and
evaluating renewal applications for direct accreditation.
(b) The following annual fees:
(1) Recognized accreditation bodies are subject to an annual fee
for the estimated average cost of the work FDA performs to monitor
performance of recognized accreditation bodies under Sec. 1.633.
(2) Third-party certification bodies directly accredited by FDA are
subject to an annual fee for the estimated average cost of the work FDA
performs to monitor directly accredited third-party certification
bodies under Sec. 1.662.
(3) Third-party certification bodies accredited by recognized
accreditation bodies are subject to an annual fee for the estimated
average cost of the work
[[Page 90194]]
FDA performs to monitor third-party certification bodies that are
accredited by a recognized accreditation body under Sec. 1.662.
Sec. 1.710 How will FDA notify the public about the fee schedule?
FDA will notify the public of the fee schedule annually. The fee
notice will be made publicly available prior to the beginning of the
fiscal year for which the fees apply, except for the first fiscal year
in which this regulation is effective. Each new fee schedule will be
adjusted for inflation and improvements in the estimates of the cost to
FDA of performing relevant work for the upcoming year.
Sec. 1.715 When must a user fee required by this subpart be
submitted?
(a) Accreditation bodies applying for recognition and third-party
certification bodies applying for direct accreditation must submit a
fee concurrently with submitting an application or a renewal
application.
(b) Accreditation bodies and third-party certification bodies
subject to an annual fee must submit payment within 30 days of
receiving billing for the fee.
Sec. 1.720 Are user fees under this subpart refundable?
User fees accompanying completed applications and annual fees under
this subpart are not refundable.
Sec. 1.725 What are the consequences of not paying a user fee under
this subpart on time?
(a) An application for recognition or renewal of recognition will
not be considered complete for the purposes of Sec. 1.631(a) until the
date that FDA receives the application fee. An application for direct
accreditation or for renewal of direct accreditation will not be
considered complete for the purposes of Sec. 1.671(a) until FDA
receives the application fee.
(b) A recognized accreditation body that fails to submit its annual
user fee within 30 days of the due date will have its recognition
suspended.
(1) FDA will notify the accreditation body electronically that its
recognition is suspended. FDA will notify the public of the suspension
on the Web site described in Sec. 1.690.
(2) While an accreditation body's recognition is suspended, the
accreditation body will not be able to accredit additional third-party
certification bodies. The accreditation of third-party certification
bodies that occurred prior to an accreditation body's suspension, as
well as food or facility certifications issued by such third-party
certification bodies, would remain in effect.
(3) If payment is not received within 90 days of the payment due
date, FDA will revoke the accreditation body's recognition under Sec.
1.634(a)(4)(iii), and provide notice of such revocation in accordance
with Sec. 1.634.
(c) An accredited third-party certification body that fails to
submit its annual fee within 30 days of the due date will have its
accreditation suspended.
(1) FDA will notify the third-party certification body that its
accreditation is suspended, electronically and in English. FDA will
notify a recognized accreditation body, electronically and in English,
if the accreditation of one if its third-party certification bodies is
suspended. FDA will notify the public of the suspension on the Web site
described in Sec. 1.690.
(2) While a third-party certification body's accreditation is
suspended, the third-party certification body will not be able to issue
food or facility certifications. A food or facility certification
issued by a third-party certification body prior to the suspension of
the auditor/certification body accreditation will remain in effect.
(3) If payment is not received within 90 days of the payment due
date, FDA will withdraw the third-party certification body's
accreditation under Sec. 1.664(a)(4), and provide notice of such
withdrawal in accordance with Sec. 1.664.
Dated: December 9, 2016.
Leslie Kux,
Associate Commissioner for Policy.
[FR Doc. 2016-30033 Filed 12-13-16; 8:45 am]
BILLING CODE 4164-01-P
