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Home flechita Legislation flechita Establishment and Maintenance of Records Under the Public Health Security

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

21 CFR Parts 1 and 11

[Docket No. 2002N-O277]

RIN 0910-AC39

Establishment and Maintenance of Records Under the Public Health Security and Bioterrorism Preparedness and Response Act of 2002

AGENCY: Food and Drug Administration, HHS.

ACTION: Final rule.

SUMMARY: The Food and Drug Administration (FDA) is issuing a final

regulation that requires the establishment and maintenance of records by persons who manufacture, process, pack, transport, distribute, receive, hold, or import food in the United States. Such records are to allow for the identification of the immediate previous sources and immediate subsequent recipients of food. The final rule implements the Public Health Security and

Bioterrorism Preparedness and Response Act of 2002 (the Bioterrorism Act), and is necessary to help address credible threats of serious adverse health consequences or death to humans or animals. The requirement to establish and maintain records is one of several tools that will help improve FDA’s ability to respond to, and further contain, threats of serious adverse health

consequences or death to humans or animals from accidental or deliberate contamination of food. In the event of an outbreak of foodborne illness, such information will help FDA and other authorities determine the source and cause of the event. In addition, the information will improve FDA’s ability to cf 0357 1002 p - 0237

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quickly notify the consumers and/or facilities that might be affected by the outbreak.

DATES: Effective Date: This final rule is effective [insert date 60 days after

publication in the Federal Register].

Compliance Dates: The compliance date is [insert date 12 months after date of publication in the Federal Register]; except that for small businesses employing fewer than 500, but more than 10 full-time equivalent employees, the compliance date is [insert date 18 months after date of publication in the Federal Register]; and except that for very small businesses that employ 10 or fewer full-time equivalent employees, the compliance date is [insert date 24 months after date of publication in the Federal Register].

FOR FURTHER INFORMATION CONTACT: Nega Beru, Center for Food Safety and Applied Nutrition (HFS–305), Food and Drug Administration, 5100 Paint Branch Pkwy., College Park, MD 20740, 301–436–1400.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Background and Legal Authority

II. Highlights of the Final Rule and Summary of the Significant Changes Made to the Proposed Rule

A. Highlights of This Final Rule

B. Significant Changes FDA Made to the Proposed Rule

III. Comments on the Proposed Rule

A. General Comments

B. Foreign Trade Issues

C. Comments on Who is Subject to This Subpart? (Proposed § 1.326)

D. Comments on Who is Excluded From All or Part of the Regulations

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in this Subpart? (Proposed § 1.327)

E. Comments on What Definitions Apply to this Subpart? (Proposed

§ 1.328)

F. Comments on Do Other Statutory Provisions and Regulations Apply?

(Proposed § 1.329)

G. Comments on Can Existing Records Satisfy the Requirements of this Subpart? (Proposed § 1.330)

H. Comments on What Information is Required in the Records You Must Establish and Maintain to Identify the Nontransporter and Transporter Immediate Previous Source and Immediate Subsequent Recipients? (Proposed §§ 1.337 and 1.345)

I. Comments on Who is Required to Establish and Maintain Records for Tracing the Transportation of All Food? (Proposed § 1.351)

J. Comments on What Information is Required in the Transportation Records? (Proposed § 1.352)

K. Comments on What Are the Record Retention Requirements? (Proposed § 1.360)

L. Comments on What Are the Record Availability Requirements?

(Proposed § 1.361)

M. Comments on What Records Are Excluded From this Subpart?

(Proposed § 1.362)

N. Comments on What Are the Consequences of Failing to Establish and Maintain Records or Make Them Available to FDA as Required By This Subpart? (Proposed § 1.363)

O. Comments on What Are the Compliance Dates for This Subpart? (Proposed § 1.368)

IV. Analysis of Economic Impacts—Final Regulatory Impact Analysis

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A. Summary of the Costs and Benefits of the Final Rule

B. Description of Proposed Rule

C. General Comments

D. The Tradeoff Between Costs and Risk Reduction

E. Estimating the Benefits

F. Costs

G. Summary of the Costs and Benefits of the Final Rule and Policy

V. Final Regulatory Flexibility Analysis

VI. Unfunded Mandates

VII. SBREFA

VIII. Paperwork Reduction Act of 1995

IX. Analysis of Environmental Impact

X. Federalism

XI. References

I. Background and Legal Authority

The events of September 11, 2001, have highlighted the need to enhance the security of the infrastructure of the United States, including the food supply. Congress responded by enacting the Bioterrorism Act (Public Law 107–188), which was signed into law on June 12, 2002. The Bioterrorism Act includes a provision in title III (Protecting Safety and Security of Food and Drug Supply), subtitle A—Protection of Food Supply, section 306, which

amends the Federal Food, Drug, and Cosmetic Act (the FD&C Act) by adding section 414, Maintenance and Inspection of Records (21 U.S.C. 350c). (In the regulation itself, which is codified in title 21 of the Code of Federal Regulations, the Federal Food, Drug, and Cosmetic Act is referred to as ‘‘the act.’’ Thus, when the regulation is quoted in this preamble, the term ‘‘the act’’

will be used to refer to the Federal Food, Drug, and Cosmetic Act. However,

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in this preamble, we refer to the Federal Food, Drug, and Cosmetic Act as ‘‘the FD&C Act’’ to distinguish it from the Bioterrorism Act.) Section 414(b) of the FD&C Act provides, in part, that the Secretary of Health and Human Services (the Secretary), may by regulation establish requirements regarding the establishment and maintenance, for not longer than 2 years, of records by persons (excluding farms and restaurants) who manufacture, process, pack, transport, distribute, receive, hold, or import food. The records that are required to be kept by these regulations are those needed by the Secretary for inspection to allow the Secretary to identify the immediate previous sources

and immediate subsequent recipients of food, including its packaging, to address credible threats of serious adverse health consequences or death to humans or animals. Section 306(d) of the Bioterrorism Act provides that the Secretary ‘‘shall’’ issue regulations establishing recordkeeping requirements under section 414(b) of the FD&C Act no later than 18 months after enactment

of the Bioterrorism Act, that is, by December 12, 2003.

In addition, the Bioterrorism Act adds a new section 414(a) to the FD&C Act that provides records inspection authority to FDA. Section 414(a) of the FD&C Act provides that, if the Secretary has a reasonable belief that an article of food is adulterated and presents a threat of serious adverse health consequences or death to humans or animals, persons who manufacture,

process, pack, distribute, receive, hold, or import food must provide access to records related to the food that are needed to assist the Secretary in determining whether the food is adulterated and presents a threat of serious adverse health consequences or death to humans or animals.

Section 306 of the Bioterrorism Act also amends section 704(a) of the FD&C Act (21 U.S.C. 374(a)) to authorize FDA inspections of all records and

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other information described in section 414 of the FD&C Act, when the Secretary has a reasonable belief that an article of food is adulterated and presents a threat of serious adverse health consequences or death to humans or animals.

In addition, section 306(c) of the Bioterrorism Act amends section 301 of the FD&C Act (21 U.S.C. 331) to make it a prohibited act to refuse to permit access to, or copying of, any record as required by section 414 or 704(a) of the FD&C Act; or to fail to establish or maintain any record as required by section 414(b) of the FD&C Act; or to refuse to permit access to, or verification or copying of, any such required record; or for any person to use to his own

advantage, or to reveal, other than to the Secretary or officers or employees of the Department of Health and Human Services, or to the courts when relevant in any judicial proceeding under the FD&C Act, any information acquired under authority of section 414 of the FD&C Act.

To implement these provisions, on May 9, 2003 (68 FR 25188), FDA issued a proposed rule to require the establishment and maintenance of records to identify the immediate previous sources and immediate subsequent recipients of food. In addition to section 306 of the Bioterrorism Act, which amends the

FD&C Act as described previously, FDA is relying on section 701(a) of the FD&C Act (21 U.S.C. 371(a)) in issuing this final rule. Section 701(a) authorizes the agency to issue regulations for the efficient enforcement of the FD&C Act.

II. Highlights of the Final Rule and Summary of the Significant Changes Made to the Proposed Rule

A. Highlights of this Final Rule

The highlights of this final rule are described briefly in the following paragraphs, and are discussed in more detail later in the preamble of this document:

• Persons who manufacture, process, pack, transport, distribute, receive,

hold, or import food in the United States are subject to the regulations in par

1 (21 CFR part 1) subpart J of this final rule (i.e., recordkeeping and access requirements);

• The following persons or facilities are excluded from all of the

regulations in subpart J of this final rule: Farms; restaurants; those performing covered activities when the food is subject to the exclusive jurisdiction of the U.S. Department of Agriculture (USDA) under the Federal Meat Inspection Act (FMIA) (21 U.S.C. 601 et seq.), the Poultry Products Inspection Act (PPIA) (21

U.S.C. 451 et seq.), or the Egg Products Inspection Act (EPIA) (21 U.S.C. 1031 et seq.); and foreign persons, except foreign persons who transport food in the United States.

• The following persons or facilities are excluded from the requirement to establish and maintain records in §§ 1.337 and 1.345 of subpart J of this final rule, but are subject to the record availability requirements in §§ 1.361 and 1.363 for existing records: (1) Fishing vessels not engaged in processing

as defined in § 123.3(k) (21 CFR part 123.3(k)); (2) retail food establishments that employ 10 or fewer full-time equivalent employees; (3) nonprofit food establishments that prepare or serve food directly to the consumer or otherwise

provide food or meals for consumption by humans or animals in the United States; and (4) persons who manufacture, process, pack, transport, distribute, receive, hold, or import food contact substances other than the finished container that directly contacts the food.

• Persons who manufacture, process, pack, transport, distribute, receive, hold, or import food are subject to §§ 1.361 and 1.363 with respect to its packaging (the outer packaging of food that bears the label and does not contact the food). All other persons who manufacture, process, pack, transport, distribute, receive, hold, or import packaging are excluded from all of the

requirements of this subpart J of this final rule.

• Persons who place food directly in contact with its finished container are subject to all of the requirements of subpart J of this final rule as to the finished container that directly contacts that food. All other persons who manufacture, process, pack, transport, distribute, receive, hold, or import the

finished container that directly contacts the food are excluded from the requirements of subpart J of this final rule as to the finished container, except §§ 1.361 and 1.363.

• Persons who distribute food directly to consumers are excluded from the requirement in § 1.345 to establish and maintain records to identify the immediate subsequent recipients as to those transactions. The term ‘‘consumers’’ does not include businesses.

• Persons who operate retail food establishments that distribute food to persons who are not consumers are subject to all of the requirements in subpart J of this final rule. However, the requirements in § 1.345 to establish and maintain records to identify the nontransporter and transporter immediate

subsequent recipients that are not consumers applies as to those transactions only to the extent the information is reasonably available.

• Persons who manufacture, process, pack, transport, distribute, receive, hold, or import food for personal consumption are excluded from all of the requirements of subpart J of this final rule.

• Persons who receive or hold food on behalf of specific individual

consumers and who are not also parties to the transaction and who are not in the business of distributing food are excluded from all of the requirements of subpart J of this final rule.

• The regulations in subpart J of this final rule do not require duplication of existing records if those records contain all of the information required by the subpart. Furthermore, persons can supplement existing records with any new information required by this final rule instead of creating an entirely new record containing both existing and new information.

• Persons who manufacture, process, pack, distribute, receive, hold, or import food in the United States must establish and maintain the following records to identify the immediate previous sources and immediate subsequent recipients for all food they receive and release, unless otherwise excluded from the requirements of subpart J of this final rule:

• Name, address, telephone number and, if available, fax number, and email address of the immediate previous source and subsequent recipient;

• Adequate description;

• Date received or released;

• For persons who manufacturer, process, or pack food, the lot or code number or other identifier;

• Quantity and how the food is packaged; and

• Name, address, telephone number and, if available, fax number, and email address of the transporter who transported the food to and from you.

• Persons who have possession, custody, or control of food in the United States for the sole purpose of transporting the food, or foreign persons who transport food in the United States, regardless of whether they have possession, custody, or control of the food for the sole purpose of transporting that food

(transporters), can meet the requirements of subpart J of this final rule by:

(1) Establishing and maintaining the records listed in § 1.352(a); or

(2) Establishing and maintaining specified information that is in the records required of roadway interstate transporters by the Department of Transportation’s (DOT’s) Federal Motor Carrier Safety Administration (FMCSA) contained in 49 CFR 373.101 and 373.103 as of the date of publication of this final rule; or

(3) Establishing and maintaining specified information that is in the records required of rail and water interstate transporters by the DOT’s Surface Transportation Board (STB) contained in 49 CFR 1035.1 and 1035.2 as of the date of publication of this rule; or

(4) Establishing and maintaining specified information that is in the records required of international air transporters on air waybills by the Warsaw Convention as Amended at the Hague, 1995 and by Protocol No. 4 of Montreal, 1975 (Warsaw Convention); or

(5) Entering into an agreement with a nontransporter immediate previous source (if located in the United States) or immediate subsequent recipient (if located in the United States) to establish, maintain, or establish and maintain, the required records in options 1 or 2 of the previous paragraphs. The agreement must contain certain elements specified in § 1.352(e).

• If you are a nontransporter, you must retain for 6 months after the dates you receive and release the food all required records for any food for which a significant risk of spoilage, loss of value, or loss of palatability occurs within

60 days after the date you receive or release the food.

• If you are a nontransporter, you must retain for 1 year after the dates you receive and release the food all required records for any food for which a significant risk of spoilage, loss of value, or loss of palatability occurs only after a minimum of 60 days, but within 6 months, after the date you receive

or release the food.

• If you are a nontransporter, you must retain for 2 years after the dates you receive and release the food all required records for any food for which a significant risk of spoilage, loss of value, or loss of palatability does not occur sooner than 6 months after the date you receive or release the food, including foods preserved by freezing, dehydrating, or being placed in a hermetically

sealed container.

• If you are a nontransporter, you must retain for 1 year after the dates you receive and release the food all required records for animal food, including pet food.

• Transporters of food (or specified persons who agree to establish and maintain required records under agreements with transporters) in the United States must retain records for 6 months for any food having a significant risk of spoilage, loss of value, or loss of palatability within 60 days after the date

the transporter receives or releases the food.

• Transporters of food (or specified persons who agree to establish and maintain required records under agreements with

transporters) in the United States must retain records for 1 year for any food having a significant risk of spoilage, loss of value, or loss of palatability only after a minimum of 60 days after the date the transporter receives or releases the food.

• Records must be made available as soon as possible, not to exceed 24 hours from the time of receipt of the official request.

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• Failure to establish or maintain records or refusal to permit access to or verification or copying of any record is a prohibited act under section 301 of the FD&C Act.

• The compliance date for the records establishment and maintenance requirements is [insert date 12 months after date of publication in the Federal Register], except that the compliance date for small businesses employing fewer that 500, but more than 10 full-time equivalent employees is [insert date

18 months after date of publication in the Federal Register], and the compliance date for very small businesses that employ 10 or fewer full-time equivalent employees is [insert date 24 months after date of publication in the Federal Register].

B. Significant Changes FDA Made to the Proposed Rule

FDA made the following significant changes to the proposed rule:

• All foreign persons, except foreign persons who transport food in the United States, are excluded from all of the requirements in subpart J of this final rule. A foreign person transporting food in the United States is subject

to the requirements for transporters in the subpart.

• Persons who manufacture, process, pack, transport, distribute, receive, hold, or import food are subject to §§ 1.361 and 1.363 with respect to its packaging (the outer packaging of food that bears the label and does not contact the food). All other persons who manufacture, process, pack, transport, distribute, receive, hold, or import packaging are excluded from all of the

requirements of subpart J of this final rule. Persons who manufacture, process, pack, transport, distribute, receive, hold, or import food contact substances other than the finished container that directly contacts the food are excluded from all of the requirements of subpart J, except §§ 1.361 and 1.363.

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• Persons who place food directly in contact with its finished container are subject to all of the requirements of subpart J of this final rule as to the finished container that directly contacts that food. All other persons who manufacture, process, pack, transport, distribute, receive, hold, or import the finished container that directly contacts the food are excluded from the

requirements of subpart J as to the finished container, except §§ 1.361 and 1.363.

• Persons who receive or hold food on behalf of specific individual

consumers and who are not also parties to the transaction and who are not in the business of distributing food are excluded from all of the requirements of subpart J.

• Transporters can meet their obligation to establish and maintain records in the following ways: (1) Keeping the records listed in § 1.352(a); (2) keeping the records listed in § 1.352(b), which contain information also currently required of roadway interstate transporters under the FMCSA regulations as of the date of publication of this final rule; (3) keeping the records listed in

§ 1.352(c), which contain information also currently required of rail and water interstate transporters under the STB regulations as of the date of publication of this final rule; (4) keeping the records listed in § 1.352(d), which contain information also currently required of international air transporters on air waybills under the Warsaw Convention; or (5) entering into an agreement with

a nontransporter immediate previous source in the United States or a nontransporter immediate subsequent recipient in the United States to keep records for them. The agreement must contain certain elements specified in § 1.352(c). Intrastate transporters must also establish and maintain records

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under this final rule and can meet this obligation by complying with either § 1.352(a), (b), (c), (d), or (e).

• Foreign persons who transport food in the United States, whether or not they have possession, custody, or control of the food for the sole purpose of transporting, must comply with § 1.352 of subpart J of this final rule.

• The exclusion for pet food not subject to the recordkeeping provisions of the animal proteins prohibited in ruminant feed regulation (BSE rule) (62 FR 30935, June 5, 1997) has been deleted.

• The definition of ‘‘farm’’ now states that washing, trimming of outer leaves, and cooling produce are part of harvesting.

• The definition of ‘‘farm’’ now includes facilities that pack or hold food, provided that all food used in such activities is grown, raised, or consumed on that farm or another farm under the same ownership.

• ‘‘Holding’’ has been defined and means ‘‘storage of food.’’ Holding facilities include warehouses, cold storage facilities, storage silos, grain elevators, and liquid storage tanks.

• ‘‘Packaging’’ has been defined and means ‘‘the outer packaging of food that bears the label and does not contact the food. Packaging does not include food contact substances as they are defined in section 409(h)(6) of the FD&C Act (21 U.S.C. 348(h)(6)).’’

• Recipe has been defined to mean the formula, including ingredients,quantities, and instructions, necessary to manufacture a food product. Because a recipe must have all three elements, a list of the ingredients used to manufacture a product without quantity information and manufacturing instructions is not a recipe.

• The partial exclusion for retail food establishments has been replaced with a partial exclusion for persons who distribute food directly to consumers.

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Persons who distribute food directly to consumers are excluded fromestablishing and maintaining records required by § 1.345 to identify the nontransporter and transporter immediate subsequent recipients as to those transactions. Persons who distribute food to businesses must establish and maintain records to identify the nontransporter and transporter immediate subsequent recipients to the extent that information is reasonably available,

for example when the purchaser has an established commercial account.

• The exclusion for retail facilities that are located in the same general physical location as a farm has been replaced with an exclusion for all retail food establishments that employ 10 or fewer full-time equivalent employees.

• An exclusion has been added for nonprofit food establishments.

• ‘‘Nonprofit food establishment’’ has been defined and means:

* * * a charitable entity that prepares or serves food directly to the consumer or otherwise provides food or meals for consumption by humans or animals in the United States. The term includes central food banks, soup kitchens, and nonprofit

food delivery services. To be considered a nonprofit food establishment, the establishment must meet the terms of section 501(c)(3) of the U.S. Internal Revenue

Code (26 U.S.C. 501(c)(3)).

• The requirement to record a ‘‘responsible individual’’ when identifying the immediate previous source, immediate subsequent recipient, and transporters has been deleted.

• The requirement to record ‘‘lot or code number or other identifier’’ has been deleted for all covered entities, except persons who manufacture, process, or pack food.

• The definition of perishable food has been deleted.

• The record retention periods for nontransporters have been changed to:

(1) 6 months for food for which a significant risk or spoilage, loss of value,or loss of palatability occurs within 60 days after the date you receive or releasethe food;

(2) 1 year for food for which a significant risk of spoilage, loss of

value, or loss of palatability occurs only after a minimum of 60 days, but within 6 months, after the date you receive or release the food; and

(3) 2 years for food for which a significant risk of spoilage, loss of value, or loss of palatability does not occur sooner than 6 months after the date you receive or release the food, including foods preserved by freezing, dehydrating, or being placed in a hermetically sealed container.

• The record retention periods for transporters (or specified persons who

agree to establish and maintain required records under agreements with

transporters) have been changed to 6 months for any food having a significant

risk or spoilage, loss of value, or loss of palatability within 60 days after the

date the food is received or released and 1 year for any food having a

significant risk or spoilage, loss of value, or loss of palatability only after a

minimum of 60 days after the date the food is received or released.

• The record availability requirements have been changed from 4 hours/

8 hours to ‘‘as soon as possible, not to exceed 24 hours from the time of receipt

of the official request.’’

• The compliance date for these regulations has changed to [insert date

12 months after date of publication in the Federal Register]. Small businesses

have [insert date 18 months after date of publication in the Federal Register]

of this final rule to come into compliance with these regulations, and very

small businesses have [insert date 24 months after date of publication in the

Federal Register] of this final rule to come into compliance with these

regulations.

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• The qualifying language ‘‘food intended for consumption in the United

States’’ has been removed from this final rule to ensure that all persons that

manufacture, process, pack, transport, distribute, receive, hold, or import food

in the United States that is intended for consumption are subject to this final

rule unless otherwise exempt.

III. Comments on the Proposed Rule

FDA received approximately 212 timely submissions in response to the

proposed rule, which raised approximately 220 major issues. To make it easier

to identify comments and FDA’s responses to the comments, the word

‘‘Comment’’ will appear in parentheses before the description of the comment,

and the word ‘‘Response’’ will appear in parentheses before FDA’s response.

FDA has also numbered each comment to make it easier to identify a particular

comment. The number assigned to each comment is purely for organizational

purposes and does not signify the comment’s value or importance or the order

in which it was submitted.

A. General Comments

(Comment 1) Some comments state that it would be beneficial for the

agency to provide the food industry with a model form that could be used

to record all the required information, with the option for the industry to use

this form or established recordkeeping systems. One comment requests that

the agency develop and provide respective freeware that could be available

as a compact disc (CD) or downloaded from the FDA Web site well in advance

of the compliance date of the final rule. A few comments request that the

regulations make clear that the model form is guidance and is not mandatory.

One comment suggests that as a way to show that the model form is guidance,

the agency should place the model form in an appendix to the regulations.

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Several comments object to the inclusion of a model form in the

regulations. The comments oppose using any ‘‘one-size fits all’’ generic form

as an example or requirement. The comments suggest that affected businesses

should decide the format in which the required records should be kept as

dictated by specific business practices. The comments express concern that

example forms might become informal requirements out in the field even

though originally only meant as guidance.

One comment recommends that the agency provide further examples of

scenarios, rather than model forms, where records would be in compliance and

noncompliance with the final regulations.

In addition, several comments state that most food companies currently

maintain the chain-of-distribution information that is required by these

regulations. However, the diversity and complexity of the food industry means

that the information is maintained in many different ways and formats, ranging

from computerized records systems to file folders of paper records. The

recordkeeping systems are designed to provide the necessary information to

remove food from the market and prevent more food presenting the same risk

from entering the market. The comments state that the regulations should not

prescribe any specific manner or form of maintaining the information.

(Response) The provisions describe the specific information a covered

entity must keep, but do not specify the form or type of system in which those

records must be maintained. As stated in both the proposed and final § 1.330,

these provisions do not require duplication of existing records if those records

contain all of the information required by subpart J of this final rule. If a person

subject to these provisions keeps records of all of the information as required

by subpart J in compliance with other Federal, State, or local regulations, or

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for any other reason, e.g., as a result of its own business practices, then those

records may be used to meet these requirements. Such records may include,

but are not limited to, purchase orders, bills of lading, invoices, and shipping

documents. Moreover, entities do not have to keep all of the information

required by this final rule in one set of records. If they have records containing

some of the required information, they may keep those existing records and

keep, either separately or in a combined form, any new data required by this

final rule. There is no obligation to create an entirely new record or

compilation of records containing both existing and new information, even if

the records containing some of the required information were not created at

the time the food was received or released.

Our intent is to have as little impact as possible on current recordkeeping

practices if those records can meet the requirements of these regulations. FDA

received numerous comments, as discussed further in section III.G of this

document on ‘‘Can existing records satisfy the requirements of this subpart?’’

that agreed with this approach to not specify the type and format of the records

and to allow flexibility to use existing recordkeeping systems. In addition,

comments state that individual companies are in a better position to decide

in what format records are needed based on knowledge of applicable business

practices and cost structures. For these reasons, FDA has not included a model

form in this final rule.

(Comment 2) Several comments state that the food industry has repeatedly

demonstrated the ability to identify and remove product from grocery store

shelves very quickly. The comments suggest that the diversion of substantial

resources that would be necessary to implement the agency’s proposed

regulations would not further food security, but instead would diminish the

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overall efficiency of the food distribution system, which is necessary to serve

food safety and security needs and commercial purposes.

Further, some comments assert that the regulations are directed toward

enabling the Government to trace a product, rather than ensuring that

companies are able to trace the product through all the links in the chain of

custody of a food ingredient or product. The comments state that the intent

of the Bioterrorism Act was to ensure the existence of a system that fully

engages the institutional knowledge and logical procedures that already enable

the companies responsible for the production and distribution of food to

maintain an orderly and efficient nationwide supply chain and that also

currently make it possible to effect rapid recalls when necessary. The

comments state that the proposed regulations fail to capitalize on the

efficiencies of time and resources available through effective public/private

coordination, exemplified by the efforts that currently support effective recalls.

(Response) FDA recognizes that some of the food industry currently has

existing records that may satisfy all or part of these regulations; however, not

all of the food industry is currently able to conduct such traceback

investigations. Notwithstanding the ability of some of the food industry to

conduct such investigations, Congress authorized FDA through the

Bioterrorism Act to issue regulations requiring the establishment and

maintenance of records by persons who manufacture, process, pack, transport,

distribute, receive, hold or import food to enable FDA to identify the

immediate previous sources and immediate subsequent recipients of food,

including its packaging, to address credible threats of serious adverse health

consequences or death to humans or animals. FDA believes the information

required to be established and maintained in records in these regulations is

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necessary to enable FDA to conduct an efficient and effective tracing

investigation, independent of what the food industry may be able to do. FDA

reiterates that it is not dictating the form or type of system to be used to satisfy

these requirements in these regulations. If the food industry already keeps all

of the information required by this final rule, then existing records can be used

to comply with this final rule. Further, FDA anticipates working closely with

the food industry in any tracing investigation.

In addition, recently FDA was significantly hampered in identifying the

source of contaminated food during a trace back investigation following a

Hepatitis A outbreak due to contaminated green onions. This outbreak

involved a distributor who purchased green onions from a variety of firms in

no predictable pattern and distributed them without recording brand and lot

information. The distributor did not keep records of the previous sources of

the green onions, which might have indicated a particular supplier of green

onions during the specified exposure time period. It was impossible for

investigators to determine, from the distributor, the identity of the supplier

of the green onions that were sent to the implicated restaurant, and therefore

FDA had to spend time investigating all potential suppliers of the green onions

to identify the one supplier that supplied the restaurant. Speedy trace back

would have enabled FDA to prevent further distribution of contaminated

products sooner, thereby preventing more illnesses.

Further, 20 percent of all tracing investigations are prematurely terminated

due to deficiencies in recordkeeping. A reduction of just one premature

termination could prevent at least 53 people from becoming ill. Requiring

adequate records to complete a tracing investigation reduces trace-back times

by 8 days. This increased efficiency facilitates preventive action in 15 to 18

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percent of outbreaks. The speed with which a tracing investigation can be

conducted is of vital importance in reducing the number of people who could

potentially become ill. Access to records that do not exist or that do not contain

sufficient information (with no requirement to retain them or make them

available in a timely fashion) is not an efficient and effective way to conduct

a tracing investigation during a public health emergency involving serious

adverse health consequences or death to humans or animals.

(Comment 3) One comment states that established industry practice with

regard to investigating product defects and conducting product recalls is

consistent with the terms of the Bioterrorism Act allowing for the rapid

identification of the immediate previous source and immediate subsequent

recipient of foods. The comment asserts that the industry’s response to the

events of September 11, 2001, has strengthened these existing practices. The

comment explains that as an inevitable result of industry’s commitment to

Responsible Care Security Code No. 7 and increased requests from customers,

emphasis is now shifting from security at fixed plant sites and major

distribution centers to security of products throughout the value chain. This

shift in emphasis enhances industry’s existing traceback capabilities. The

comment asserts that the controls needed to effectively trace the source and

recipient of foods are already in place.

(Response) As explained in the response to comment 2, these provisions

are intended to help ensure that FDA has the information it needs to identify

the immediate previous sources and immediate subsequent recipients of food

to address credible threats of serious adverse health consequences or death

to humans or animals.

23

(Comment 4) One comment asserts that when food presents a risk of

serious adverse health consequences or death to humans or animals, a class

I recall is used and can quickly eliminate problems, whereas recordkeeping,

at best, will get a message to the retail locations where products were placed

on sale to consumers. The comment questions the benefit of the copious

amounts of information and possible implementation of an intricate new

product tracking system required by the regulations. The comment asserts that

class I recalls will continue to be the appropriate means by which a potential

hazard is handled and that requiring the expenditure of significant resources

to develop a new system in the absence of a Congressional mandate or a

genuine need is questionable. The comment recommends that FDA continue

to rely upon the proven capabilities of class I recalls and cooperation with

the food industry. The comment suggests that FDA should develop a system

to contact the appropriate companies to engage their assistance in addressing

threats to the food supply, rather than requiring the onerous recordkeeping

specified in the regulations.

(Response) This comment assumes that the contaminated food and its

whereabouts are known completely, which may not always be the case. As

such, the need exists for records to be able to trace forward fully to all locations

where the food was shipped, as well as trace backwards to locate any similarly

contaminated food shipped to all other locations. Moreover, class I recalls are

voluntary measures only. In the Bioterrorism Act, Congress has given FDA the

means both to establish requirements for establishment and maintenance of

records, and to administratively detain, on its own initiative, food for which

FDA has credible evidence or information that the food presents a threat of

serious adverse health consequences or death to humans or animals (section

24

303 of the Bioterrorism Act). In addition, the records are needed not only to

help remove contaminated food from the market place, but also to help identify

the source of the contamination.

(Comment 5) A few comments state that, in the event of a serious product

issue or life-threatening situation, the only responsible action to take is to warn

the public through the media to prevent further use or distribution of the

product. The communication vehicle used to disseminate the warning should

be based on the severity of potential harm or health consequences. Use of the

media also is necessary to influence facilities to check their store stock and

for consumers to check their refrigerators and pantries for the affected product.

(Response) FDA agrees that the use of warnings to the public about specific

products is important. Indeed, FDA has used this approach many times.

Nonetheless, records will ensure that FDA can perform trace forward to remove

the problem food from the market and traceback to identify the source of the

problem. These recordkeeping requirements will also enable FDA to identify

the problem food more specifically and, thus, FDA can target its public

warnings on the specific problematic food.

(Comment 6) A few comments request that the agency add a ‘‘pipeline

provision’’ that allows the use of NA (not available) in place of information

where ingredient records were not maintained. The comments state that many

ongoing processing operations will have some ingredients on site that have

been purchased and housed in facilities for some time prior to the

implementation of these regulations. In these cases, it would be a significant

manpower burden (or perhaps not possible at all) to obtain or attempt to

recreate all the required information on the source of those ingredients. The

comments note that these ingredients have been used in food production

25

without incident and it would be unlikely they would be involved in an act

of terrorism.

(Response) There is no requirement to establish and maintain records for

food ingredients you received before the compliance date of these regulations.

Under that scenario, however, you must establish and maintain records of that

food when you release it after the compliance date of the regulations. For

example, if a commercial bread bakery receives flour, eggs, and salt before the

compliance date of this final rule, it does not need to keep records of the

immediate previous source of when it received that food. Once the bakery uses

these ingredients to bake the bread and releases the bread to nonconsumers

after the compliance date of the rule, the bakery must keep the records required

by § 1.345 of this final rule regarding the immediate subsequent recipients of

the bread.

(Comment 7) One comment recommends the use of United Code Council

standards, a system of globally recognized and implemented standards that

enables traceability of products and identification of trading parties/recipients,

through all locations of the supply chain.

(Response) FDA does not agree. The agency has determined that the least

burdensome way of issuing the recordkeeping requirements is to specify the

information that must be contained in the records, but not the format in which

the records are kept. Indeed, the agency received numerous comments that

argued that covered entities should be allowed to use existing records and

systems.

(Comment 8) One comment requests that source labeling, including

country-of-origin labeling, be required as a component of an effective traceback

program in the event of a food emergency. The comment states that some

26

industries have already developed technologies such as barcodes, stamps,

stickers, or tags to identify the source of produce as well as software to assist

in more accurate traceback to the grower/packer level.

(Response) FDA does not agree. At this time, FDA does not believe this

information is necessary to enable a traceback. FDA believes the requirements

of the final regulations for the establishment and maintenance of records to

identify the immediate previous sources and immediate subsequent recipients

of food in order to address credible threats of serious adverse health

consequences or death to humans or animals are sufficient.

(Comment 9) Some comments ask that the agency generate more publicity

on the regulations and provide the industry with educational materials and

training. One comment states that because food wholesale distributors have

no significant contact with FDA personnel and procedures, they have a limited

understanding of the requirements. One comment asks that the agency help

promote and educate the industry abroad on the recordkeeping regulations.

Another comment asks that FDA provide materials in other languages. One

comment asks that the agency develop a strong communications program to

disseminate the new regulations once they become final because the fresh

produce industry and its transportation partners are highly diverse and

fragmented. The comment states that independent truckers in particular need

to be made aware of the regulations because the fresh produce industry in the

United States relies heavily on independent truckers to move fresh fruits and

vegetables to market quickly.

(Response) FDA conducted extensive outreach on the proposed

recordkeeping rule, including having relevant FDA staff attend 6 international

meetings and more than 100 domestic meetings to ensure that affected parties

27

were aware of the Bioterrorism Act requirements. On May 7, 2003, FDA held

a public meeting (via satellite downlink) to discuss the recordkeeping and

administrative detention proposed rules. See 68 FR 16998 (April 8, 2003) or

http://www.cfsan.fda.gov/~dms/fsbttraz.html. Nearly 1,000 participants in

North and South America and the Caribbean viewed that live broadcast. The

meeting was later rebroadcast to Europe, Asia, Africa, and the Pacific (areas

in different time zones). FDA has also provided transcripts of the broadcast

in English, French, and Spanish (the three official World Trade Organization

languages) on the agency’s Web site. In addition to this outreach to the affected

industry, FDA has conducted outreach on the proposed rule to States.

FDA plans similar outreach directed to stakeholders following publication

of the final rule implementing the recordkeeping provisions of the Bioterrorism

Act. Our outreach will include the following:

• Materials and events for the media;

• Domestic outreach meetings to States and industry;

• International outreach to U.S. trading partners;

• Presentations by FDA officials and exhibits at professional and trade

conferences and meetings to inform industry and State and local government

representatives of the new regulations and their requirements; and

• Cooperative arrangements with other Federal agencies to ensure that

information on the final regulations and their requirements is disseminated

to affected companies and individuals.

More specifics regarding each of these will be included on FDA’s Web

site at http://www.fda.gov/oc/bioterrorism/bioact.html.

(Comment 10) Several comments suggest that, to lessen the burden to the

food industry, FDA needs to coordinate with other local, Federal, and State

28

government security programs in establishing the final recordkeeping

regulations.

(Response) In issuing these recordkeeping regulations, FDA has stated that

records established and maintained as a result of local, State, or other Federal

regulations, or as a matter of routine business practice, need not be duplicated

if the records contain all the information required by these regulations. Further,

if existing records contain some, but not all, of the required information,

persons may supplement existing records with the additional information

required under this final rule.

(Comment 11) One comment asks that the final rule require that upstream

entities provide all the required information to downstream entities in the food

distribution system. The comment states that distribution centers that receive

and store food and retail outlets that hold and sell food do not know and

should not be required to determine many of the information items required

under the proposed regulation. The comment states that requiring that any

information be passed through the system from the first point of distribution,

preferably through electronic means, would alleviate some of the burden of

the recordkeeping requirements on downstream entities.

(Response) The agency does not agree completely that distribution centers

and retail outlets do not know many of the information items. The agency

agrees, however, that including information pertaining to lot or code numbers

of foods in the required records is not practical for distribution centers and

retail outlets, given current business practices. FDA has, therefore, deleted this

requirement. Instead, the final regulation now only requires that persons who

manufacture, process, or pack food keep records on the lot or code number

or other identifier of the food, and only to the extent this information exists.

29

Moreover, to minimize the burden this regulation may have on affected parties,

FDA is not specifying the form or format of the records that must be established

and maintained and is not requiring electronic records.

(Comment 12) Several comments applaud the agency’s efforts in proposing

a rule that appears to be designed to work with the food industry as efficiently

and effectively as possible to address credible threats without imposing undue

burdens. One comment urges the agency to issue the final regulations as

expeditiously as possible to enhance compliance with the provisions of the

Bioterrorism Act. The comment states that, by finalizing the regulations in

conjunction with the interim final rules entitled ‘‘Registration of Food

Facilities Under the Public Health Security and Bioterrorism Preparedness and

Response Act of 2002’’ (the registration interim final rule) (68 FR 58894,

October 10, 2003) and ‘‘Prior Notice of Imported Food Under the Public Health

Security and Bioterrorism Preparedness and Response Act of 2002’’ (the prior

notice interim final rule) (68 FR 58974, October 10, 2003), the education and

training that will be necessary for compliance with the regulations can be done

together and the internal policy and procedures for companies can be designed

to meet all of the obligations under the final rule. The comment further states

that this is the reason that Congress intended regulations to be issued within

18 months of the effective date of the Bioterrorism Act.

(Response) The agency has acted expeditiously in issuing all of the

regulations under the Bioterrorism Act and has developed and published final

regulations as quickly as possible. With respect to education and training, as

stated previously, the agency intends to conduct extensive outreach to

stakeholders for this final rule that is similar to outreach the agency conducted

for the registration and prior notice interim final rules.

30

(Comment 13) One comment requests clarification regarding the level of

recordkeeping that will be expected at each facility maintained by a vertically

integrated company. The comment explains that a vertically integrated

company has various facilities involved in the growing and processing of bulk

ingredients as well as the manufacturing and marketing of finished products.

Some of the requirements for recordkeeping could result in duplication of

effort if each facility within the company is required to maintain separate

records, even though the overall records are available at company headquarters

or some central location. One comment requests that the final rule clarify what

is meant by the term ‘‘released’’ and the relationship of this term to holding

legal title, or ownership of the food. Another comment suggests that FDA

clarify that only at such time as the food leaves the possession and control

of one firm and enters into the possession and control of another firm, whether

or not via a transporter, would the recordkeeping requirement apply. The

comment maintains that any other interpretation of the statute would impose

a crushing burden of internal tracking systems and paperwork that would

detract from most firms’ abilities to do business and is well beyond the intent

of the Bioterrorism Act.

(Response) The records required by these regulations are those that FDA

needs for inspection to identify the immediate previous sources and the

immediate subsequent recipients of food. ‘‘Immediate previous source’’ has

been defined in § 1.328 of the final rule to mean ‘‘a person who owns food

or who holds, processes, packs, imports, receives, or distributes food or food

packaging, and that last had an article of food before transferring it to another

person.’’ Unless otherwise exempt (i.e., a farm), a ‘‘vertically integrated

company’’ would be required to identify the sources of all food received from

31

its immediate previous sources. Once the vertically integrated company

receives the food and keeps information on its immediate previous sources,

that vertically integrated company does not need to keep additional records

until it releases the food to another person. Unless otherwise exempt, at the

time the vertically integrated company releases the food, it is required to

identify the immediate subsequent recipients of that food.

As an example, if a company buys food from its immediate previous

source (company A), then the company further processes the food, holds the

food, transports the food, and distributes the food to a grocery store, then the

vertically integrated company would only have to keep records on its

immediate previous source (company A) and its immediate subsequent

recipient (grocery store). The vertically integrated company need not keep

records of all the covered activities (manufacturing, processing, packing,

transporting, etc.) conducted by that company while it has the food.

Of course, when the integrator has any records or other information

available to FDA under sections 414 and 704(a) of the FD&C Act, then FDA

would have access to those records if FDA has a reasonable belief that the

food is adulterated and presents a threat of serious adverse health

consequences or death to humans or animals.

B. Foreign Trade Issues

(Comment 14) Several comments representing foreign governments and

international associations agree in principle to the recordkeeping requirements

provided the requirements are based on a sound risk assessment and do not

restrict trade more than necessary to effectively address potential risks. Some

comments note that there is no risk assessment provided to justify the

proposed measures required by the World Trade Organization Agreement on

32

the Application of Sanitary and Phytosanitary Measures (SPS agreement).

Several comments representing foreign governments and businesses request

that FDA work with foreign governments to develop common standards and

requirements and to facilitate trade flow. Some foreign comments argue that

the result of the onerous recordkeeping burden in the regulations will be the

elimination of many legitimate and safe food distribution businesses and a

serious reduction in global food trade. One comment suggests that the

regulations will adversely impact trade, as they are likely to increase

uncertainty and costs for foreign exporters. Small and medium sized foreign

companies in particular may be prevented from continuing to export to the

United States for these reasons. One comment is concerned that the regulations

may lead to the unintended consequence of foreign countries imposing the

same requirements of U.S. goods in foreign trade.

(Response) FDA considers that these foreign trade comments are now

moot, given the scope of these final regulations. These final regulations do not

apply to foreign persons, except foreign persons transporting food in the

United States, who are treated no differently than domestic food transporters

under these final regulations. FDA does not believe that foreign persons who

transport food in the United States will incur additional costs as a result of

these regulations, because FDA assumes that they will choose to comply with

§ 1.352 of this final rule by establishing and maintaining the records already

required by FMCSA. See the response to comment 82, later in this document.

C. Comments on Who is Subject to This Subpart? (Proposed § 1.326)

1. General

(Comment 15) Several comments seek clarification on who is covered by

the proposed regulation. Comments ask if the provisions of the regulations

33

apply to port facilities, such as warehouses, or storage and inspection facilities

in land, sea, or airports that belong to private companies and government

bodies for food control in the country of shipping and/or origin.

(Response) Persons who manufacture, process, pack, transport, distribute,

receive, hold, or import food in the United States are subject to these

regulations. ‘‘Person’’ is defined in section 201(e) of the FD&C Act (21 U.S.C.

321 (e)) and includes any ‘‘individual, partnership, corporation, and

association.’’ Therefore, any person located in any State or Territory of the

United States, the District of Columbia, or the Commonwealth of Puerto Rico

who manufactures, processes, packs, transports, distributes, receives, holds, or

imports food is included within the term ‘‘person’’. ‘‘Holding’’ has been

defined in § 1.328 of the final rule to mean ‘‘storage of food. Holding facilities

include warehouses, cold storage facilities, storage silos, grain elevators, and

liquid storage tanks.’’ Accordingly, port facilities, such as warehouses, or

storage facilities that are located in any State or Territory of the United States,

the District of Columbia, or the Commonwealth of Puerto Rico are subject to

these regulations as they are ‘‘persons’’ who are holding food.

(Comment 16) One comment seeks clarification on whether the proposed

regulation applies to a carrier’s freight brokers. The comment states that,

although these brokers never have actual physical possession of freight, they

act as the middleman for carriers and shippers and have knowledge of where

the freight came from and where it went. A few comments ask that FDA clarify

that customs brokers are excluded from the regulations. The comment indicates

that because § 1.326 of the proposed regulations applies to, inter alia, persons

that ‘‘import’’ food, it could be interpreted to include customs brokers, who

act only as agents for the importer. A comment notes that customs brokers

34

have only the information needed to file an entry on behalf of the actual

importer and to obtain release of the food from U.S. Customs and Border

Protection (CBP). However, according to the comment, customs brokers do not

own food or hold, process, pack, import, receive, or distribute food for

purposes other than transportation. The comment notes that applying the

recordkeeping requirements to customs brokers would cause redundant and

burdensome recordkeeping requirements for them.

(Response) FDA clarifies that the recordkeeping requirements do not apply

to brokers who act only to facilitate distribution, sale, or transportation of food

by processing information or paperwork associated with these functions.

Brokers who do not directly manufacture, process, pack, transport, distribute,

receive, hold, or import food are not subject to the requirements of the

regulation.

(Comment 17) One comment asks that FDA specify whether the regulation

applies to the importer of record or to the initial U.S. recipient when the

merchandise enters the country. The comment notes that this clarification

could affect who is responsible for the establishment and maintenance of

records.

(Response) The final rule applies to persons who manufacture, process,

pack, transport, distribute, receive, hold, or import food in the United States,

unless the person qualifies for an exclusion in § 1.327 of the final rule. An

importer of record or an initial U.S. recipient that is involved in one or more

of the identified activities must establish and maintain the required records.

(Comment 18) Several comments express concern because the proposed

regulation applies only to domestic, for-hire transporters, and foreign

transporters that enter the United States, as well as domestic private

35

transporters, are not covered. Comments state that the regulation should apply

uniformly to all transporters, foreign and domestic, for-hire and private, to

ensure that no group has an unfair competitive advantage.

(Response) All persons transporting food in the United States must meet

the requirements of subpart J of this final rule, regardless of whether they are

‘‘for hire’’ or ‘‘private.’’ FDA notes, however, that if a manufacturer located

in the United States transports the food in its own company trucks, then it

must comply with the recordkeeping requirements for nontransporters as

opposed to those applicable to transporters because FDA does not need the

facility to keep duplicative records of the food while it is in that facility’s

control. However, if a foreign person, such as a person who manufactures food,

transports food in the United States, it must comply with the requirements

for transporters, even if it transports the food in the United States itself. This

ensures that FDA will have the ability to traceback the food that is transported

in the United States, even if the facility from which the food originates is an

exempt foreign facility under subpart J.

(Comment 19) One comment notes that CBP’s current requirements apply

to trucking companies that transport imported food into the United States. The

comment suggests that FDA coordinate with CBP to get data from them in the

event of a threat to the nation’s food supply, rather than develop its own

distinct recordkeeping regulations.

(Response) The records required to be kept by these regulations are those

FDA needs to help identify the immediate previous sources and immediate

subsequent recipients of food. Section 1.361 of the final rule allows FDA access

to transporters’ existing records when FDA has a reasonable belief that an

article of food is adulterated and presents a threat of serious adverse health

36

consequences or death to humans or animals. When conducting a traceback,

FDA needs access to the required records at each point in the distribution

chain for the implicated food. Thus, FDA will expect to obtain applicable

records from transportation companies in the distribution chain. Although

FDA may contact, and coordinate tracebacks with, other Federal agencies,

including CBP, the agency expects transportation companies to comply with

the recordkeeping and access provisions of these regulations. FDA notes that

entities keeping records to satisfy CBP’s regulations may use those same

records to satisfy some or all of the requirements of this final rule if those

records contain some or all of the information required by subpart J of this

final rule. Entities also can supplement existing records with any new data

required by this regulation, instead of creating an entirely new record

containing both existing and new information.

(Comment 20) A few comments ask FDA to clarify what constitutes

‘‘holding’’ food, who FDA considers to be ‘‘holders of food,’’ and under what

circumstances food is being held in transport. The comment notes that the lack

of clarity leaves a carrier’s terminal operating facility, gas stations, truck stops,

and even trucks themselves vulnerable to being considered as ‘‘holders of

food’’ and thereby subject to burdensome reporting requirements. Comments

also ask FDA to exclude trucks, truck terminals, and facilities from the

definition of ‘‘holding,’’ stating that this would be consistent with the intent

of the law and the realities of the trucking industry’s business practices. One

comment asks whether food held for short periods of time in a trucking

terminal during cross-dock operations meets the definition of ‘‘holding.’’ One

comment states that there are certain areas in the supply chain that provide

temporary space for food during transit and that these areas should not be

37

considered to be ‘‘holding’’ or ‘‘storing’’ food and subject to the recordkeeping

requirements. The comment notes that some sites serve as transitory staging

areas where produce is momentarily held before transportation and that,

because of the perishable nature of the product and the desire to transport the

fresh commodity rapidly, produce moves from these staging areas as quickly

as possible.

(Response) ‘‘Holding’’ means storage of food. Holding facilities include

warehouses, cold storage facilities, storage silos, grain elevators, and liquid

storage tanks. The recordkeeping requirements in §§ 1.337 and 1.345 of this

final rule apply to persons who ‘‘hold’’ food for purposes other than

transportation. As defined in § 1.328 of this final rule, a ‘‘transporter’’ is:

* * * a person who has possession, custody, or control of an article of food in

the United States for the sole purpose of transporting the food, whether by road, rail,

water, or air. Transporter also includes a foreign person that transports food in the

United States, regardless of whether that person has possession, custody, or control

of that food for the sole purpose of transporting the food.* * *

Truck terminals or similar facilities that are part of the transportation

process and merely provide a location for trucks to transfer possession,

custody, or control to another entity are not subject to the requirements in

§§ 1.337 and 1.345 of the final rule, unless possession, custody, or control is

transferred to that terminal or facility.

(Comment 21) One comment seeks clarification on whether a ‘‘customer,’’

such as an office complex, would be required to maintain records if it receives

and stores a food, such as bottled water, in the customer’s own storage area

for subsequent distribution to the various offices within the complex. The

comment also asks whether, for bottled water, such a customer would also be

38

the immediate previous source for bottles that are returned to the bottler for

reuse.

(Response) FDA has added an exclusion to the final rule for persons who

receive or hold food on behalf of specific individual consumers and who are

not also parties to the transaction and who are not in the business of

distributing food. This exclusion covers person such as a hotel concierge, the

reception desk in an apartment building, and an office complex that receives

bottled water as described by the comment. FDA has added this exclusion

because such persons are not parties to the transaction and records from such

person are not necessary to identify the immediate previous sources and

immediate subsequent recipients of food to address credible threats of serious

adverse health consequences or death.

The comment also asks whether, for bottled water, such a customer would

also be the immediate previous source for bottles that are returned to the

bottler for reuse. A customer who returns bottles to the bottler would be the

nontransporter immediate previous source of the bottles (§ 1.328 of the final

rule). As with other sources of its bottles (e.g., a bottle manufacturer), the

bottler would be required to keep records of bottles received from customers

for reuse.

(Comment 22) One comment asks that FDA clarify in the regulation that

domestic grain-handling, feed manufacturing/ingredient or processing facilities

dedicated solely to exporting bulk or processed agricultural commodities to

other countries are exempt from the recordkeeping requirement unless the

commodities, products, or byproducts they handle are introduced into U.S.

commerce. The comment states that this clarification would be consistent with

the statutory language and FDA’s proposed regulations.

39

(Response) The proposed rule applied to persons who manufacture,

process, pack, transport, distribute, receive, hold, or import food intended for

consumption in the United States, unless the person qualifies for an exclusion

in § 1.327. This provision has been changed in the final rule. The Bioterrorism

Act does not limit the recordkeeping authority to food that is consumed in

the United States. FDA’s intent in the proposed rule was to apply the

recordkeeping provisions to the full reach of section 306 of the Bioterrorism

Act with respect to domestic persons. In contrast, the registration interim final

rule that FDA issued under section 305 of the Bioterrorism Act only requires

those facilities that manufacture, process, pack, or hold food for consumption

in the United States to register. The proposed recordkeeping rule inadvertently

added the same qualifier as is in the registration interim final rule: That is,

it only applied to food that was ‘‘intended for consumption in the United

States.’’ FDA is removing this qualifying language from the final rule to ensure

that all persons that manufacture, process, pack, transport, distribute, receive,

hold, or import food in the United States are subject to this final rule unless

otherwise exempt. FDA believes this coverage is necessary because foods

intended for export could easily be diverted into domestic commerce. In

addition, not everyone in the food supply chain may know if the food is

intended for consumption in the U.S. or intended solely for export. Therefore,

such a limitation in this rulemaking could create holes in a tracing

investigation. Further, FDA is concerned that exempting foods intended for

export from the recordkeeping regulations could lead to such foods being

targeted for tampering and reintroduction into domestic commerce because

they would prove more intractable to tracing investigations.

40

(Comment 23) One comment asks whether small growers who provide a

raw agricultural commodity to a cooperative must keep records and whether

the cooperative must list all of the growers.

(Response) Growers of raw agricultural commodities that meet the

definition of ‘‘farm’’ in § 1.328 are excluded from the requirements of subpart

J of this final rule. A cooperative that accumulates raw agricultural

commodities from growers, and does not meet the exemption for retail food

establishments that employ 10 or fewer full-time equivalent employees in

§ 1.327(f) of the final rule, is subject to the requirements in § 1.337 of the final

rule regarding the immediate previous sources of food. Distribution of food

from the cooperative directly to consumers is excluded from the requirements

of § 1.345 of the final rule regarding the immediate subsequent recipients of

food.

2. Intrastate

(Comment 24) One comment agrees that the requirement for U.S. domestic

firms, whether shipping interstate or intrastate, to establish and maintain

records as provided in the proposed regulation will maximize FDA’s capability

to implement traceback procedures within the borders of the United States.

Another comment states that a finding that a certain food is intentionally

contaminated—even if only distributed or sold locally—could have

widespread, nationwide, even international, economic implications. The

comment states that the recent ‘‘mad cow’’ episode in Canada demonstrates

that restrictions might be imposed on the distribution and sale of implicated

products, or consumers across the country may decide not to buy the products

thus impacting the economy as a whole. As a result, the comment states that

FDA is correct in concluding that all persons who manufacture, process, pack,

41

transport, distribute, receive, hold, or import food should be subject to the

recordkeeping requirements whether or not they directly engage in interstate

activities involving food.

However, another comment states that FDA’s intent to assert jurisdiction

over food, whether or not it enters interstate commerce, may be

unconstitutional. The comment notes that this assertion of power to regulate

food in intrastate commerce is inconsistent with limitations imposed by the

Commerce Clause of the U.S. Constitution, which generally authorizes

Congress to regulate purely interstate commerce only. The comment further

states that FDA should have assumed that Congress did not intend to violate

the Constitution, and should revise the proposed rule accordingly. Another

comment states that the FDA is proposing that domestic persons must maintain

appropriate records as stipulated by the proposed regulations regardless of

whether their food enters interstate commerce. The comment adds that

appropriate State, local, and municipal regulatory bodies have authority to

regulate domestic persons who manufacture, process, pack, transport,

distribute, receive, or hold food intended for human or animal consumption,

when intended solely for intrastate commerce in the United States. The

comment argues that the proposed regulations regarding recordkeeping should

not be expanded beyond what has been set forth in the Bioterrorism Act.

Another comment states that the FMCSA has guidelines for determining

whether carriers and drivers are engaged in interstate commerce and provides

the following definition in 49 CFR part 390.5:

Interstate commerce means trade, traffic, or transportation in the United States—

(1) Between a place in a State and a place outside of such State (including a place

outside of the United States);

42

(2) Between two places in a State through another State or a place outside of

the United States; or

(3) Between two places in a State as part of trade, traffic, or transportation

originating or terminating outside the State or the United States.

(Response) In the preamble to the proposed rule, FDA sought comments

on its tentative conclusion that it has authority to require recordkeeping by

persons engaged only in intrastate commerce. FDA also sought comments on

how many intrastate persons would not be covered by one of the exclusions

from the recordkeeping requirements (e.g., the farm or restaurant exemption).

Based on consideration of the received comments and further review of the

provision of the Bioterrorism Act that provides FDA with the authority to

require the establishment and maintenance of records by all ‘‘persons’’ who

engage in specified activities involving food, FDA has concluded that the

Bioterrorism Act gives FDA authority to require persons to establish and

maintain records, whether or not they engage in interstate commerce, as long

as they fall within Congress’s power to legislate in this area.

FDA is mindful that its interpretation of the Bioterrorism Act should not

cast doubt on the constitutionality of the statute. (See Solid Waste Agency of

Northern Cook County v. U.S., 531 U.S. 159 (2001).) The agency has considered

the relevant provisions of the Bioterrorism Act, the comments submitted on

this issue, FDA’s responsibilities in implementing the Bioterrorism Act, and

the law interpreting the Commerce Clause of the Constitution (Article I, section

8). Based on these considerations, FDA is retaining § 1.326(b) as proposed, with

the result that all persons that manufacture, process, pack, transport, distribute,

receive, hold, or import food in the United States (unless otherwise exempt)

43

must establish and maintain records, even if food from the facility does not

enter interstate commerce.

The plain language of new section 414 of the FD&C Act does not exclude

a facility from recordkeeping because food from such facility does not enter

interstate commerce. Notably, sections 301 and 304 (21 U.S.C. 331 and 334)

of the FD&C Act demonstrate that Congress has included a specific interstate

commerce nexus (e.g., has explicitly required interstate commerce) in the

provisions of the FD&C Act when that is its intent. Accordingly, it is reasonable

to interpret the Bioterrorism Act as not limiting recordkeeping only to those

persons with a direct connection to interstate commerce. Congress’s power to

legislate under the Commerce Clause is very broad. We acknowledge that such

power is not without limits, see United States v. Lopez, 514 U.S. 549, 567

(1995); U.S. v. Morrison, 529 U.S. 598, 618 (2000), but these limits have to

be construed in light of relevant and enduring precedents.

In particular, in Lopez, supra, the Supreme Court acknowledged the

continuing vitality of Wickard v. Filburn, 317 U.S. 111 (1942), noting that:

* * * although Filburn’s own contribution to the demand for wheat may have

been trivial by itself, that was not ‘enough to remove him from the scope of federal

regulation where, as here, his contribution, taken together with that of many others

similarly situated, is far from trivial.’* * *

(Lopez, 514 U.S. at 556.) This principle applies squarely to the recordkeeping

provision of the Bioterrorism Act. Accordingly, given the collective impact on

commerce of intrastate manufacturing, processing, packing, transporting,

distributing, receiving, or holding of food in the United States, FDA has

concluded that the requirement to establish and maintain records should apply

regardless of whether the food enters interstate commerce. Thus, FDA is

44

retaining § 1.326(b) as proposed. See also response to comment 82 below for

an expanded discussion of the collective impact on commerce of intrastate

transportation of food.

This is consistent with section 709 of the FD&C Act (21 U.S.C. 379a),

which states that, in any action to enforce the FD&C Act’s requirements

respecting foods, drugs, devices, and cosmetics, any necessary connection with

interstate commerce is presumed. Likewise, this outcome is consistent with

Congress’s goal in enacting the Bioterrorism Act, because the potential harm

from bioterrorist attacks or other food-related emergencies can be great,

whether or not the food moves from one State to another. The usefulness of

recordkeeping also can be significant in food emergencies where interstate

shipment has not occurred.

3. Foreign Facilities

(Comment 25) Several comments assert that FDA lacks the statutory

authority to apply the recordkeeping and records inspection provisions of the

Bioterrorism Act to foreign facilities. According to the comments, section 306

of the Bioterrorism Act does not indicate, expressly or by inference, that

Congress intended the provisions of that section to apply to overseas persons

or facilities. They also contend that nothing in the legislative history of the

Bioterrorism Act indicates Congress intended that section 306 of the

Bioterrorism Act should apply to foreign facilities. The comments point out

that there is a longstanding presumption in the law that legislation does not

apply outside the borders of the United States, unless Congress clearly and

expressly states such an intent. The comments state that, under governing case

law, FDA may not infer legislative intent to give a statute extraterritorial reach.

45

A few comments indicated that FDA failed to provide legal justification

for applying the regulation to foreign facilities. The comments pointed out that

FDA’s stated belief that this was the most efficient and effective strategy for

obtaining needed information on food from foreign countries cannot overcome

the clear indications that Congress did not intend section 306 of the

Bioterrorism Act to apply to foreign entities.

One comment suggests that FDA clarify that the recordkeeping

requirements do not apply outside of the United States, but serve only as a

guideline to facilitate a rapid response through cooperation at intergovernment

and international industry levels. One comment states that it has been

acknowledged in the context of recent CBP initiatives that CBP has no

jurisdiction in foreign countries. The comment notes that, consequently,

mutual agreements on cooperation between CBP and some foreign governments

have been reached to address together their shared security objectives.

Comments suggested that FDA pursue a similar approach for safety and

security of foods.

One comment asks what action FDA can take against foreign companies

that do not establish and maintain the records required under section 306 of

the Bioterrorism Act. A few comments state that the fact that section 306 of

the Bioterrorism Act does not provide any mechanisms for enforcement of the

recordkeeping and records access requirements against foreign persons

supports the position that Congress did not intend that section to apply to

foreign entities.

(Response) Because FDA has decided, for policy reasons, to exempt foreign

facilities that do not manufacture, process, pack, distribute, hold, or import

food in the United States from the requirements of the rule, FDA does not

46

need to decide this jurisdictional issue. FDA is exempting all foreign persons

(except for foreign persons who transport food in the United States) from the

final regulation because FDA does not believe such records would be needed.

Much of this information is available to the Secretary from facilities required

to provide prior notice under part 1, subpart I. FDA intends to work with the

competent authorities in foreign countries to access records during public

health emergencies to obtain additional information, if necessary. However, the

final rule explicitly provides that persons who transport food in the United

States are subject to subpart J of this final rule.

(Comment 26) One comment questions FDA’s determination that it can

perform its Bioterrorism Act mission of tracking shipments by exempting

Mexican and Canadian motor carriers from the recordkeeping requirements

while requiring U.S. motor carriers to comply with the recordkeeping

requirements. The comment notes that, based on CBP figures for Mexicodomiciled

carriers, referenced in the ‘‘Economic Impact Estimates’’ section of

the proposed rule, 63,000 out of 80,000 carriers operating across the southern

border are Mexico-domiciled. The comment points out that, therefore, the

majority of cross-border FDA-regulated shipments at the southern border may

be exempt from the requirements of the regulation.

(Response) FDA agrees. The final rule provides that foreign persons who

transport food in the United States are subject to this final rule. A ‘‘transporter’’

is now defined as:

* * * a person who has possession, custody, or control of an article of food in

the United States for the sole purpose of transporting the food, whether by road, trail,

water, or air. Transporter also includes a foreign person that transports food in the

United States, regardless of whether the foreign person has possession, custody, or

control of that food for the sole purpose of transporting that food.* * *

47

Thus, even if a foreign manufacturing facility transports its own

manufactured food into the United States, it is considered a ‘‘transporter’’

under subpart J of this final rule and must comply with the requirements

applicable to transporters.

(Comment 27) One comment seeks clarification regarding application of

the recordkeeping requirements to certain ownership-partnership relationships

involving a U.S. trucking company and a Canadian or Mexican trucking

company. The comment asks, for example, whether a Canadian subsidiary of

a U.S. trucking company is subject to the recordkeeping requirements. The

comment states that a Canadian trucking company may be in partnership with

a U.S. company, and the percentage of U.S. ownership is established in each

partnership. Another example provided by the comment is that a Mexican

motor carrier may have a contractual or interline relationship with a U.S.

company. The comment asks whether the recordkeeping requirements apply

to the foreign transporters with these U.S. relationships.

(Response) The final rule applies to persons who manufacture, process,

pack, transport, distribute, receive, hold, or import food in the United States.

Thus, any person who transports food in the United States is subject to these

recordkeeping requirements with respect to that food that enters the United

States. The partnership or contractual status with a U.S. company does not

affect the application of these requirements to a foreign person if they are

transporting food in the United States, because such persons are already

covered by this final rule by virtue of transporting food in the United States.

(Comment 28) One comment seeks clarification on whether residency in

a territory of the United States affects applicability of the regulation. One

comment questions FDA’s authority to apply the proposed regulation to the

48

Caribbean jurisdictions of the U.S. Virgin Islands and the Commonwealth of

Puerto Rico. The comment contends that the regulations would be burdensome

to grocery operators or other retailers in the Caribbean jurisdictions who do

not export to the Continental United States, but would not deter bioterrorism

acts in the Continental United States or in the Caribbean jurisdictions. The

comment asserts that the proposed regulation will jeopardize the island

economies of the Caribbean jurisdictions by increasing unnecessary expenses

to the food retailing activity, which is already more expensive than in the

Continental United States, by adding, among other expenses, the maritime

transportation cost to the goods.

(Response) The final rule applies to persons that manufacture, process,

pack, hold, transport, distribute, receive, or import food in the United States.

Section 201(a)(1) of the FD&C Act defines the term ‘‘State’’ as, ‘‘any State or

Territory of the United States, the District of Columbia, and the Commonwealth

of Puerto Rico’’, and section 201(a)(2) of the FD&C Act defines the term

‘‘Territory’’ as, ‘‘any Territory or possession of the United States, including the

District of Columbia, and excluding the Commonwealth of Puerto Rico and

the Canal Zone).’’ Accordingly, any person in the 50 States of the United

States, or in any Commonwealth or Territory of the United States, that

performs a covered activity is subject to the requirements of this final rule.

This includes both Puerto Rico (because, for purposes of the FD&C Act, it is

considered a State) and the U.S. Virgin Islands (because, as a U.S. territory,

it is considered a State for purposes of the FD&C Act).

49

D. Comments on Who is Excluded From All or Part of the Regulations in This

Subpart? (Proposed § 1.327)

1. General

(Comment 29) Several comments argue that because the Bioterrorism Act

specifically excludes those foods under the jurisdiction of USDA, alcoholic

beverages should also be excluded, as they are already regulated by the

Department of Treasury’s Alcohol and Tobacco Tax and Trade Bureau (TTB)

as well as by CBP. One comment requests that FDA secure a legislative

amendment to the Bioterrorism Act that exempts wines and spirits and other

alcoholic beverages from its application, in the same way meat, poultry, and

egg products under the jurisdiction of the USDA are excluded from its scope.

Another comment states that the importer’s records enable a product to

be traced from the point of importation to its destination, as well as back to

the producer/supplier. The comment states that substantial information about

a product imported legally into the United States is already held in the TTB

database.

(Response) Unlike products regulated under the exclusive jurisdiction of

USDA under the FMIA, the PPIA, or the EPIA, Congress did not exempt

alcoholic beverages from the scope of the recordkeeping requirements. FDA

has not excluded alcoholic beverages from the scope of this final rule because

FDA believes that these records are needed to help the Secretary to identify

the immediate previous sources and the immediate subsequent recipients of

food to address credible threats of serious adverse health consequences or

death to humans or animals. Further, FDA reiterates that, to the extent that

you already keep the information required by this final rule to comply with

50

TTB requirements, or for any other reason, you do not need to establish and

maintain duplicative records.

In addition, securing a ‘‘legislative amendment’’ to the Bioterrorism Act,

as the comment suggests, is beyond the scope of this rulemaking.

(Comment 30) One comment suggests that FDA add an exclusion that

covers persons who transport food for the U.S. military and U.S. Government

agencies with respect to that food. Those entities are sophisticated and able

to establish their own requirements. Transporters of food for those entities

should not be subject to potentially duplicative FDA standards.

(Response) Congress did not provide for an exemption for food that is

transported for the U.S. military or any other U.S. Government agency from

the scope of the recordkeeping requirements. FDA believes that these records

are needed to help the Secretary identify the immediate previous sources and

the immediate subsequent recipients of food to address credible threats of

serious adverse health consequences or death to humans or animals. Again,

with respect to the comment’s assertion that transporters of food for those

entities should not be subject to potentially duplicative FDA standards, FDA

agrees. There is no requirement to keep duplicative records. FDA reiterates

that to the extent that you already keep the information required by this final

rule, you do not need to establish and maintain duplicative records.

(Comment 31) One comment questions whether there are provisions for

the exemption of beekeepers who bottle and sell small amounts of honey and

other beehive products, even if they keep their hives on the property of others,

as is frequently done for pollination purposes or the production of honey from

sites other than the beekeepers’ own property.

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(Response) Congress did not provide for an exemption for beekeepers who

bottle and sell small amounts of honey and other beehive products. FDA

believes that these records are needed to help the Secretary identify the

immediate previous sources and the immediate subsequent recipients of food

to address credible threats of serious adverse health consequences or death

to humans or animals. Unless these entities fall within a specified exemption,

they are subject to the requirements of this final rule. For example, some of

the beekeepers may fall within the exemption for farms or retail food

establishments that employ 10 or fewer full-time equivalent employees. In

addition, beekeepers are not required to keep records of sales directly to

consumers.

(Comment 32) One comment requests clarification on how imported food

samples that do not enter commerce will be handled based on the regulations.

These food samples have the intended end use of analysis, experimentation,

and/or subsequent destruction within approved company premises. The

samples may be carried into the United States as personal baggage of company

representatives or sent unaccompanied. The comment points out that food

carried in personal baggage is exempt from the registration interim final rule

only if the food is for personal enjoyment/use. Another foreign comment states

that the recordkeeping requirement should not apply to commercial samples.

The comment states that new exporters cannot be expected to engage in

recordkeeping requirements concerning exports before testing marketing

opportunities.

(Response) Persons who manufacture, process, pack, transport, distribute,

receive, hold, or import food in the United States that is intended for

consumption by humans or animals are subject to these regulations. The

52

recordkeeping requirements would not apply to food samples that are used

for quality assurance, research or analysis purposes, as long as the food

samples are not consumed by humans or animals. Samples of food are

considered to be for quality assurance, research or analysis purposes, rather

than human consumption, when they are in small quantities (i.e., quantities

consistent with the quality assurance, research, or analysis purposes) and the

entire sample is used up by the analysis, destroyed after analysis, or destroyed

following a reasonable retention period after analysis. The analysis may

include sensory examination, such as organoleptic examination for

determining tea quality or detecting the presence of histamines. Evidence that

an article of food is for quality assurance, research, or analysis purposes only

might include, among other evidence, markings on the food and shipping

documents. Food samples intended for consumption via test marketing, such

as tasting at trade shows or product promotional tasting events, are subject

to this subpart.

The recordkeeping rule, however, exempts all foreign persons, except

foreign persons who transport food in the United States. Therefore, the foreign

exporter of the samples mentioned by the comment’s is not required to

establish and maintain records under this final rule. With respect to the

comments assertion that the registration interim final rule exempts food carried

in personal baggage for personal use, FDA notes that it is the prior notice

interim final rule (part 1, subpart I) that exempts these products, not the

registration interim final rule (part 1, subpart H). The registration interim final

rule applies to all domestic and foreign facilities that manufacture, process,

pack, or hold food that will be consumed in the United States, unless otherwise

exempted. This includes facilities performing covered activities with respect

53

to commercial samples if those samples will be consumed in the United States.

See response to comment 67 at 68 FR 58911 through 58912 (October 10, 2003).

As detailed in the response to comment 22, this final rule does not distinguish

between food consumed in the United States and food that is exported.

(Comment 33) One comment indicates that the proposal is silent as to

whether firms producing finished food products or food additives and

ingredients intended solely for export must comply with the recordkeeping

requirements. The comment argues that because this regulation applies to

foods for consumption in the United States, producers of such products should

be exempt from the recordkeeping requirements.

(Response) Persons who manufacture, process, pack, transport, distribute,

receive, hold, or import food in the United States are subject to these

regulations. If the food is intended solely for export, the person producing that

food in the United States would still be subject to these regulations with

respect to that food.

2. Farms

(Comment 34) Several comments ask if foreign farms, including fish farms

(aquaculture) fall under the regulation’s farm exemption.

(Response) Section 306 of the Bioterrorism Act specifically exempts farms

from these regulations. The definition of a farm includes aquaculture facilities.

In addition, foreign persons (except for foreign persons who transport food in

the United States), including foreign farms, are excluded from all of these

regulations.

(Comment 35) One comment states that FDA has not clarified whether

producers who ship live food animals to the United States will be required

to keep records on their farm operations, as their products will be ‘‘finished’’

54

in another country, may have been raised on more than one farm, and may

not be considered as going directly to the consumer for consumption. The

comment strongly urges the FDA not to require farmers shipping live animals

to the United States to incur the additional cost, time, and work involved in

maintaining records, beyond those which are currently being maintained for

their operations, solely for the purpose of this regulation.

(Response) Farms are excluded from these regulations, as are foreign

persons, except for foreign persons who transport food in the United States.

Therefore, foreign farmers who ship live food animals to the United States are

exempt from this final rule (unless they transport the animals into the United

States themselves). FDA notes, however, that although foreign exporters of food

into the United States are exempt from these recordkeeping requirements, they

must comply with the prior notice regulations issued under the Bioterrorism

Act (part 1, subpart I). FDA also notes that an importer of live food animals

into the United States would be required to establish and maintain records

under these regulations given that importers are not exempt from this final

rule.

(Comment 36) One comment states that, although the proposed rule

exempts farms, it may still result in a recordkeeping burden for them. The

comment states that, in practice, the farmer will be expected to generate

paperwork so that those delivering and dropping products off at the farm will

be able to comply with the final rule. Although farms may be exempt on the

face of the rule, the comment states that, in reality, farmers will have to

generate large amounts of paperwork for their suppliers, truckers, and buyers.

The comment states that the final rule needs to make clear that farmers will

55

not be responsible, or expected to generate, paperwork for those complying

with this rule.

(Response) Farms are specifically exempted from the requirements of these

regulations. Only those persons subject to these regulations must establish and

maintain records of the immediate previous sources and immediate subsequent

recipients of food that they manufacture, process, pack, transport, distribute,

receive, hold, or import. This final rule does not require a farm to establish

or maintain records for those who are subject to this regulation.

3. Restaurants

(Comment 37) Several comments state that retail food stores offer a variety

of services and conveniences to consumers, including foods that are prepared

in-store and ready for immediate consumption, and that the restaurant-type

facilities in the retail store should be excluded from the recordkeeping

requirements.

One comment notes that the proposed rule includes an exemption for

restaurants, which are defined as facilities that sell food directly to consumers

for immediate consumption. The comment asserts that many convenience

stores make such sales of prepared foods, but convenience stores are included

in the proposed rule’s definitions as an example of retail facilities. In the

comment’s view, convenience stores that sell food for immediate consumption

should be exempt from the proposed rule. There is no reason why convenience

stores that sell prepared foods should have greater regulatory burdens than any

other type of entity that sells prepared foods. The comment further states that

the restaurant exemption as currently proposed leads to results that are

difficult to justify. The comment asks why, for example, should a convenience

store that sells lunchmeat be required to comply with a costly system of

56

recordkeeping, while a delicatessen that sells precisely the same product to

the same consumer is exempt? The comment states that the only sensible

answer to these unjustifiable inconsistencies is to exempt retailers that sell

food to consumers for immediate consumption from the requirements of the

regulation.

(Response) FDA agrees with these comments. Section 306 of the

Bioterrorism Act exempts restaurants from recordkeeping requirements. There

is no similar exemption in section 306 for retail facilities. In the proposed rule,

FDA exercised the agency’s discretion and proposed excluding retail facilities

from the requirement to establish and maintain records of the immediate

subsequent recipients of food when the food is sold directly to consumers (68

FR 25188 at 25192). As explained therein, the Bioterrorism Act expressly states

that the Secretary may require the establishment and maintenance of records

by persons who ‘‘distribute’’ food, and therefore retail facilities could be

subject to all of the provisions in subpart J of this final rule if FDA thought

it was necessary to address credible threats of serious adverse health

consequences or death to humans or animals.

FDA recognizes that some facilities that are predominantly retail distribute

some food to businesses (that then may further distribute the food before it

is consumed) and that some facilities that are predominantly nonretail

distribute some food to consumers. FDA concludes that to require such

facilities to keep records of each individual recipient consumer would be too

burdensome, and not necessary to help address credible threats of serious

adverse health consequences or death to humans or animals. If a traceback or

trace forward is necessary, FDA can learn from sickened consumers the sources

of the food they purchased, or notify consumers generally about food that

57

presents a threat. Therefore, FDA is changing the final rule from the proposal

so that it does not require records of subsequent recipients for sales directly

to consumers, regardless of whether the seller is a retailer or another type of

entity. The final rule excludes persons who distribute food directly to

consumers from keeping records of those transactions. Moreover, if a person

prepares and sells food directly to consumers for immediate consumption, then

those sales qualify for the restaurant exemption.

However, persons who operate retail food establishments that distribute

food to persons who are not consumers are subject to all of the requirements

in subpart J of this final rule. However, the requirements in § 1.345 of the final

rule to establish and maintain records to identify the nontransporter and

transporter immediate subsequent recipients that are not consumers applies

as to those transactions only to the extent the information is reasonably

available.

Furthermore, retail food establishments that employ 10 or fewer full-time

equivalent employees are excluded from all of the requirements of subpart J

of this final rule, except the record access provisions for existing records under

§§ 1.361 and 1.363.

4. Fishing Vessels

FDA received no comments on this issue and has made no changes to the

definition for fishing vessels or to the exemption in the final rule.

5. Retail Facilities

(Comment 38) One comment states that it operates a business that is

essentially the same as any other retailer (although they sell to restaurants).

Sales to its customers are recorded using a checkout register, and thus, it

should not be required to keep records of individual items purchased by

58

customers. Requiring such records from it, but not requiring retailers to keep

such records, would be unfair and would be extremely burdensome.

(Response) The business described in the comment is not treated

differently than other retailers. Persons who distribute food to businesses do

not qualify for the exclusion for sales to consumers in § 1.327(d) of the final

rule. Thus, sales of food to restaurants require the establishment and

maintenance of records of the immediate subsequent recipient, as codified in

§ 1.345 of the final rule, to the extent that information is reasonably available

to you. Information is reasonably available to you if you have a system in place

to capture the information. FDA does not intend to require the reconfiguration

of business operations. Thus, for example, information is reasonably available

to you when the purchaser has an established commercial account to which

the food purchases are charged in an identifiable manner. Accordingly,

§ 1.327(e) of the final rule provides that persons who operate retail food

establishments that distribute food to persons who are not consumers are

subject to all of the requirements in subpart J of this final rule. However, the

requirements in § 1.345 of the final rule to establish and maintain records to

identify the nontransporter and transporter immediate subsequent recipients

that are not consumers applies as to those transactions only to the extent the

information is reasonably available. For purposes of this section, ‘‘retail food

establishment’’ is defined to mean an establishment that sells food products

directly to consumers as its primary function. The term ‘‘consumers’’ does not

include businesses. A retail food establishment may manufacture/process,

pack, or hold food if the establishment’s primary function is to sell from that

establishment food, including food that it manufactures/processes, packs, or

holds, directly to consumers. A retail food establishment’s primary function

59

is to sell food directly to consumers if the annual monetary value of sales of

food products directly to consumers exceeds the annual monetary value of

sales of food products to all other buyers. A ‘‘retail food establishment’’

includes grocery stores, convenience stores, and vending machine locations.

In addition, a retail food establishment that employs 10 or fewer full-time

equivalent employees is excluded from all of the requirements of this subpart,

except the records access provisions for existing records under §§ 1.361 and

1.363. Given the large number of establishments that would be excluded and

the significant cost reduction, FDA has analyzed the impact on its ability to

efficiently and effectively conduct a tracing investigation to address credible

threats of serious adverse health consequences or death. FDA believes the

information as to the source of the food of concern sold at these establishments

may be obtainable from a larger retail food establishment that is covered by

the regulations and sold the same food. Specifically, many of the foods sold

at very small retail food establishments are nationally distributed and are also

sold at covered retail establishments. If there is an outbreak and product could

also be traced to a covered retailer, then FDA could use that retailer’s records

to identify the source of the food.

Moreover, given the relatively small size of the exempted establishments,

the exempted establishments are likely to have fewer products and suppliers

than other retail establishments and are therefore more likely to be able to

provide FDA with source information even if they are exempted from records

establishment requirements. With larger retailers, the records of immediate

previous sources are more critical to isolating quickly potential sources of food

that poses a threat of serious adverse health consequences or death to humans

or animals. The exclusion is based on the number of employees at each retail

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food establishment and not the entire company, which may own numerous

retail stores.

(Comment 39) One comment argues that distributors for direct selling

companies should be exempt from the requirement to maintain records

concerning immediate subsequent recipients. The proposed regulation would

have a significant impact on the direct selling industry. Independent

distributors sell product not only to consumers, but also to other independent

distributors in their network to support each others’ businesses and enable

them to fulfill customer orders.

In addition, FDA should acknowledge the unique, closed distribution

model of the direct selling business and exempt independent distributors in

a direct selling organization from the requirement to maintain records

concerning the immediate previous source. In the closed distribution model

of direct selling, the direct selling company is the source of all products sold

by its distributors. Distributors typically obtain the products they redistribute

directly from the direct selling company with which they are associated. Under

the proposed regulations, the direct selling company will maintain records that

identify the carriers and the distributors who are the immediate subsequent

recipients of the product. Any records maintained by the distributor regarding

the immediate previous source for such shipments would be wholly

duplicative of the records held by the direct selling company.

(Response) Whether these ‘‘independent distributors’’ are subject to the

requirement to establish and maintain records to identify the immediate

subsequent recipients depends on the nature of their customers. Section

1.327(d) of this final rule excludes persons who distribute food directly to

consumers from the requirement in § 1.345 of this final rule to establish and

61

maintain records of the nontransporter and transporter immediate subsequent

recipients. As discussed in response to comment 37, FDA concluded that to

require such records would be too burdensome and not necessary to help

address credible threats of serious adverse health consequences or death to

humans or animals. Thus, independent distributors are not required to

maintain records of subsequent recipients who are consumers. Independent

distributors, however, are required to keep records of subsequent recipients

who are not consumers. However, an independent distributor who qualifies

as a retail food establishment under § 1.327(e) of the final rule that also

distributes food to persons who are not consumers is required to identify the

nontransporter and transporter immediate subsequent recipients as to those

transactions only to the extent the information is reasonably available. FDA

needs such records to quickly and effectively traceback and trace forward in

the event of a food-related emergency. However, an independent distributor

who qualifies as a retail food establishment that employs 10 or fewer full-time

equivalent employees is excluded from all of the requirements in this subpart,

except the record access provisions for existing records under §§ 1.361 and

1.363.

(Comment 40) One comment asserts that there is no added public health

protection from requiring retailers to establish and maintain records of the

immediate previous holder of a food product. The proposed rule ensures that

all information desired by FDA (e.g., the product and lot number going to a

particular retail store) is already recorded by both the distributor of the product

and by the transporter of the product. Therefore, traceability of a product will

exist without requiring the retailer to also keep that information. The comment

believes that the added burden of requiring retailers to establish and maintain

62

records on immediate previous sources of the food it receives is not necessary

based on the limited public health and safety benefit that would result.

(Response) As discussed in response to comment 37 of this document, the

Bioterrorism Act did not exempt retail food establishments from recordkeeping

requirements. FDA decided to exclude persons who distribute food directly

to consumers from the requirement to establish and maintain records of

subsequent recipients because sick consumers can provide information as to

where they obtained food in a traceback, and FDA can notify consumers of

a food threat in a trace forward. In the case of a traceback from a retailer, the

retailer’s records of the immediate previous sources are needed by FDA to

address credible threats of serious adverse health consequences or death to

humans or animals. In a traceback, it is unlikely that a retailer’s source for

certain foods would be apparent. Accordingly, in order for FDA to be able to

identify the retailer’s immediate previous nontransporter and transporter

sources, to gain access to those sources records and identify its sources or other

recipients of the food, the retailer has to have records identifying those sources.

Therefore, the final rule requires retailers to establish and maintain records

containing this information. However, retail food establishments that employ

10 or fewer full-time equivalent employees are excluded from all of the

requirements in subpart J of the final rule, except §§ 1.361 and 1.363. (See

response to comment 38 of this document for a further discussion of FDA’s

rationale underlying this exclusion.)

(Comment 41) One comment states that a ‘‘retail facility’’ is defined as

a facility that sells food directly to consumers only. Thus, a warehouse store

or ‘‘cash and carry’’ store that sells food both to consumers and to commercial

accounts would not qualify for this exemption. As the name implies, a ‘‘cash

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and carry’’ store sells food products to anyone who wishes to buy bulk

quantities in cash transactions (e.g., from an individual consumer planning a

party or providing for a large family to intermittent supply to restaurants). Such

stores typically do not retain detailed records of cash sales. For cash and carry

stores that do engage in regular commercial transactions, or which provide

credit to commercial customers, ordinary business practices should normally

generate records that could be tailored to serve the requirements of the

proposed rule. FDA should clarify that, if an entity conducts both exempt and

nonexempt activities at the same location, it would be required to retain

records only with respect to its nonexempt activities. Under such a

clarification, a ‘‘cash and carry’’ store that sells food to individual consumers

would not be required to maintain records regarding its retail sales to

consumers. The comment requests that the agency adopt and confirm this

interpretation.

(Response) FDA agrees. Section 1.327(d) of the final rule excludes persons

who distribute food directly to consumers from the requirement to establish

and maintain records of the immediate subsequent recipients of food.

Therefore, a ‘‘cash and carry’’ store is not required to maintain records

regarding its sales to consumers. However, under § 1.327(e) of the final rule,

persons who operate retail food establishments that distribute food to persons

who are not consumers are subject to all of the requirements in subpart J of

this final rule. However, for retail food establishments, the requirements in

§ 1.345 of the final rule to establish and maintain records to identify the

nontransporter and transporter immediate subsequent recipients that are not

consumers applies as to only those transactions involving nonconsumers and

only to the extent the information is reasonably available. For purposes of this

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section of this document, retail food establishment is defined to mean an

establishment that sells food products directly to consumers as its primary

function. The term ‘‘consumers’’ does not include businesses. A retail food

establishment may manufacture/process, pack, or hold food if the

establishment’s primary function is to sell from that establishment food,

including food that it manufactures/processes, packs, or holds, directly to

consumers. A retail food establishment’s primary function is to sell food

directly to consumers if the annual monetary value of sales of food products

directly to consumers exceeds the annual monetary value of sales of food

products to all other buyers. A ‘‘retail food establishment’’ includes grocery

stores, convenience stores, and vending machine locations. In addition, retail

food establishments that employ 10 or fewer full-time equivalent employees

are excluded from all of the requirements in subpart J of this final rule, except

record access provisions for existing records under §§ 1.361 and 1.363.

(Comment 42) One comment states that, in the case of control state retail

operations, keeping detailed information on the immediate subsequent

recipients would impose an administrative burden. Although retailers are

generally exempt from keeping records pertaining to their customers, the

exemption is lost when, as is the case with control states, retail stores sell

to other retailers, in this case restaurants, taverns, and bars who subsequently

resell the alcoholic beverages being purchased to end-use customers. The retail

store transactions are essentially the same type of ‘‘over the counter’’

transactions that take place between the stores and individual consumers.

Some information is usually and customarily maintained (e.g., the information

pertaining to the licensed purchaser and what is being purchased), although

in some cases such information is not generally secured and retained. The

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comment further notes that some of the information sought (e.g., lot and other

product identifiers) is neither generally secured, nor is it maintained.

(Response) Section 1.327(d) of the final rule excludes persons who

distribute food directly to consumers from the requirement to establish and

maintain records of the immediate subsequent recipients of food. As discussed

in response to comment 37 of this document, such sales are excluded because

FDA can learn from sickened consumers about the sources of food they

purchased or notify consumers generally about food that presents a threat.

However, this rationale is not applicable when, as described in the comment,

retail stores sell to other retail stores. Under § 1.327(e) of the final rule, persons

who operate retail food establishments that distribute food to persons who are

not consumers are subject to all of the requirements in subpart J of this final

rule. However, for retail food establishments, the requirements in § 1.345 of

this final rule to establish and maintain records to identify the nontransporter

and transporter immediate subsequent recipients that are not consumers

applies as to only those transactions and only to the extent the information

is reasonably available. In addition, a retail food establishment that employs

10 or fewer full-time equivalent employees is excluded from all of the

requirements in subpart J of this final rule, except §§ 1.361 and 1.363. (See

response to comment 38 of this document for a further discussion of FDA’s

rationale underlying this exclusion.)

In regard to lot identification numbers, retailers are not required to

maintain this information. The final rule only requires that persons who

manufacture, process, or pack food record lot or code numbers or other

identifiers of that food (and only to the extent this information exists)

(§§ 1.337(a)(4) and 1.345(a)(4) of the final rule).

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(Comment 43) One comment argues that the proposed retail exemption

(§ 1.327(d)) must be a complete exemption, including an exemption from

recordkeeping regarding suppliers, identical to the exemption given to

restaurants. The comment states that today retailers and restaurants compete

in the burgeoning take home and carryout market. FDA’s proposal gives an

unfair and unnecessary advantage to restaurants, which are expanding out of

in-restaurant dining into areas formerly served by retailers and carryout

establishments. A full exemption for retailers presents no lessening of food

safety safeguards.

(Response) ‘‘Restaurant’’ is defined to mean ‘‘a facility that prepares and

sells food directly to consumers for immediate consumption.’’ This means that

an establishment that prepares and sells food that is capable of being eaten

immediately, with no further preparation, is considered a restaurant. This

definition and the corresponding exemption for restaurants in § 1.327(b) of the

final rule includes activities such as a restaurant preparing and selling food

to a consumer to be consumed at a later time, as long as the food is capable

of being immediately consumed without further preparation or processing. For

example, a restaurant may prepare and sell pies from a counter that consumers

purchase and take home for later consumption. This activity qualifies for the

restaurant exemption as long as the food is prepared and sold directly to a

consumer for immediate consumption.

In addition, a restaurant/retail facility is excluded from all of the

requirements in subpart J of this final rule if its sales of food it prepares and

sells to consumers for immediate consumption are more than 90 percent of

its total food sales. FDA notes that many facilities that otherwise would be

excluded as restaurants under the final rule sell a small amount of food that

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they do not prepare for immediate consumption. For example, some restaurant/

retail facilities have small packaged goods gift shop areas that sell food. The

entire facility is excluded from all of the requirements in subpart J if its sales

of food it prepares and sells to consumers for immediate consumption are more

than 90 percent of its total food sales. FDA exercised its discretion and

excluded restaurant/retail facilities whose nonrestaurant food sales are less

than 10 percent of their total food sales because many facilities that would

otherwise qualify as restaurants make such sales as an incidental activity (Ref.

14). FDA believes that, were it not to provide such an exclusion, the exemption

for restaurants would be undermined because many facilities that prepare and

sell a high percentage of their food for immediate consumption also sell a small

amount of packaged goods that they do not prepare themselves for sale to

consumers (e.g., beverages, chips, candy, condiments, and sweeteners) and

otherwise would be subject to the rule as to those sales.

Conversely, if a restaurant/retail facility’s sales of food it does not prepare

and sell for immediate consumption are 10 percent or more of its total food

sales, FDA believes that such sales are a significant portion of the facility’s

activities. Such a facility’s retail food sales are exempt only from the

requirement to establish and maintain records of sales to consumers. The

restaurant/retail facility’s sales of food it prepares and sells for immediate

consumption remain exempt from all of the requirements of subpart J of this

final rule. As noted earlier, retail facilities are required to keep records of sales

to nonconsumers only to the extent that information is reasonably available.

Section 306 of the Bioterrorism Act specifically exempts restaurants, but

not retailers. FDA believes persons, including retailers, must establish and

maintain records of immediate previous sources to ensure that FDA can

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quickly and effectively conduct a traceback in a food-related emergency.

However, a retail food establishment that employs 10 or fewer full-time

equivalent employees is excluded from all of the requirements of this final

rule, except §§ 1.361 and 1.363. (See response to comment 38 of this document

for a further discussion of FDA’s rationale underlying this exclusion.)

(Comment 44) Several comments state that, although they make every

effort to provide food to their customers in a timely and efficient manner, a

small percentage of the food that is in a grocery store is sent to a reclamation

center from which it is either returned to the manufacturer or sent to food

banks. Reclamation centers are currently the largest single source of food

donations for food banks. Food may be sent to reclamation centers if its

packaging is damaged or if it is past the ‘‘best if used by’’ date. The system

for sending food to reclamation centers is simple: The unsaleable products are

collected in banana cartons and then shipped to the center where the food

is sorted and either donated to charitable organizations, such as food banks,

or returned to the manufacturers. No records are kept by the store of the foods

shipped to the reclamation center.

The comment states that FDA’s regulations should consider reclamation

centers and food banks to be ‘‘consumers’’ for purposes of the recordkeeping

regulations. Specifically, food retailers do not currently track the foods that

are sent to reclamation centers, nor is there a mechanism available to do so.

The requirement to develop and implement new recordkeeping systems would

be a serious disincentive to corporate food donations and, again, would serve

no purpose with respect to food security. If it is not necessary to track product

to individual consumers to enhance food security, no purpose is served by

monitoring those products that are sent through reclamation centers to

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consumers. Any products that are returned to the manufacturer are removed

from the food distribution system so they will not reach consumers and their

whereabouts need not be accounted for. Accordingly, FDA should broaden the

exclusion for retailers to include food products that are routed to consumers

through reclamation centers.

(Response) FDA agrees. FDA is exempting nonprofit food establishments

that prepare or serve food directly to the consumer or otherwise provide food

or meals for consumption by humans or animals in the United States.

‘‘Nonprofit food establishment’’ has been defined to mean:

* * *a charitable entity that prepares or serves food directly to the consumer

or otherwise provides food or meals for consumption by humans or animals in the

United States. The term includes central food banks, soup kitchens, and nonprofit

food delivery services. To be considered a nonprofit food establishment, the

establishment must meet the terms of section 501(c)(3) of the U.S. Internal Revenue

Code (26 U.S.C. 501(c)(3)).* * *

Congress gave FDA the discretion to issue regulations regarding the

establishment and maintenance of records under section 306 of the

Bioterrorism Act. Charitable food establishments, such as food banks, stand

in place of the consumer and FDA will treat them as consumers for purposes

of this final rule. Therefore, grocery stores, catering facilities, and others giving

a charitable donation of food to a food bank, soup kitchen, or other similar

charitable entity are not required to keep records of the immediate subsequent

recipients of the food, and the charitable food establishment does not need

to keep records of the immediate previous sources of that food or the

immediate subsequent recipients of that food. FDA has determined that it does

not need records of food donated to food banks to address credible threats of

serious adverse health consequences or death to humans or animals. In the

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event of a traceback investigation, FDA believes that it is likely to have the

ability to trace the immediate previous source of contaminated food by other

means. Unless the source of the contamination is at the food bank itself, other

consumers of that same food obtained from a grocery store are likely to identify

that grocery store as a link in the chain-of-distribution of the contaminated

product. In the case of a trace forward investigation, records will likely exist

from the donor of the food to the charitable food establishment. FDA believes

that the likelihood of the existence of such records is great given the tax

benefits available to the persons donating goods to establishments that are

501(c)(3) establishments under the Internal Revenue Code. Therefore, FDA

does not believe that exempting such charitable entities from these

requirements would interfere with the goals of the Bioterrorism Act or subpart

J of this final rule.

With respect to the ‘‘reclamation centers’’ mentioned by the comment,

FDA understands that most reclamation centers are actually owned by the

grocery store or grocery chain. Such reclamation centers will be treated as if

they are part of the grocery store and must keep the records that must be kept

by the grocery store. For instance, if food from the reclamation center is

donated to a food bank, the exclusion described previously applies. If food

is sold to consumers, the exclusion for foods sold directly to consumers

applies. If food is returned to the manufacturer, or sold to another

nonconsumer, the reclamation center must keep records of the immediate

subsequent recipients of food, to the extent this information is reasonably

available.

(Comment 45) Several comments state that, although retailers will not be

required to keep track of foods sold to consumers, retailers will be required

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to keep records on those immediate subsequent recipients who are wholesalers

or other retailers. The comments add that, unless the recordkeeping exclusion

applies to all foods that are sold from the store, it is essentially meaningless.

Food retailers do not know whether a person who comes into a store and buys

food will be using the food for personal consumption or for a business purpose.

To cover the possibility that a purchase was intended for business purposes

would essentially require a retailer to record all consumer transactions. The

comments state that this would not increase food security or consumer

confidence. The comments also state that the trust of consumers is of

tantamount importance and requiring documentation of all consumer

transactions will diminish that trust without furthering the goal of food

security.

(Response) Although retailers must keep records of immediate subsequent

recipients of food who are not consumers, retailers are not required to do so

unless that information is reasonably available, for example, when the

purchaser has an existing commercial account. (See response to comment 38

of this document.) Retailers need not ask the status of each purchaser, and

retailers will not be required to record every consumer transaction. Under

§ 1.327(e) of this final rule, persons who operate retail food establishments that

distribute food to persons who are not consumers are subject to all of the

requirements in subpart J of this final rule. However, the requirements in

§ 1.345 of this final rule to establish and maintain records to identify the

nontransporter and transporter immediate subsequent recipients that are not

consumers applies as to those transactions only, and only to the extent the

information is reasonably available.

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FDA notes that there is an exclusion with respect to food that is

manufactured, processed, packed, held, received, or transported for personal

consumption. Such activities are excluded from the rule because if a traceback

or trace forward investigation is necessary, FDA can learn from sickened

consumers the sources of the food they purchased, or notify consumers

generally about food that presents a threat. Whether food is for personal

consumption depends on many factors, but FDA would consider food prepared

in a private home and transported for other than business purposes to qualify

for this exclusion. An example of food covered by this exclusion includes food

prepared for ‘‘pot luck’’ suppers.

(Comment 46) One comment believes that direct marketing facilities

should be explicitly exempted from maintaining records of immediate

subsequent recipients. The comment believes that direct marketers that sell

their food directly to consumers are functionally no different than brick-andmortar

retail establishments. Moreover, FDA’s proposal already explicitly

exempts other entities that sell food directly to consumers (farms, some

roadside stands, and restaurants). Direct marketers thus should be exempt from

another and different mandated recordkeeping protocol. Direct marketers

already must meet the recordkeeping requirements of taxing authorities.

Adding another enormous, needless recordkeeping requirement for consumers

who purchase their food directly would do nothing to achieve the aims of the

Bioterrorism Act at the expense of increased costs to marketers and, thus, their

customers. The comment urges FDA to revise the exclusion for retail facilities

by explicitly stating that direct marketing facilities are likewise exempt from

the one-down requirements of § 1.345.

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(Response) Neither the proposed nor final rule distinguishes between

persons that sell to consumers as direct marketers, including those selling

products over the Internet, and other persons selling to consumers from

establishments. Therefore, if a direct marketer sells food directly to a

consumer, he or she is exempt from establishing and maintaining records of

the immediate subsequent recipients of that food. Under § 1.327(e) of this final

rule, persons who operate retail food establishments that distribute food to

persons who are not consumers are subject to all of the requirements in subpart

J of this final rule. However, for retail food establishments, the requirements

in § 1.345 to establish and maintain records to identify the nontransporter and

transporter immediate subsequent recipients that are not consumers applies

as to those transactions only, and only to the extent the information is

reasonably available. In addition, retail food establishments that employ 10 or

fewer full-time equivalent employees are excluded from all of the requirements

of subpart J of this final rule, except the record access provisions for existing

records under §§ 1.361 and 1.363. (See response to comment 38 of this

document for a further discussion of FDA’s rationale underlying this

exclusion.) For a further discussion of ‘‘direct sellers’’ responsibilities under

this rulemaking, see response to comment 50 in the following paragraphs.

(Comment 47) One comment states it is not clear in the proposed

regulations whether retail bakeries and delicatessens are subject to these

regulations. Although the registration requirements exempt them entirely, the

recordkeeping rule only contains an exemption from establishing and

maintaining records with the names of ‘‘immediate subsequent recipients of

foods sold directly to consumers.’’ This implies that they still need to keep

track of ingredient lots used in each production. In such operations, production

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usually consists of a wide variety of products made daily and in very small

quantities. Keeping track of ingredients used in each and every product made

daily is virtually impossible, and if required, would financially break every

retail bakery or delicatessen, most of which are already struggling to compete

in the dwindling market being taken over by supermarket chains. The comment

requests that FDA look seriously at totally exempting any retail food operation

with 10 or less employees from any of the requirements of the proposed

regulations, particularly recordkeeping. If this is not possible, the comment

proposes that FDA consider an alternative choice if they do not keep records

of ingredients used in products, that if any contaminated ingredient is found,

or brought to their attention, that they agree to destroy all manufactured

products currently in stock (made from this ingredient or not). This alternative

would have the same safety effect, but would be a lot less costly than keeping

records.

(Response) A bakery or delicatessen is excluded from all of the

requirements in subpart J of this final rule if its sales of food it prepares and

sells to consumers for immediate consumption are more than 90 percent of

its total food sales. Food is for immediate consumption when the food is

capable of being eaten immediately with no further preparation. However, if

the bakery or delicatessen does not qualify for the restaurant/retail facility

exclusion in § 1.327(b) of this final rule, there is also an exclusion for retail

food establishments that may apply. Under § 1.327(f) of this final rule, retail

food establishments that employ 10 or fewer full-time equivalent employees

are excluded from all of the requirements in this subpart, except the record

access requirements for existing records. The exclusion is based on the number

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of full-time equivalent employees at each retail food establishment and not the

entire business, which may own numerous retail stores.

(Comment 48) One comment states it appears that rather than exempting

convenience stores that sell food for immediate consumption, FDA has

proposed a partial exemption such that records need be kept only for the

nonexempt activities, but that is not clear in the proposed rule. FDA should

either take a functional approach that allows facilities that sell food to

consumers for immediate consumption to have a full exemption, or FDA

should clarify that convenience stores and other facilities that make sales for

immediate consumption need not maintain records for that part of their

operation.

(Response) Convenience stores and other covered facilities that sell to

consumers are an example of a mixed-type facility. Food that the convenience

store prepares and sells directly to consumers for immediate consumption (i.e.,

hot dogs, hot pretzels), is exempt from subpart J of this final rule under the

restaurant exemption. Under § 1.337 of this final rule, the facility is required

to keep records of the nontransporter and transporter immediate previous

sources for all other food. The facility is not required to establish and maintain

records to identify the nontransporter and transporter immediate subsequent

recipients for sales of food to consumers, but must establish and maintain

records to identify immediate subsequent recipients of food who are not

consumers, as required by § 1.345 of this final rule, when such information

is reasonably available, as discussed in response to comment 38. In addition,

retail food establishments that employ 10 or fewer full-time equivalent

employees are excluded from all of the requirements of subpart J in this final

rule, except the record access provisions for existing records under §§ 1.361

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and 1.363. (See response to comment 38 of this document for a further

discussion of FDA’s rationale underlying this exclusion.)

(Comment 49) Some comments state they are engaged in marketing

products directly to the consumer through direct sales, mail order, Internet

sales, and/or retail sales and urge FDA to clarify the scope of ‘‘retail facilities’’

to include independent distributors in direct sales forces, mail order

companies, or Internet sales operations, because it is apparent that neither

Congress nor FDA intended for the recordkeeping requirement to encompass

records of individual sales to consumers.

(Response) As described in response to comment 37, persons are not

required to establish and maintain records to identify the nontransporter and

transporter subsequent recipients of food distributed directly to consumers

(§ 1.327(d) of this final rule). Further, as described in response to comment

50, these regulations do not distinguish between direct marketers and others

selling food from a retail establishment. In addition, retail food establishments

that employ 10 or fewer full-time equivalent employees are excluded from all

of the requirements of subpart J of this final rule, except §§ 1.361 and 1.363.

(See response to comment 38 of this document for a further discussion of

FDA’s rationale underlying this exclusion.)

(Comment 50) One comment states that because direct sellers might also

sell to other direct sellers either for consumption or for resale to other

consumers, it is possible that the proposed recordkeeping requirements of the

regulation might be construed to apply to them. The comment strongly suggests

that were the requirements to apply to their businesses, many individuals

would be discouraged from entering into direct sales. Individuals who are

attracted to direct selling because of the ease of entry into the business would

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surely not welcome the additional paperwork and bureaucratic requirements

necessitated by the proposal. Although perhaps appropriate for larger

businesses, these requirements would provide a severe disincentive to their

way of doing business. Additionally, given the sheer numbers of salespeople

potentially involved, and the generally small size of the sales transactions

consummated by direct sellers, the massive paperwork generated by direct

sellers under the recordkeeping requirements could actually be

counterproductive to efforts to enhance bioterrorism preparedness. The

comment states that, given the unique, micro-entrepreneurial nature of

operations of individual direct sellers and the questionable (at best) benefit

to national security that might be achieved by applying this regulation to them,

direct sellers should be exempt from the extensive recordkeeping requirements

with respect to both immediate previous sources and immediate subsequent

recipients. The comment also notes that other retailing operations are exempt

(at least in part) from the proposed regulation, and believes that an exemption

for direct sellers is consistent with the retailing exemption and the

Bioterrorism Act.

(Response) ‘‘Direct sellers’’ are not required to establish and maintain

records to identify the nontransporter and transporter immediate subsequent

recipients for sales directly to consumers. Direct sellers that qualify as a retail

food establishment under § 1.327(e) are required to establish and maintain

records for sales to other direct sellers, when such information is reasonably

available. FDA explains the rationale for distinguishing between sales to

consumers and businesses in response to comment 40. Direct sellers, like other

covered persons, are required to establish and maintain records to identify the

nontransporter and transporter immediate previous sources of food, as required

78

by § 1.337 of this final rule. However, retail food establishments that employ

10 or fewer full-time equivalent employees are excluded from all of the

requirements of subpart J in this final rule, except the record access provisions

for existing records under §§ 1.361 and 1.363. (See response to comment 38

of this document for a further discussion of FDA’s rationale underlying this

exclusion.) Thus, if a direct seller qualifies as a retail food establishment and

employs 10 or fewer full-time equivalent employees, it is exempt from all

recordkeeping requirements under this rule, except for the record access

provisions for existing records.

(Comment 51) One comment states the Secretary has the full discretion

to determine who shall be required to maintain records and what records shall

be kept. Congress has clearly communicated its intention to protect small

businesses by stating: ‘‘The Secretary shall take into account the size of the

business in promulgating regulations under this section.’’ The comment states

that individual direct sellers who distribute nutritional or related products

should be exempt from the requirement to maintain records under the

proposed rule.

(Response) As stated in the proposed rule, FDA carefully considered the

size of a business when developing these regulations. FDA found that most

products and ingredients pass through at least one very small business when

moving through the distribution process. If FDA were to exempt all very small

businesses with 10 or fewer employees, not just those in the retail sector, this

would create a ‘‘Swiss Cheese’’ approach to trace back, as there would be a

potential failure of entities to keep records throughout the distribution chain.

The number of very small entities account for a large fraction of the total

number of food establishments. We used U.S. Census data to estimate the

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percentage of the total number of food establishments that are very small, as

well as their revenues, by sector and report them in table A of this document.

The fraction of the total number of facilities that are very small ranges from

an estimated 73 percent of convenience outlets to 90 percent of transporters.

TABLE A.—ESTIMATED TOTAL NUMBER OF VERY SMALL FOOD ESTABLISHMENTS

Sector % of establishments That Are Very Small % of Food Industry Revenue From Very

Small Establishments

Manufacturers 77 15

Wholesalers 81 14

Transporters 90 16

Grocery outlets 88 18

Convenience outlets 73 18

Importers 82 14

Mixed-type facilities 82 15

Moreover, many of our failures in a typical trace back investigation (i.e.,

unclassified scenarios) have been at the wholesaler (distributor) level. As noted

in the table A of this document, 81 percent of the wholesalers are considered

very small. We also would have significant concerns if 90 percent of the

transporters (as very small entities) were excluded from the requirements to

establish and maintain records.

In light of the previous information, FDA does not believe we would have

an effective recordkeeping system if we were to exempt all very small entities

from the rule. Unlike the very small retailers who are at the end of the

distribution chain only, a full exemption by size would create holes throughout

the distribution chain and would not provide FDA adequate assurances that,

in the event of a threat of serious adverse health consequences or death, FDA

would be able to conduct an efficient and effective tracing investigation.

However, ‘‘individual direct sellers’’ as described in the comment who

qualify as retail food establishments that employ 10 or fewer full-time

equivalent employees are excluded from all of the requirements of subpart J

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in this final rule, except the record access provisions for existing records under

§§ 1.361 and 1.363. (See response to comment 38 of this document for a further

discussion of FDA’s rationale underlying this exclusion.)

In addition, FDA has considered the size of a business in establishing

compliance dates for this final rule. Further, the final rule exempts direct

sellers who are otherwise subject to the recordkeeping requirements of this rule

and who sell food products directly to consumers from keeping records of the

immediate subsequent recipients of that food.

(Comment 52) Several comments state FDA should interpret the exemption

from maintaining records for immediate subsequent recipients of food to

expressly include retail farm supply and feed stores that sell finished product

directly to consumers and final purchasers. For instance, the comments note

that many small rural feed manufacturers also have a retail outlet in their

facilities that sell bagged feed, pet food, and feed ingredients/additives overthe-

counter directly to consumers and to final purchasers for their own

animals. These products are not resold by the purchaser-customer. Maintaining

records of these sales is not common practice today, would represent a costly

burden to such enterprises, many of which are small businesses, and would

not demonstrably enhance human or animal protection from bioterrorismrelated

threats.

(Response) The exclusion in § 1.327(d) of this final rule from establishing

and maintaining records of immediate subsequent recipients for food

distributed directly to consumers applies to sales of bagged feed, pet food, and

feed ingredients/additives over-the-counter directly to consumers and final

purchasers for their own animals, unless the feed is to be used in animals that

will be sold as food. If the feed is to be fed to food-producing animals, then

81

the purchasers are not considered consumers since they are purchasing the

food for a business (i.e., for the food-producing operation). The feed will

remain in the food distribution system, and FDA needs records to help address

credible threats of serious adverse health consequences or death to humans

or animals. Therefore, under § 1.327(e), persons who operate retail food

establishments that distribute food to persons who are not consumers are

subject to all of the requirements in subpart J of this final rule. However, for

retail food establishments, the requirements in § 1.345 of this final rule to

establish and maintain records to identify the nontransporter and transporter

immediate subsequent recipients that are not consumers applies as to those

transactions only to the extent the information is reasonably available.

In addition, retail food establishments that employ 10 or fewer full-time

equivalent employees are excluded from all of the requirements of subpart J

in this final rule, except the record access provisions for existing records under

§§ 1.361 and 1.363. (See response to comment 38 of this document for a further

discussion of FDA’s rationale underlying this exclusion.)

6. Retail Facility/Roadside Stands

(Comment 53) One comment is concerned that the retail exemption only

applies to facilities, such as roadside stands that employ 10 or fewer full-time

employees, and that are located in the same general physical location as farms

that sell unprocessed food grown or raised on those farms. The comments note

that the exclusion does not apply to processed foods, even if they are sold

directly to the consumers from the retail facility in the same general location

as the farm, unless all the ingredients in that processed food were grown or

raised on that farm. Consequently, persons handling processed foods, such as

baked goods, jams, jellies, maple syrup, and ‘‘processed’’ items such as hams

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and sausages from animals grown and processed into meat products on the

farm would fall under the provisions of the final rule. Also, any persons

handling products that were ‘‘imported’’ from off the farm would be subject

to the final rule. The processed food provision is a burden for those involved

in roadside stands that operate outside of the normal seasonal harvest period

or sell processed foods. They could not purchase goods from neighbors or bring

in goods from other areas under the exemption or include ingredients from

a nonfarm source. The comment asks that this limitation affecting farm markets

be removed from the final rule.

(Response) FDA has changed the exclusion in proposed § 1.327(d)(2) and

has now provided an exclusion for all retail food establishments that employ

10 or fewer full-time equivalent employees from all of the regulations in this

final rule, except the record access provisions for existing records under

§§ 1.361 and 1.363, regardless of whether the food being sold is processed or

unprocessed. (See response to comment 38 of this document for a further

discussion of FDA’s rationale underlying this exclusion.)

7. Persons Under the Exclusive Jurisdiction of USDA

(Comment 54) One comment states that proposed §§ 1.327 and 1.328

distinguish between those foods that will be subject to the requirements of the

final rule, and those foods that will be exempt. In doing so, the proposed rule

refers to other federal statutes (e.g., the Federal Meat Inspection Act, the

Poultry Products Inspection Act, and the Egg Products Inspection Act), as a

means to provide the regulated community with the relevant details as to

whether and when their conduct will come within the scope of the regulations

being proposed. Although statutory references such as these may suffice to

inform farms, food manufacturers, restaurants, and other food-related facilities

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that deal with these statutes on a daily basis whether and when they will be

subject to FDA’s final rule, that is clearly not the case with motor carriers.

Therefore, the comment states that FDA should explain what food is subject

to the final rule in layman’s language to avoid any confusion. The comment

further recommends that FDA attach a list of the applicable or the exempted

foods as an appendix to the final rule.

In addition, a foreign comment states that meat, poultry, and eggs are

exempt under the proposed rule because the United States deems current risk

management systems associated with these products to be sufficiently

stringent. The comment states that, in Australia, these products are subject to

strict regulatory and certification requirements as ‘‘prescribed goods’’ under

Australian legislation (the Export Control Act 1982), which the USDA audits.

A range of other Australian products, such as milk and fish, are also prescribed

goods and are subject to the same certification process. The comment,

therefore, argues that all prescribed goods should qualify for an exemption on

these grounds.

(Response) The rule does not impose any requirements with regard to food

to the extent it is within USDA’s exclusive jurisdiction under FMIA, PPIA,

or EPIA. Under the FMIA, USDA regulates cattle, sheep, swine, equines, goats,

and ‘‘meat food products.’’ Under the PPIA, USDA regulates poultry and

‘‘poultry products.’’ Under the Egg Products Inspection Act, USDA regulates

some eggs and ‘‘egg products.’’

Any person that manufactures, processes, packs, transports, distributes,

receives, holds, or imports some foods subject to exclusive USDA jurisdiction

is exempt from these regulations with respect to that food while it is under

USDA’s exclusive jurisdiction.

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FDA has decided not to attach an appendix to the final rules highlighting

which foods are within the scope of this final rule. If questions remain, FDA

will determine whether it needs to issue additional guidance on this subject.

With respect to the comment regarding Australian meat, poultry, eggs,

milk, and fish, FDA notes that all foreign persons, except for foreign persons

who transport food in the United States, are excluded from all of the

requirements of the final rule under § 1.327(h). However, domestic persons

who import these foreign products are required to comply with these

recordkeeping regulations to the extent that they are FDA-regulated food

products.

(Comment 55) One foreign comment requests that FDA identify the list

of persons that are excluded from all or part of the regulation in accordance

with § 1.327.

(Response) Foreign persons, except for foreign persons who transport food

in the United States, are excluded from all of the requirements of this final

rule under § 1.327(h). The term ‘‘person’’ includes an individual, partnership,

corporation, and association (section 201 of the FD&C Act (21 U.S.C. 321(e))).

8. Foreign Facilities if Food Undergoes Further Manufacturing/Processing

There were no comments received on this issue. However, FDA has

decided to exempt foreign persons, except foreign persons who transport food

in the United States, from this rulemaking. This is discussed in detail under

section III.C of this document entitled ‘‘Comments on Who is Subject to This

Subpart?’’ (Proposed § 1.326).

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9. Pet Food

(Comment 56) Two comments requested clarification on whether the

exemption from the recordkeeping requirements for non-BSE regulated pet

food manufacturers applies to foreign manufacturing facilities.

(Response) All foreign persons, except foreign persons who transport food

in the United States, are excluded from all of these regulations under § 1.327(h)

of this final rule. In addition, the final rule deletes the proposed exclusion

for non-BSE regulated pet food. Accordingly, all persons who manufacture,

process, pack, transport, distribute, receive, hold, or import animal feed in the

United States, including pet food, are subject to the requirements of this final

rule, unless otherwise exempted.

(Comment 57) FDA received three comments from four national animal

feed trade associations. One disagrees with the proposal to exempt pet food

entities that are not subject to the BSE rule. It comments that it was an error

to attempt to combine provisions of the BSE rule with a Bioterrorism rule.

Because the BSE rule was solely designed to prevent the introduction and amplification of BSE, the comment is concerned that the recordkeeping requirements of the BSE rule do not fully address the recordkeeping provisions of the Bioterrorism Act. In addition, it comments that the health and safety of pets should not be compromised and, therefore, all animal food should be

treated equally under the final rule and pet food companies should be required to maintain the same level of records as other animal feed companies. The comment also notes that creating an exempt category of food products (i.e., certain pet foods) could result in a gap in the recordkeeping system established

by the Bioterrorism Act.

Two additional animal feed associations submitted a combined comment that for simplicity FDA should adopt the same recordkeeping requirements for all animal food, pet food, and food intended for food-producing animals. One comments that entities already complying with the BSE rule should comply

but all other animal feed and pet foods should be exempt from the recordkeeping requirement because of the low risk of serious adverse health consequence. Two comments state that they agree with FDA’s risk assessments that animal feed and pet food have a lower risk and therefore needs fewer requirements than human food.

One other comment supports the proposed provision stipulating that BSEregulated pet food entities should comply with the recordkeeping regulations.

A foreign comment questions the need for the inclusion of any animal feed or pet food in the rule. Several comments, foreign and domestic, request clarification on which foreign establishments are subject to the recordkeeping

requirements under the proposed non-BSE rule exclusion.

(Response) In the final rule, FDA has deleted the non-BSE pet food

exclusions, and the final rule now requires all animal feed and pet food entities

to establish and maintain records for 1 year. Therefore, the definition of pet

food in the proposed rule is no longer needed and has been deleted. FDA was

persuaded by the comments from three national trade organizations that: (1)

Using the scope of the BSE rule as the criterion for exempting certain pet foods

is inappropriate and would result in insufficient recordkeeping coverage to

protect the public from bioterrorism; (2) creating an exclusion for certain pet

foods could create a gap in the recordkeeping system; and (3) for simplicity,

FDA should adopt the same recordkeeping requirements for all animal food,

including pet food. FDA believes that contaminated animal food can be a link

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to human foodborne illness. People could be at risk through direct contact with

animal food or through unintentional cross-contamination of cooking surfaces

or utensils. Animals may also become infected and serve as a reservoir for

exposing other animals and humans to disease. In 2002, dog chew treats were

contaminated with Salmonella enteritidis (Salmonella) and became a vehicle

to transmit Salmonella into homes. As a consequence, many pet owners

became ill, and one person died (Ref. 15). Although FDA continues to believe

that the consequences of a potential terrorist attack or food-related emergency

are greater for food for food-producing animals than for pet food, compelling

arguments have been raised against the proposal to create exclusions for certain

pet food entities. Therefore, FDA believes that applying the recordkeeping

requirements uniformly to all animal foods is most consistent with the intent

of the Bioterrorism Act.

The final rule requires records for all animal food, including pet food, to

be retained for 1 year after the dates you receive and release the food. FDA

believes that a 1-year period of records retention is appropriate because food

for food producing animals tends to have a faster turnover rate than many

kinds of human food. In addition, since pet foods are typically the sole source

of food for pets, such foods tend not to be stored as long as many human foods.

(Comment 58) One comment states that the recordkeeping requirements

for animal food foreign establishments should be limited to the final

establishment handling the product prior to export to the United States.

(Response) Section 1.327(h) of this final rule excludes all foreign persons,

except foreign person who transport food in the United States, from all

requirements in this final rule.

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(Comment 59) One comment asks FDA to officially recognize its country’s

BSE regulations as equivalent to the U.S. BSE regulations.

(Response) FDA declines to respond to this request because it is outside

the scope of this rulemaking.

(Comment 60) One comment asks that suppliers and transporters of animal

food not be required to retain any additional information other than what is

contained in their current records.

(Response) FDA agrees in part with this comment. This rule only requires

additional records to be established and maintained to the extent the

information does not already exist.

10. Food Contact Materials

(Comment 61) Several comments state that, although they agree with

FDA’s decision not to apply the proposed regulations to outer packaging, the

same logic that supports that exclusion applies equally to food contact

materials. One comment states that applying the recordkeeping requirements

to food contact substances would create an unreasonable and unjustified

burden on the industry and its suppliers. One comment states that, under

FDA’s proposed approach, there is no limit to the suppliers of components

and precursor substances who would be required to establish and maintain

records. Removing food contact facilities from the ambit of the recordkeeping

regulations is consistent with the clear intent of the Bioterrorism Act and

FDA’s mandate to ensure the safety of the U.S. food supply in the least

burdensome means possible.

Several comments state it is unrealistic to believe that a terrorist attack

on the food supply will be carried out through food contact substances. As

a technical matter, it would be virtually impossible to insert a poison in contact

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materials with a sustained release mechanism to contaminate food, without

the full cooperation of the materials manufacturer. Even putting aside the

technical and logistical complexities that would be involved, such an indirect

approach would have virtually no impact before discovery. Food contact

manufacturers and food processors have routine procedures in place to ensure

that their contact materials are suitable for use with food. Any possible threat

to the food supply from packaging would be uncovered at this stage.

Accordingly, there is no reason to believe that applying the recordkeeping

requirements to food contact substances would further the purpose of the

Bioterrorism Act or FDA’s stated goal of the proposed regulations.

Another comment states that excluding outer food packaging from the

requirements has little practical meaning because nearly all packaging

companies handle both outer packaging and food contact substances. The

comment further states that FDA’s assumption that half of the manufacturers

and distributors of packaging handle only outer packaging materials (68 FR

25188 at 25212) may be true for suppliers in other packaging segments, but

is simply incorrect when it comes to the cartonboard segment of the industry.

The comment states that packaging companies in that segment will find it more

expedient to keep records on all materials—both outer packaging and contact

substances—rather than to document only the food contact materials, because

many of the same materials can be used for both purposes, and it would be

prohibitively expensive to segregate these uses. The comment notes that this

would result in a recordkeeping requirement for nearly all facilities that

manufacture packaging and packaging components, and all of their suppliers,

if FDA retains the proposed approach.

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One comment states the inclusion of ‘‘immediate food packaging’’ and

‘‘food contact substances’’ in the definition of ‘‘food’’ creates a difficult and

unnecessary compliance effort throughout the supply chain. The comment

suggests that FDA remove the requirement to establish and maintain records

on ‘‘immediate food packaging’’ and ‘‘food contact substances’’ after such

materials are either accompanying or affixed to the food, thus eliminating

duplicative tracking and burdensome paperwork. If records are kept on the

food, the comment states that those same records could be used to trace the

packaging and labeling materials to the farm and point of initial contact with

the food. From there, the material’s original manufacturing/processing facility

can be identified, where detailed records on the immediate subsequent

transporter and recipient (likely the farm) will be maintained according to the

regulations.

(Response) FDA agrees with these comments in part. FDA is finalizing the

definition of ‘‘food’’ as proposed and is not excluding food contact substances

from the definition. As discussed in the following paragraphs and provided

in §§ 1.327(i) and (j) of this final rule, however, FDA is using our discretion

to exclude specified persons and activities from recordkeeping requirements

for packaging and food contact substances.

These comments raise the question of what Congress intended ‘‘food’’ to

mean for purposes of recordkeeping and access. In construing the

recordkeeping and access provisions of the Bioterrorism Act, FDA is

confronted with two questions. First, has Congress directly spoken to the

precise question presented (Chevron step one)? Chevron, U.S.A., Inc. v. NRDC,

Inc., 467 U.S. 837, 842 (1984). To find no ambiguity, Congress must have

focused directly on the question presented and have articulated clearly its

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intention. Young v. Community Nutrition Institute, 476 U.S. 974, 980 (1986).

If Congress has spoken directly and plainly, the agency must implement

Congress’s unambiguously expressed intent. Chevron, 467 U.S. at 842–843. If,

however, the Bioterrorism Act is silent or ambiguous as to the meaning of

‘‘food,’’ FDA may define ‘‘food’’ in a reasonable fashion (Chevron step two).

Chevron, 467 U.S. at 842–843; FDA v. Brown & Williamson Tobacco Corp.,

529 U.S. 120, 132 (2000).

The agency has determined that, in enacting section 306 of the

Bioterrorism Act, Congress did not speak directly and precisely to the meaning

of ‘‘food.’’ The FD&C Act has a definition of ‘‘food’’ in section 201(f). It is

a reasonable assumption that, when the term ‘‘food’’ is used in the Bioterrorism

Act, section 201(f) applies. However, although there may be ‘‘a natural

presumption that identical words used in different parts of the same Act are

intended to have the same meaning [citation omitted], * * * the presumption

is not rigid* * *.’’ Atlantic Cleaners & Dyers, Inc. v. U.S., 286 U.S. 427, 433

(1932). Accord: U.S. v. Cleveland Indians Baseball Co., 532 U.S. 200, 213

(2000). Thus, the same word may be given different meanings, even in the same

statute, if different interpretations are what Congress intended. Atlantic

Cleaners & Dryers, Inc., supra.

Even before the Bioterrorism Act amendments, the term ‘‘food’’ was not

given an identical meaning throughout the FD&C Act. For example, in

construing the parenthetical ‘‘(other than food)’’ in section 201(g)(1)(C) of the

FD&C Act, the Seventh Circuit noted that Congress meant to exclude only

‘‘articles used by people in the ordinary way that most people use food—

primarily for taste, aroma, or nutritive value’’ and not all substances defined

as food by section 201(f) of the FD&C Act. Nutrilab, Inc. v. Schweiker, 713

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1 FDA’s long-standing interpretation of the FD&C Act’s definition of color additive,

section 201(t), is an additional example of where ‘‘food’’ is used more narrowly than as

defined in section 201(f) of the FD&C Act. A color additive is defined in section 201(t) as

a substance that ‘‘when applied to a food is capable of imparting color thereto * * *.’’ The

agency’s food additive regulations distinguish between color additives and ‘‘colorants,’’ the

latter being used to impart color to a food contact material (21 CFR 178.3297(a)). See also

21 CFR 70.3(f). Thus, ‘‘food’’ as it appears in the statutory definition of color additive,

necessarily excludes food contact materials.

F.2d 335, 338 (7th Cir. 1983). Similarly, section 409(h)(6) of the FD&C Act

defines a food contact substance as ‘‘any substance intended for use as a

component of materials used in manufacturing, packing, packaging,

transporting, or holding food if such use is not intended to have any technical

effect in such food (emphasis added).’’ This definition makes sense only if

‘‘food’’ is interpreted to exclude materials that contact food because

components of food contact materials are plainly intended to have a technical

effect in such materials.1

Thus, it is in this larger statutory context, that FDA has evaluated section

306 of the Bioterrorism Act to determine whether the meaning of the word

‘‘food’’ is ambiguous. In conducting this Chevron step one analysis, all of the

traditional tools of statutory interpretation are available to determine whether

Congress’s intent is ambiguous. Pharmaceutical Research & Manufacturers of

America v. Thompson, 251 F. 3d 219, 224 (D.C. Cir. 2001). Section 306 of the

Bioterrorism Act amends the FD&C Act by adding section 414 to the FD&C

Act. In section 414, ‘‘food’’ is used in conjunction with other words to describe

which FDA-regulated articles are subject to recordkeeping and access

requirements. In describing the conditions for record access by FDA, section

414(a) of the FD&C Act requires a reasonable belief as to an ‘‘article of food.’’

In describing the purpose for which recordkeeping may be required, section

414(b) of the FD&C Act refers to ‘‘food, including its packaging.’’ Elsewhere

in the recordkeeping provisions, section 414 of the FD&C Act refers to ‘‘food,’’

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‘‘food safety,’’ ‘‘a food to the extent it is within the exclusive jurisdiction of

[USDA],’’ and ‘‘recipes for food.’’

The Bioterrorism Act is silent as to the meaning of ‘‘food.’’ Congress did

not specify whether it intended the definition in section 201(f) of the FD&C

Act to apply, one of the other possibilities noted in the previous paragraph,

or another meaning. Where, as here, the statutory language on its face does

not clearly establish Congressional intent, it is appropriate to consider not only

the particular statutory language at issue, but also the language and design of

the statute as a whole. Martini v. Federal Nat’l Mortgage Association, 178 F.

3d 1336, 1345 (D.C. Cir. 1999), citing K Mart Corp. v. Cartier, Inc., 486 U.S.

281 (1988). Indeed, the analysis should not be confined to the specific

provision in isolation because the meaning or ambiguity of a term may be

evident only when considered in a larger context. FDA v. Brown & Williamson

Tobacco Corp., supra at 132 (2000).

FDA has considered other sections of the Bioterrorism Act and has

concluded that the meaning of ‘‘food’’ in the Bioterrorism Act is ambiguous.

FDA previously considered the meaning of ‘‘food’’ in section 305 of the

Bioterrorism Act, governing registration of food facilities, and concluded that

it is ambiguous (68 FR 58894). Section 305 of the Bioterrorism Act amends

the FD&C Act by adding section 415 to the FD&C Act (21 U.S.C. 350d). In

section 415(a)(1) of the FD&C Act, the word ‘‘food’’ is modified by the phrase

‘‘for consumption in the United States.’’ It is not clear whether this modifying

phrase limits the definition of ‘‘food’’ to food that is ingested, a narrower

definition of ‘‘food’’ than that in section 201(f) of the FD&C Act. In addition,

the definition of ‘‘facility’’ in section 415(b)(1) of the FD&C Act exempts

‘‘farms; restaurants; other retail establishments.’’ It is not clear whether the

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phrase ‘‘other retail establishments’’ includes retailers of food contact

materials; the legislative history indicates that it does not, thereby giving rise

to additional ambiguity about which definition of ‘‘food’’ applies to section

415.

FDA also considered the meaning of ‘‘food’’ in section 307 of the

Bioterrorism Act, governing prior notice of imported food shipments, and

concluded that it is ambiguous (68 FR 58974). Section 307 of the Bioterrorism

Act amends the FD&C Act by adding section 801(m) to the FD&C Act. Section

801(m) of the FD&C Act refers to an ‘‘article of food.’’ However, the legislative

history of section 307 of the Bioterrorism Act indicates that packaging

materials are not subject to section 307, and can be read to imply that Congress

was not relying on the definition of food in section 201(f) of the FD&C Act,

thereby giving rise to ambiguity about which definition of ‘‘food’’ applies to

section 307 of the Bioterrorism Act.

FDA also considered the meaning of ‘‘food’’ in section 303 of the

Bioterrorism Act, governing administrative detention, and concluded that it is

ambiguous. FDA determined that use of the definition of ‘‘food’’ in section

201(f) of the FD&C Act is consistent with the language of section 303 of the

Bioterrorism Act. Section 303 repeatedly uses the term ‘‘food’’ without

adjectives, except for a reference to ‘‘perishable foods,’’ which is not used to

limit the reach of the section. FDA also determined that use of the definition

of ‘‘food’’ in section 201(f) of the FD&C Act is consistent with the use of the

term in judicial enforcement actions (e.g., seizures and injunctions) that may

be instituted under administrative detention.

The ambiguity surrounding Congress’s use of ‘‘food’’ in sections 303, 305,

306, and 307 of the Bioterrorism Act, coupled with the lack of a definition

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of the term in the Bioterrorism Act, support a conclusion that the meaning

of ‘‘food’’ in the Bioterrorism Act is ambiguous. Having concluded that the

meaning of ‘‘food’’ in the Bioterrorism Act and in section 306 of the

Bioterrorism Act in particular is ambiguous, FDA has considered how to define

the term to achieve a ‘‘permissible construction’’ of the records establishment

and maintenance provisions. Chevron, USA, Inc. v. NRDC, Inc., supra at 843.

In conducting this Chevron step two analysis, the agency has considered the

same information it evaluated at step one of the analysis. Bell Atlantic

Telephone Co. v. FCC, 131 F. 3d 1044, 1049 (D.C. Cir. 1997); Chevron U.S.A.,

Inc. v. FERC, 193 F. Supp. 2d 54, 68 (D.D.C. 2002). FDA has determined that

it is permissible, for purposes of the records establishment and maintenance

provisions, to use the definition of ‘‘food’’ in section 201(f) of the FD&C Act.

Use of the definition of ‘‘food’’ in section 201(f) of the FD&C Act is

consistent with the language of section 306 of the Bioterrorism Act. Section

306 does not contain language qualifying the meaning of food. Furthermore,

section 414(b) of the FD&C Act authorizes the Secretary to require certain

records to identify the immediate previous sources and recipients of ‘‘food,

including its packaging.’’ In addition, section 306(b) of the Bioterrorism Act

amended section 704(a) of the FD&C Act, governing factory inspections, to

provide that in the case of persons engaging in covered activities with regard

to ‘‘foods, the inspection shall extend to all records and other information

described in section 414* * *.’’ The inspection referenced in section 306(b)

of the Bioterrorism Act is one of ‘‘any factory, warehouse or establishment in

which [food] is manufactured, processed, packed or held* * *.’’ FDA’s

longstanding interpretation is that ‘‘food’’ in section 704 of the FD&C Act has

the same meaning as in section 201(f) of the FD&C Act.

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Use of the definition of ‘‘food’’ in section 201(f) of the FD&C Act is also

consistent with other sections of the Bioterrorism Act. Section 414(a) of the

FD&C Act refers to an article of food that is ‘‘adulterated.’’ ‘‘Adulterated’’ is

defined in section 402 of the FD&C Act (21 U.S.C. 342), and ‘‘food’’ in that

section has the meaning provided in section 201(f) of the FD&C Act. See, e.g.,

Natick Paperboard Corp. v. Weinberger, 525 F.2d 1103 (1st Cir. 1975).

Furthermore, using the definition of ‘‘food’’ in section 201(f) of the FD&C Act

for section 306 is consistent with the interpretation of ‘‘food’’ in section 303

of the Bioterrorism Act, providing for administrative detention. When the

Secretary has a reasonable belief that an article of food is adulterated and

presents a threat of serious adverse health consequences or death to humans

or animals, FDA may need to administratively detain the food under section

303 of the Bioterrorism Act and access relevant records under section 306 of

the Bioterrorism Act. FDA is therefore retaining its interpretation of ‘‘food’’

in section 306 of the Bioterrorism Act to mean ‘‘food’’ as defined in section

201(f) of the FD&C Act. Food subject to section 306 of the Bioterrorism Act

thus includes, but is not limited to, fruits, vegetables, fish, dairy products, eggs,

raw agricultural commodities for use as food or components of food, animal

feed (including pet food), food and feed ingredients and additives (including

substances that migrate into food from food packaging and other articles that

contact food, dietary supplements and dietary ingredients), infant formula,

beverages (including alcoholic beverages and bottled water), live food animals

(such as hogs and elk), bakery goods, snack foods, candy, and canned foods.

Although ‘‘food’’ for purposes of section 306 of the Bioterrorism Act means

the same as in section 201(f) of the FD&C Act, FDA is using its discretion to

exclude some food from the record establishment and maintenance provisions.

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Persons who manufacture, process, pack, transport, distribute, receive, hold,

or import food contact substances other than the finished container that

directly contacts the food are excluded from all the requirements of subpart

J of this final rule, except §§ 1.361 and 1.363. Persons who place food directly

in contact with its finished container are subject to all of the requirements

of subpart J as to the finished container that directly contacts that food. All

other persons who manufacture, process, pack, transport, distribute, receive,

hold, or import the finished container that directly contacts the food are

excluded from the requirements of subpart J as to the finished container, except

the record access provisions for existing records under §§ 1.361 and 1.363. FDA

determined that requiring such persons to establish and maintain records is

not necessary in order to address credible threats of serious adverse health

consequences or death to humans and animals.

(Comment 62) One comment states that food packaging other than

immediate food-contact packaging defined as ‘‘food’’ in the FD&C Act should

not be included within the scope of this final rule. This appears to be

consistent with FDA’s intent in that the term ‘‘packaging’’ is neither defined

nor used in the proposed rules.

One comment states that the inner packaging that is in direct contact with

the food provides a barrier to contamination from outer packaging components.

Therefore, the comment agrees with FDA’s conclusion that shipping containers

and outer packaging not in direct contact with food poses only a small risk

from contamination and should be omitted from recordkeeping requirements.

One comment believes strongly that ‘‘packaging’’ is not ‘‘food’’ for

purposes of the Bioterrorism Act. Even if FDA disagrees, the agency is urged

to exclude from the recordkeeping obligation all materials that are separated

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from edible food by a ‘‘functional barrier.’’ In other words, at a minimum, any

materials that are separated from edible food by a functional barrier should

be regarded as a type of ‘‘outer packaging’’ for which recordkeeping is not

required. The comment states that FDA has long recognized the use of a

functional barrier in determining what types of materials can be used in a

packaging product. If a functional barrier (such as aluminum foil) is present

in a packaging laminate, there is no expectation of migration of any material

through the functional barrier. Therefore, the comment strongly requests that

any materials on the exterior side of a functional barrier be excluded from the

recordkeeping regulation. Because there is no expectation of migration of any

material through a functional barrier, the likelihood that such materials could

be used to adulterate food is extremely remote.

One comment states the reference to packaging does not mandate

recordkeeping by packaging suppliers or transporters. Indeed, the reference to

‘‘packaging,’’ in addition to ‘‘food,’’ indicates a distinction between the two

terms in the view of the drafters. The law and Congressional intent would be

satisfied by a food processor maintaining records identifying the source of the

finished packaging for the food product. In the unlikely event that food

packaging is the target of terrorists, records in the hands of food processors

regarding their packaging suppliers will allow FDA to follow the history of

the packaging and its components. The regulation as proposed by FDA extends

far beyond what was intended by Congress. To follow Congressional intent,

the comment states FDA needs to revise the proposed regulation to provide

only that food processors have records identifying the suppliers of their

packaging.

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(Response) FDA agrees with the comments in part. Persons who

manufacture, process, pack, transport, distribute, receive, hold, or import food

are subject to §§ 1.361 and 1.363 of this final rule (records access for existing

records) with respect to its packaging (the outer packaging of food that bears

the label and does not contact the food). All other persons who manufacture,

process, pack, transport, distribute, receive, hold, or import packaging are

excluded from all of the requirements of subpart J of this final rule. In addition,

persons who place food directly in contact with its finished container are

subject to all of the requirements of subpart J as to the finished container that

directly contacts that food. All other persons who manufacture, process, pack,

transport, distribute, receive, hold, or import the finished container that

directly contacts the food are excluded from the requirements of subpart J as

to the finished container, except §§ 1.361 and 1.363 of this final rule. For

example, a manufacturer and transporter of candy bar wrappers are not

required to establish and maintain records as to the wrappers because they

do not place food (candy bars) directly in contact with its finished container

(wrappers). A manufacturer of candy bars, who places the candy bars in the

wrappers, is required to keep records as to the sources of the wrappers and

the recipients of the candy bars as a whole (not the candy bar and wrapper

separately). Once the candy bar is placed in the wrapper, all persons who

manufacture, process, pack, transport, distribute, receive, hold, or import the

wrapped candy bar are required to keep records of the wrapped candy bar,

but not to keep separate records with respect to the wrapper. FDA notes that

the ‘‘food’’ in contact with the finished container refers to articles used by

people in the ordinary way that most people use food primarily for taste,

aroma, or nutritive value and not all substances defined as food by section

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201(f) of the FD&C Act. The requirements for packaging and food contact

substances are reflected in the following table.

TABLE B.—PACKAGING AND FOOD CONTACT SUBSTANCES

SUBSTANCE ACTIVITY COVERAGE

Packaging (Defined as the outer packaging of food

that bears the label and does not contact the food.

Packaging does not include food contact substances

(§ 1.328).

Manufacture, process, pack, transport, distribute, receive,

hold, or import

Excluded from all provisions of the rule unless person

also engages in covered activity with respect

to food, in which case subject to §§ 1.361

and1.363 (record access) (See § 1.327(i))

Food contact substance, other than the finished container

that directly contacts food

Manufacture, process, pack, transport, distribute, receive,

hold, or import

Excluded from all provisions of the rule, except

§§ 1.361 and 1.363 (record access) (See

§ 1.327(j))

Finished container that contacts food Place food directly in contact with its finished container

No exclusions, subject to record establishment,

maintenance, and access (See § 1.327(k))

Finished container that contacts food All other activities with respect to finished container Excluded from all provisions of the rule, except

§§ 1.361 and 1.363 (record access) (See

§ 1.329(k))

E. Comments on What Definitions Apply to This Subpart? (Proposed § 1.328)

1. General Comments

(Comment 63) One comment states that FDA should clarify the meaning

of ‘‘responsible individual.’’ The meaning of the term ‘‘responsible individual’’

is the same as other terms mentioned in other sections, such as ‘‘emergency

contact.’’ Moreover, it is not clear what responsibilities are included in this

term.

(Response) FDA agrees with the comment that there is little utility for the

record of each commercial transaction involving the distribution of food to

contain the name of a responsible individual given that individuals change

jobs within and among companies very often, making it unlikely that the

person in the record will have responsibility for the food at issue when FDA

seeks to effect a traceback. Therefore, FDA deleted the requirement that a name

of a ‘‘responsible individual’’ be included in each record. To the extent this

information is available, FDA will use the registration contact information for

facilities subject to registration requirements under § 1.232. FDA believes that,

for facilities not subject to the registration interim final rule, an independent

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requirement to provide this emergency contact information with the records

being kept will not be useful. The stated purpose of having such a contact

name is to obtain help in accessing the records. However, to find that

information, FDA would have already obtained the records without this

emergency contact information.

(Comment 64) One comment states that FDA should clarify the meaning

of ‘‘Adequate description.’’ FDA must establish and publish the minimum

parameters of the products description.

(Response) An adequate description of the food would include the brand

name and specific variety (e.g., brand x cheddar cheese, not just cheese; or

romaine lettuce, not just lettuce). This type of description saves time and

resources during a tracing investigation because it allows FDA to narrow its

focus to the appropriate product during the investigation.

(Comment 65) One comment requests that FDA clarify the meaning of

‘‘Holding.’’

(Response) FDA has defined ‘‘holding’’ in § 1.328 of this final rule to mean

‘‘storage of food. Holding facilities include warehouses, cold storage facilities,

storage silos, grain elevators, and liquid storage tanks.’’

(Comment 66) One comment states that FDA uses the word ‘‘Importer’’

but does not define it.

(Response) The word ‘‘importer’’ does not appear in the final regulation.

FDA will not define it for purposes of this regulation.

2. The FD&C Act

There were no comments on this issue.

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3. Domestic Person

There were no comments on this issue; however, FDA has deleted the

word ‘‘domestic’’ and instead defines the word ‘‘person’’ consistent with its

definition in section 201(e) of the FD&C Act. FDA believes that the term

‘‘domestic person’’ is no longer needed because it is exempting foreign persons,

except for foreign persons who transport food in the United States, from the

requirements of subpart J of this final rule.

4. Farm

(Comment 67) Several comments assert that FDA’s proposed definition of

farm is too narrow and would require recordkeeping by farms that minimally

process their produce for further marketing. The comments claim that many

fresh produce farms incorporate packing and holding activities, and that minor

manufacturing/processing activities should be considered incidental to the

packing and storage activities. Accordingly, to give effect to the legislative

intent to exclude farms, the comments argue that the definition of ‘‘farm’’

should include typical fresh produce post-harvest farming operations such as

packing/packaging, washing, grading, waxing, sizing, cooling, application of

inventory control items (e.g., price lookup stickers (PLUs) or universal product

codes (UPCs)), conventional storage, controlled-atmosphere storage,

transportation from the fields, transportation to storage or processing facilities,

and transportation from the farm. According to the comments, these activities

should be included in the definition of ‘‘farm’’ whether they are conducted

in the field or in a packinghouse.

Some comments believe that the proposed definition of ‘‘farm’’ should be

modified to include certain of the activities defined as manufacturing/

processing, regardless of whether the foods that are the focus of these activities

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are consumed on that farm or one with common ownership or are offered for

sale elsewhere, at least insofar as these activities relate to raw agricultural

commodities. The comments state that the specific manufacturing/processing

activities that should be included within the definition of ‘‘farm’’ are at least

the following activities: Cutting, at least when this activity is applied to harvest

of a farm crop; trimming; washing; labeling, at least when this activity is

applied to containers that are not intended for direct consumer purchase; and

packaging, at least when this activity is applied to containers that are not

intended for direct consumer purchase. The comments also suggest that FDA

should consider allowing farms to engage in milling and grinding without

voiding the statutory exemption to section 306 of the Bioterrorism Act granted

to farms, insofar as these activities are common farm activities.

(Response) In response to these comments and to ensure that FDA is

fulfilling Congress’s intent to exempt ‘‘farms,’’ FDA has revised the definition

of farm in the final rule to state that a ‘‘farm’’ means ‘‘a facility in one general

physical location devoted to the growing and harvesting of crops, the raising

of animals (including seafood), or both’’, and that ‘‘[w]ashing, trimming of

outer leaves, and cooling produce are considered part of harvesting.’’

FDA considers several of the activities identified in the comments to be

‘‘packing or holding,’’ including sorting, grading, wrapping, and boxing

harvested food for the sole purpose of transporting this food off the farm. FDA

also considers placing stickers on produce grown or consumed on a farm to

be part of ‘‘packing.’’ FDA notes that the definition of ‘‘farm’’ includes facilities

that pack or hold food, provided all food used in such activities is grown,

raised, or consumed on that farm or another farm under the same ownership.

Thus, a farm that performs these packing and holding activities will not

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necessarily cease to be a farm and therefore cease to be exempt from these

regulations. Similarly, FDA considers several of the activities identified in the

comment (waxing, milling, and grinding) to be manufacturing/processing. A

farm that performs these activities will not necessarily cease to be a farm

because the definition of ‘‘farm’’ includes facilities that manufacture/process

food, provided that all food used in these activities is consumed on that farm

or another farm under the same ownership.

FDA is aware that a number of other activities may affect an

establishment’s status as a ‘‘farm’’ under this final rule. Thus, the agency is

providing the following additional clarification. First, FDA considers

application of a pesticide to a crop to be an integral part of growing and

harvesting crops and therefore considers the activity to be covered by the

‘‘farm’’ definition. Therefore, an establishment devoted to the growing and

harvesting of crops that applies a pesticide to its crops is a ‘‘farm’’ as defined

in this final rule.

In addition, FDA recognizes that an activity such as placing a raw

agricultural commodity directly into consumer-ready packages is likely to

provide better protection to fragile produce, such as berries, than placing the

produce into a larger bin or box for transport off the farm, with consumer

packaging of the produce further down the distribution chain. ‘‘Manufacturing/

processing’’ as defined in § 1.328 means ‘‘making food from one or more

ingredients, or synthesizing, preparing, treating, modifying or manipulating

food, including food crops or ingredients.’’ Thus, simply placing produce into

containers (such as clamshells, baskets, mesh bags, or plastic bags) is more

akin to packing, even if the containers are ultimately received by the consumer.

Under § 1.328 of this final rule, a farm may engage in this packing activity

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so long as all of the involved produce is grown or consumed on the farm or

a farm under the same ownership. Accordingly, a farm that simply places a

raw agricultural commodity into containers, such as placing berries in

clamshells, is not ‘‘manufacturing/processing.’’

Finally, a farm that transports its products from the field does not cease

to be a ‘‘farm’’ because such transportation is considered incidental to

traditional farming activities.

(Comment 68) One comment states that FDA’s definition of ‘‘farm’’ should

be size-neutral, and apply equally to integrated livestock and poultry facilities,

as long as the activities engaged in at such locations are limited to ‘‘growing

or raising’’ farm animals for human food, but do not extend to further

processing of food-producing animals into meat, milk, or eggs (such as occurs

at food processing and packing plants and rendering facilities) for subsequent

commercial sale for humans or animals.

(Response) The proposed rule’s definition of ‘‘farm’’ had no size limitation,

and neither does the final rule’s definition. FDA agrees that integrated livestock

and poultry facilities are ‘‘farms,’’ to the extent that these operations are

devoted to raising animals for food, the growing of crops, or both, and

otherwise engage in only those activities included in the farm definition. FDA

considers milking cows and collecting eggs from chickens to be ‘‘harvesting’’

when applied to animals, because these activities are akin to harvesting crops.

5. Food

FDA received a number of comments regarding using the definition of

‘‘food’’ in section 201(f) of the FD&C Act, which includes food contact

substances within its scope. These comments are addressed in section III.D.10,

entitled ‘‘Food Contact Materials.’’ For the reasons stated therein, FDA has

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decided to retain the definition of food as proposed; however, the final rule

exempts persons who manufacture, pack, transport, distribute, receive, hold,

or import food contact substances, other than the finished container that

directly contacts the food, from all requirements of subpart J of this final rule,

except §§ 1.361 and 1.363. Further, persons who place food directly in contact

with its finished container are subject to all of the requirements of subpart

J as to the finished container that directly contacts that food. All other persons

who manufacture, process, pack, transport, distribute, receive, hold, or import

the finished container that directly contacts the food are excluded from the

requirements of subpart J as to the finished container, except §§ 1.361 and

1.363 (regarding access to existing records).

6. Foreign Facility

(Comment 69) One comment asks whether ‘‘foreign facility’’ includes

warehouses in ports belonging to shipping companies, land transport or air

lines, sealed container deposits, public organization facilities of the foreign

government and of other federal agency representatives (such as FDA or USDA)

in the country of origin and/or shipment. Another comment states that FDA’s

definition of foreign facility is too inclusive. The comments suggest that only

foreign manufacturers and exporters should be required to keep records of their

partners, such as packing facilities and holding facilities.

(Response) FDA has deleted the definition of foreign facility in the final

rule. FDA notes that foreign persons, except foreign persons who transport food

in the United States, are excluded from all of these regulations in subpart J

of this final rule.

7. Manufacturing/Processing

There were no comments on this issue.

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8. Nontransporter

(Comment 70) Two comments state that many nontransporters own trucks

or other vehicles and transport food as an incidental part of their operations.

For example, many food distributors deliver food by truck to their customers

and also may transport food returns. These entities should not be classified

as transporters for their distribution practices that are incidental to the

nontransporters’ holding, processing, packing, importing, or receiving of food.

The comments ask that the final rule clarify that an entity is either a transporter

or a nontransporter, and that FDA will not consider the same entity a

transporter for some purposes and a nontransporter for other purposes. The

final rule should confirm that a food distributor is a nontransporter. A food

distributor should not automatically be considered a transporter simply

because it delivers food using its own truck fleet. If FDA were to consider the

same company a transporter for some purposes and a nontransporter for other

purposes, this would create tremendous confusion regarding what records are

required to be retained.

(Response) Both the proposed and final rule define a transporter as a

person who has possession, custody, or control of an article of food for the

sole purpose of transporting the food. A person who owns food, or who holds,

processes, packs, imports, receives, or distributes food for purposes other than

transportation is not a transporter, even if the person also transports food. In

the example presented in the comment, a manufacturer that owned its own

trucks to deliver food would not be considered a transporter. However, because

FDA has exempted all foreign persons except those who transport food in the

United States from this rule, foreign persons who transport food in the United

States are subject to the requirements applicable to transporters regardless of

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whether that person has possession, custody, or control of the food for the

sole purpose of transporting that food.

(Comment 71) One comment states that the proposed definition of

‘‘nontransporter’’ reads as follows: ‘‘Nontransporter means a person who owns

food or who holds, processes, packs * * *’’ The same reference to a ‘‘person’’

is included in the definitions of ‘‘nontransporter immediate previous source’’

and ‘‘nontransporter immediate subsequent recipient.’’ The comment asks

whether the proposed rules apply to firms and other legal entities and/or

physical persons. Any other solution would, in the comment’s view, neither

be appropriate nor practicable.

(Response) The maintenance and inspection of records provisions in

section 306 of the Bioterrorism Act apply to ‘‘persons (excluding farms and

restaurants) who manufacture, process, pack, transport, distribute, receive,

hold, or import food.’’ The term ‘‘person’’ has the same meaning as in section

201(e) of the FD&C Act and includes individuals, partnerships, corporations,

and associations.

In addition, as explained further in response to comment 13, intracompany

transfers of food are not subject to additional recordkeeping

requirements. Once a covered person (including individuals, partnerships,

corporations, and associations) receives food and keeps information on its

immediate previous sources, that person or company does not need to keep

additional records until it releases the food to another person or company.

Unless otherwise exempt, at the time that person or company releases the food,

it is required to identify the immediate subsequent recipients of that food.

9. Nontransporter Immediate Previous Source

There were no comments on this issue.

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10. Nontransporter Immediate Subsequent Recipient

There were no comments on this issue.

11. Perishable Food

(Comment 72) Several comments propose that FDA use existing National

Institute of Standards and Technology (NIST) Handbook 130 Regulations for

Uniform Open Dating Definition for Perishable; Semi-Perishable and Long

Term Shelf Life to define ‘‘perishable food.’’ One comment states that the

definition of ‘‘perishable food’’ proposed by FDA is inconsistent with

prevailing regulatory definitions of that term. The NIST Handbook defines

‘‘perishable food’’ as ‘‘any food for which a significant risk of spoilage, loss

of value, or loss of palatability occurs within 60 days of the date of packaging.’’

‘‘Semi-Perishable food’’ means ‘‘any food for which a significant risk for

spoilage, loss of value, or loss of palatability occurs only after a minimum of

60 days, but within 6 months, after the date of packaging.’’ ‘‘Long Shelf-Life

food’’ is defined as ‘‘any food for which a significant risk of spoilage, loss of

value, or loss of palatability does not occur sooner than six months after the

date of packaging, including foods preserved by freezing, dehydrating, or being

placed in a hermetically sealed container.’’ These definitions have a history

of use and acceptance by industry and government, and were developed 30

years ago by the National Conference of Weights and Measures, working in

conjunction with state agencies responsible for the regulation of foods. The

comments note that the National Conference undertook this task to assist in

the establishment of a uniform method for presenting open code date labeling

for foods. The definitions have since been adopted by numerous states and

local jurisdictions with open date code regulations.

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Several comments also question why records should be maintained for an

additional 22 months after a product has been consumed. The comments state

that 6 months is sufficient time to maintain records necessary for any traceback

investigation related to food safety or security risks in the produce industry.

One comment estimates that few, if any foods, would qualify as perishable

as defined by FDA. The comment has identified only a few foods sold at retail

that are ‘‘not heat-treated, not frozen and not otherwise preserved in a manner

so as to prevent the quality of the food from being adversely affected if held

longer than 7 days under normal shipping and storage conditions,’’ namely

bread, fish, and store prepared food.

One comment supports the following revised definition of the term

‘‘perishable food.’’ Perishable food means food that may have been thermally

processed or otherwise preserved in a manner so as to prevent the quality of

the foods from being adversely affected if held for 90 days or less under normal

shipping and storage conditions. The comment agrees with FDA’s decision to

divide the food products subject to the record maintenance requirement into

perishable and nonperishable groupings, but disagrees with the 7-day aspect

of the proposed rule’s definition of perishable. In addition, the comment does

not believe that whether a food has been subjected to heat treatment or thermal

processing should be a factor in differentiating between perishable and

nonperishable food. The comment’s members consider as ‘‘perishable’’ those

juice products that have a shelflife of 90 days or less. If 90 days was substituted

for 7 days in the definition of ‘‘perishable,’’ this would result in retention of

records for perishable products for at least 4 times their shelflife.

One comment states that FDA should harmonize the Bioterrorism

regulations with the other current regulatory provisions such as the Perishable

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Agricultural Commodities Act, where available. The definition for ‘‘perishable

food’’ should include all fresh fruits and vegetables where the original kind

or character has not been changed. The comment states that the effects of the

following operations should not be considered as changing a commodity into

a food of a different kind or character: Water, steam, or oil blanching;

chopping; color adding; curing; cutting; dicing; drying for the removal of

surface moisture; fumigating; gassing; heating for insect control; ripening and

coloring; removal of seed, pits, stems, calyx, husk, pods, rind, skin, peel, etc.;

polishing; precooling; refrigerating; shredding; slicing; trimming; washing with

or without chemicals; waxing; adding sugar or other sweetening agents; adding

ascorbic acid or other agents used to retard oxidation; mixing several kinds

of sliced, chopped, or diced fruits or vegetables for packaging in any type of

containers; or comparable methods of preparation. (For example, fresh iceberg

lettuce, romaine and carrots would be included, as well as fresh-cut and

packaged salads; fresh green beans would be included; frozen or canned green

beans would not; fresh oranges would be included; frozen concentrated orange

juice would not.)

One comment states that the proposed definition of ‘‘perishable food’’

excludes many products (including milk, which sometimes has a shelflife of

up to 15 days) that are handled and treated as perishable in the food

distribution system. The comment states that FDA should amend the definition

so that perishable foods are those that are refrigerated or those that will be

adversely affected if held longer than 20 days. The comment asserts that such

a change would make the regulation more consistent with industry practice.

One comment states that the ‘‘perishable food’’ definition is confusing

because the definition begins by stating that perishable foods are foods that

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are ‘‘not heat-treated, not frozen and not otherwise preserved * * * ’’

Confusion arises because pasteurized milk is heat treated, and FDA’s

qualification of the three criteria is somewhat awkward and combined with

an extensive use of negatives.

(Response) FDA agrees in part with the comments, but has decided not

to define ‘‘perishable food’’ in this final rule. FDA defined perishable food in

the proposal for the purpose of establishing a shorter record retention time

for those foods as opposed to nonperishable foods. FDA has concluded that

this objective can be achieved by inserting language directly in § 1.360(b) of

this final rule using similar criteria as the NIST definitions for perishable,

semi-perishable and long shelf-life food. FDA agrees that the proposed

definition is too restrictive for purposes of these final regulations. Therefore,

FDA has changed the record retention requirements in § 1.360(b) of this final

rule to require record retention for: (1) 6 months for food for which a

significant risk of spoilage, loss of value, or loss of palatability occurs within

60 days after the date you receive or release the food; (2) 1 year for food for

which a significant risk of spoilage, loss of value, or loss of palatability occurs

only after a minimum of 60 days, but within 6 months, after the date you

receive or release the food; and (3) 2 years for food for which a significant

risk of spoilage, loss of value, or loss of palatability does not occur sooner

than 6 months after the date you receive or release the food, including foods

preserved by freezing, dehydrating, or being placed in a hermetically sealed

container. However, transporters, or nontransporters retaining records on

behalf of transporters, are required to retain for 6 months records for any food

having a significant risk of spoilage, loss of value, or loss of palatability within

60 days after the date the food is received or released and 1 year for any food

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having a significant risk of spoilage, loss of value, or loss of palatability only

after a minimum of 60 days after the date the food is received or released.

FDA chose this approach because: (1) The food industry already is familiar

with classification of foods into these three categories due to existing

regulations and practices and (2) it will mitigate the problem raised by some

comments of inadequate infrastructure for long term storage of records for the

shorter shelf life foods. FDA believes that a tracing investigation involving

‘‘perishable’’ food will not be compromised by providing for the reduced

record retention of 6 months because most of these tracebacks are initiated

within 6 months of the outbreak.

(Comment 73) FDA requested comments on whether persons subject to

the proposed rule always or usually know at the time a perishable food is

released whether or not it is intended to be processed into nonperishable food.

Two comments state that distributors have no way of knowing whether a

perishable food will be processed into a nonperishable food by other parties.

Buyers do not always disclose how the product will be used and may utilize

it in more than one way. Therefore, producers of perishable food will have

to retain records for the longer period, if they are held accountable for the

further distribution and use of their products as nonperishable food.

(Response) FDA agrees with the comments that covered persons may not

know at the time they release food if it is intended to be processed into a

food that meets the 2-year record retention requirement. FDA clarifies that the

retention period depends upon the status of the food at the time you release

a food to your immediate subsequent recipient, regardless of whether it is

intended or not to be processed into nonperishable food in the future.

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12. Pet Food

There were no comments on the definition of pet food, however, FDA has

decided to include all animal feeds, including pet food, under these

regulations. Therefore, there is no longer a need to define the term ‘‘pet food’’

and FDA has deleted this definition from the final rule.

13. Recipe

(Comment 74) Three comments state that the proposed definition of recipe

is internally inconsistent and ambiguous, and request clarification of its precise

meaning. One comment characterizes the proposed definition as confusing and

nearly nonsensical. The comment suggests that this definition be removed and

that instead § 1.362 of this final rule be modified to add, for example,

‘‘Notwithstanding the exclusion of recipes for food from this subpart, all of

the ingredients in a food are subject to this subpart.’’

Four comments state that the provisions in the proposed rule are

inconsistent with the protection of recipes required by the Bioterrorism Act.

The Bioterrorism Act and accompanying legislative history make it clear that

the records authority does not apply to recipes. The comments urge FDA to

further clarify that information on both the quantitative and qualitative

ingredients in a proprietary formula are not covered by the proposed

recordkeeping requirements or by the records access authority. According to

the comments, in its ordinary meaning, a ‘‘recipe’’ includes three elements:

The ingredients, the quantities, and the procedure. However, the fundamental

element, and the one which in most cases is the most commercially sensitive,

is the ingredient list. The comments state that it is not reasonable to define

‘‘recipe’’ to exclude the list of ingredients to obtain access to the list. The

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comments state that FDA is exceeding its statutory authority under the

Bioterrorism Act.

Other comments are concerned about trade secret, sensitive, and/or

proprietary information regarding recipe ingredients. One comment notes that

food manufacturers are explicitly exempted from disclosing the specific

contents of their flavor mixtures by section 403(i)(2) of the FD&C Act (21 U.S.C.

343(i)(2)) and 21 CFR 101.4(b)(1) and 101.22(h)(1). The comment states that

the purpose of this exemption is to protect a food manufacturer’s trade secrets

and excluding the identity of the individual ingredients of the food from the

definition of ‘‘recipe’’ negates trade secret protection. The comment states that

the complete lists of ingredients used in flavor formulas and seasoning blends

are considered closely held trade secrets and should be considered part of the

meaning of recipe. Flavors and spices are highly proprietary and, in many

products, distinguish one manufacturer’s product from another’s. Disclosure

on the label, or disclosure through the exercise of FDA’s record access

authority would be highly damaging to the food manufacturer whose ‘‘secret

formula’’ entered the public domain. The comment states that it is unlikely

that a product specific formulation would be relevant to an investigation.

Therefore, the comment believes persons subject to the final rule should only

have to establish and maintain records on nutrition facts.

Another comment similarly states that many products will be affected by

the proposed definition, and ingredients and quantities must be protected.

Many products are unique and were expensive to develop. Reverse engineering

as well as trial and error can lead to duplication of products that can have

very serious consequences for companies. FDA must find a solution to this

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challenge so as to not impede its investigations and at the same time protect

the recipes of the involved companies.

(Response) FDA is changing the definition of ‘‘recipe’’ to clarify that a

recipe consists of all three elements necessary to make a food: (1) A list of

ingredients, (2) ingredient quantity information, and (3) instructions for

combining the ingredients. Therefore, FDA is defining recipe to mean ‘‘the

formula, including ingredients, quantities, and instructions, necessary to

manufacture a food product. Because a recipe must have all three elements,

a list of the ingredients used to manufacture a product without quantity

information and manufacturing instructions is not a recipe.’’

To address credible threats of serious adverse health consequences or

death to humans or animals and to conduct tracing investigations, it is critical

that FDA have access to the ingredients and the sources of the ingredients of

food.

Some comments express concern about the disclosure of ingredients to the

public. FDA understands the comments’ concerns about protecting the

confidentiality of nonpublic information. Several statutes and the agency’s

information disclosure regulations at parts 20 and 21 (21 CFR parts 20 and

21) govern the agency’s ability to disclose information to the public. For

example, section 301 of the FD&C Act prohibits any person from using to his

own advantage or revealing, other than to the Secretary or other officers or

employees of the Department, or to the courts, any information acquired under

authority of section 414 and 704 concerning any method or process which as

a trade secret is entitled to protection. Furthermore, the records provisions in

the Bioterrorism Act recognize that FDA may obtain trade secret or confidential

information and direct the Secretary to ‘‘take appropriate measures to ensure

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that there are in effect effective procedures to prevent the unauthorized

disclosure of [such information]’’ (21 U.S.C. 414(c)). FDA is planning to

reemphasize in instructions to FDA personnel the importance of current

protections and legal requirements against the unauthorized disclosure of any

trade secret or confidential information that is obtained. Therefore, FDA

disagrees that a manufacturer would be harmed by disclosing ingredient

information to FDA.

Moreover, the FD&C Act currently requires manufacturers to disclose the

ingredients they use to the public on food labels. One comment notes that

section 403(i)(2) of the FD&C Act excludes spices, flavorings, and some colors

from the label requirement. The exemption in section 403(i)(2) of the FD&C

Act from disclosing specific spices, flavorings, and colors to the public on the

label does not prohibit FDA from obtaining this information under the

Bioterrorism Act. As previously discussed, if this information is legally

protected from public disclosure, FDA will not release it to the public.

(Comment 75) A comment states that FDA’s procedures for the exercise

of its records access authority should embody recognition of the special status

of confidential ingredients, as follows: First, FDA should provide that it will

not routinely seek access to records that would require the disclosure of

confidential ingredient information; second, if FDA concludes that it needs

access to information about ingredients, it should present a written explanation

to the custodian of the records that sets forth the basis for the agency’s

conclusion; and third, FDA should seek records access in an orderly manner,

beginning with ingredients other than flavors and spices. The comment states

that it will not be possible for FDA to assess simultaneously each ingredient

in a product as the potential source of the problem that is being investigated.

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Given that flavor and spice information is highly confidential and that the low

levels of use of those ingredients make it unlikely that one of them will be

the source of the problem investigated, it is reasonable to provide that

requesting information on flavors and spices will occur only as a ‘‘last resort.’’

Finally, FDA should provide for special procedures to ensure that, when flavor

and spice information is obtained, it is properly protected from disclosure,

whether advertently or otherwise. The comment urges FDA to implement a

system to adequately safeguard against the inadvertent release of proprietary

and confidential information. Among other things, such information should

be shared within FDA only to the limited extent necessary to conduct the

particular investigation that resulted in the disclosure. The comment asserts

that highly proprietary information about product formulas should not be

widely distributed within the agency, and all persons who are made privy to

the information should be reminded explicitly of the confidential nature of

the information. Moreover, the comment states that FDA should amend its

public information regulations to provide expressly that information obtained

under the records access authority is exempt from disclosure under one or

more of the exemptions under the Freedom of Information Act (FOIA) (5 U.S.C.

552).

(Response) FDA’s procedure for accessing records is outside the scope of

this final rule. FDA will consider these comments when it develops guidance

for its investigations outlining how FDA intends to implement its access

authority in section 414(a) of the FD&C Act. Such guidance will be subject

to public comment under FDA’s good guidance practice regulations (CGPs)

§ 10.115 (21 CFR 10.115).

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14. Restaurant

(Comment 76) Many comments suggest that caterers supplying interstate

conveyances are preparing meals for direct consumption by the consumer and

should be excluded as restaurants. Some comments state that the

manufacturer/processor of a sandwich should be treated the same, whether the

sandwich is served in a restaurant, offered for sale in a vending machine,

delivered as carryout, served on a hospital patient’s tray, or served on a train

or airplane. The comments note that, in the past, FDA has referred to ‘‘level

playing fields.’’ In this case, exempting of conveyance caterers is the only way

to regulate even-handedly. If restaurants and retailers are to be exempt, these

comments believe that caterers should also be exempt.

The comments further state that just because FDA has historically

inspected the facilities providing food to interstate conveyances under the

Public Health Service Act does not mean that these facilities should be

considered processors under this security regulation. The comments view the

proposed distinction between a snack bar on the train selling sandwiches to

consumers for immediate consumption (considered an exempted restaurant)

and a facility that provides the sandwiches to an airplane or train for later

consumption (considered a covered processing establishment) as an arbitrary

and illogical distinction, because they view the risk associated with that

sandwich as the same between the two facilities.

The comments view their industry as similar to a large restaurant or hotel

kitchen, which produces a wide variety of meals within a matter of hours. The

comments state that inflight catering is not regulated under the same rules as

a food processing plant because the same rules would not fit the inflight

catering industry. Food in a processing plant may be prepared weeks to a year

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before consumption. The comments state that the only difference between the

catering and the restaurant service is that the catering meals are generally

consumed 1 to 4 hours after departing from the kitchen rather than

immediately consumed, as in the restaurant industry.

(Response) FDA continues to believe that facilities that provide food to

interstate conveyances should not be covered by the restaurant exclusion

because they do not provide food directly to the consumer for immediate

consumption. In fact, the food is prepared and provided to several possible

intermediaries before reaching the consumer, such as the packer, transporter,

and/or distributor, before reaching the interstate conveyance (e.g., airplanes,

passenger trains, and cruise ships) that actually provides the food directly to

the consumer for immediate consumption. FDA believes the risk is

substantially higher when the food is not prepared and served directly to

consumers for immediate consumption, but rather goes through a number of

intermediaries before it reaches the consumer. In a traceback investigation, it

is critical for FDA to be able to identify each entity that handled the suspect

food. FDA would lose this ability if interstate conveyance caterers were

exempted. In addition, this requirement is consistent with the registration

interim final rule, which requires interstate conveyance caterers to register as

manufacturers/processors.

(Comment 77) Several comments urge FDA to reconsider the proposed

regulations for airline caterers. The comments state that these proposed

requirements are onerous, unnecessary, and are being unfairly applied to that

industry and would bury the industry in volumes of information. The

comments note that the same rationale FDA used for partially exempting retail

facilities should apply to airline caterers as well.

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The comments further state that the airline catering industry currently

must be in compliance with many Government regulatory agencies (FDA,

Federal Aviation Administration (FAA), USDA, Environmental Protection

Agency, Transportation Security Administration (TSA)), and that they have

strict specifications for products and vendors, whereas most food service

operations do not. The comments also note that they currently employ security

companies to monitor their staff, the food processes in which they prepare

meals, the equipment the food items are loaded into, and the process of how

it gets on board the aircraft. They also state that their customers have always

expected traceability of all products used on their flights as part of their food

safety and hygiene audits to resolve flight passenger complaints, food

poisoning reports, and for other purposes, but not to the extent that is required

by the proposed rule.

One comment states that it is a member of the International Flight Catering

Association and International Inflight Food Service Association and adheres

to practices of the ‘‘World Food Safety Guideline’’ as set forth by the two

associations of inflight food services. Another comment states that all

employees have been certified by the FAA through fingerprinting and 10-year

background checks, and inhouse security personnel are responsible for

checking what is placed on aircraft. Another comment maintains control of

all inputs and outputs of production and states that documentation is in place

for all items received and for all items produced.

(Response) For the reasons stated in response to comment 76 of this

document, FDA continues to believe that facilities that provide food to

interstate conveyances should not be covered by the restaurant exclusion

because they do not provide food directly to consumers for immediate

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consumption. However, these final regulations state that duplication of existing

records is not required if those records contain all of the information required

by subpart J of this final rule. Therefore, if a covered person keeps records

of all of the information as required by subpart J in order to comply with other

Federal, State, or local regulations, or for any other reason, then those records

may be used to meet these requirements. As the comment notes, the airline

catering industry currently has the capability to trace all food products on their

flights. These regulations do not dictate the format or system in which the

required records are maintained. The airline catering industry can use existing

tracing mechanisms to comply with these regulations to the extent those

mechanisms contain the required information.

(Comment 78) Some comments state that these proposed regulations

would require a substantial and costly change in the way meals are delivered

and processed. The comments urge FDA to consider whether the air and rail

industries can bear the additional expense of these proposed regulations, as

numerous ingredients are included in each meal that is prepared and boarded.

The comments state that compliance with the traceability regulations depicted

in the rule would require so many revamped processes and additional

personnel that their organizations would likely not recover from the fiscal

implications. The comments further state that they would have to completely

change the way they produce and package meals for their customers, going

to unprecedented lengths to ensure strict batch preparation. As an example,

the comments note that with their current processes, they can determine

shipment origin and location of the entire meal; however, it would be

impossible to trace each individual ingredient going into the package. For

example, meat from one lot number of ham could be put into sandwiches along

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with other ingredients from different sources and fruit or chips, and then

loaded onto numerous flights. This level of batch control would make the

production of these sandwiches and meals cost prohibitive.

The comments further state that the impact on the airline industry from

September 11, 2001, has been tremendous. The airline industry is facing

unprecedented challenges, and the way business is conducted has been altered

forever. The comments note that reductions and bankruptcy filings by the

various airlines have been extreme and have resulted in immense reductions

in the airline catering business. The airlines’ decisions to significantly cut

back, eliminate food service, and reduce the load capacity on airplanes and

number of flights continue to impact the interstate conveyance catering

business. The comments urge FDA to consider these conditions because it will

be difficult for the airline catering business to absorb the costs of proposed

regulations into its current pricing structure. The comments conclude that they

would be forced to pass these costs onto the already struggling airline industry.

(Response) For the reasons stated in the previous paragraphs, FDA

continues to believe that facilities that provide food to interstate conveyances

should not be covered by the restaurant exclusion because they do not prepare

and sell food directly to the consumer for immediate consumption. However,

the comment’s concern about having to ‘‘go to unprecedented lengths to ensure

strict batch preparation’’ misconstrues the proposed requirement. In the final

rule, FDA deleted the requirement in § 1.337(a) for a nontransporter to provide

information reasonably available to identify the specific source of each

ingredient used to make every lot of finished product, and instead put that

requirement in § 1.345(b) of this final rule because it is unlikely that a person

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would have that information reasonably available at the time records are

created to identify the immediate previous sources of the food.

FDA acknowledges that certain business practices are not amenable to

linking incoming ingredients with outgoing product and that it may not always

be possible to identify the specific source of an ingredient that was used to

make a lot of finished product. It is not FDA’s intent to mandate reengineering

of long-standing existing processes. Accordingly, the final rule requires linking

incoming with outgoing product only when this information is reasonably

available.

Although the definition of restaurant has not changed from the proposed

definition, FDA exercised its discretion and added language to the restaurant

exclusion in § 1.327(b) of this final rule to account for incidental sales of food

that a restaurant/retail facility does not prepare itself (e.g., food it purchases

from a manufacturer for sale to consumers). See the discussion earlier in

section III.E.14 of this document.

15. Retail Facility

As explained in response to comment 40 of this document, for purposes

of § 1.327(e) of this final rule, ‘‘retail food establishment’’ is defined to mean

an establishment that sells food products directly to consumers as its primary

function. The term ‘‘consumers’’ does not include businesses. A retail food

establishment may manufacture/process, pack, or hold food if the

establishment’s primary function is to sell from that establishment food,

including food that it manufactures/processes, packs, or holds, directly to

consumers. A retail food establishment’s primary function is to sell food

directly to consumers if the annual monetary value of sales of food products

directly to consumers exceeds the annual monetary value of sales of food

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products to all other buyers. A ‘‘retail food establishment’’ includes grocery

stores, convenience stores, and vending machine locations. In addition, retail

food establishments that employ 10 or fewer full-time equivalent employees

are excluded from the requirements in subpart J of this final rule, except

§§ 1.361 and 1.363. (See response to comment 38 of the document for a further

discussion of FDA’s rationale underlying this exclusion.)

16. Transporter

There were no comments on this definition. However, FDA is changing

the definition to make clear that foreign persons that transport food in the

United States are subject to these requirements regardless of whether they have

possession, custody, or control of that food for the sole purpose of transporting

that food.

17. Transporter’s Immediate Previous Source

There were no comments on this definition.

18. Transporter’s Immediate Subsequent Recipient

There were no comments on this definition.

19. You

There were no comments on this definition.

F. Comments on Do Other Statutory Provisions and Regulations Apply?

(Proposed § 1.329)

There were no comments on this issue.

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G. Comments on Can Existing Records Satisfy the Requirements of This

Subpart? (Proposed § 1.330)

(Comment 79) Several comments state that the final rule requires

additional or more detailed data than what is already maintained and

recommend that the FDA and CBP work together with industry to avoid any

unnecessary burdens. A few comments requested that we also work closely

with TSA and FAA as those agencies consider modifications of their own rules.

The comments urge close coordination between the FDA and those other

agencies to avoid inconsistent or redundant regulations.

Several comments state that the proposed regulations do not strike a

proper balance in that some of the data elements requested are unnecessary

(redundant) and too burdensome on an industry already highly regulated by

several agencies requiring the same or similar information. For example, the

air cargo industry currently establishes and maintains industry air waybills,

bills of lading and commercial invoices, which are required by CBP to be

maintained for a period of 5 years. Moreover, CBP will be proposing a new

set of mandatory advanced notice information, including other data elements,

that could satisfy FDA in its effort to establish a complete tracing of activities.

(Response) FDA based the requirements of the final rule on what records

are needed by the Secretary for inspection to help the Secretary identify the

immediate previous sources and the immediate subsequent recipients of food,

including its packaging, to address credible threats of serious adverse health

consequences or death to humans or animals. Section 1.330 of subpart J of

this final rule states that duplication of existing records is not required if those

records contain all of the information required by subpart J. If a person keeps

records of all of the information as required by subpart J to comply with other

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Federal, State, or local regulations (including those of TSA or FAA), or for

any other reason, then those records may be used to meet these requirements.

In addition, where a person currently has existing records that contain some,

but not all, of the required information, only records for the nonexisting

information needs to be created.

(Comment 80) One comment notes that CBP’s current requirements would

apply to a trucking company transporting imported food into the United States

and manifest data would be maintained. The comment states that FDA could

easily coordinate with CBP to get the data from them in the event a threat

to the nation’s food supply is discovered, rather than develop its own distinct

recordkeeping regulations.

(Response) The Bioterrorism Act authorizes the Secretary (and, by

delegation, FDA) to require the establishment and maintenance of records to

address credible threats of serious adverse health consequences or death to

humans or animals. As discussed in response to comment 79, subpart J of this

final rule does not require duplication of existing records if those records

contain all of the information required by subpart J. Therefore, to the extent

information you keep for purposes of complying with CBP satisfies the

provisions of subpart J, you do not need to keep duplicate records.

(Comment 81) One comment states that past situations have demonstrated

that FDA already has a policy and good track record for finding and refusing

adulterated products and products that could pose a problem to the American

public. The comment questions how the final rule is going to improve upon

existing recordkeeping.

(Response) As explained in the proposed rule (68 FR 25188), FDA has been

involved in traceback investigations where not all necessary records were

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established and maintained to enable FDA to conduct a complete tracing

investigation. By issuing these regulations, FDA believes that the likelihood

of such a situation recurring will be reduced. As discussed in response to

comment 93 of this document, for those covered persons already establishing

and maintaining records that contain all of the required information in subpart

J of this final rule, duplication of those existing records is not necessary. (See

response to comment 2 of this document for further discussion on FDA’s past

experiences with traceback failures.)

(Comment 82) Several comments recommend that, for accuracy and

regulatory consistency, the final rule should recognize that compliance with

the bill of lading regulations of DOT’s FMCSA will constitute compliance with

the transporter’s obligations under proposed § 1.352. The comments note that

bills of lading and freight/expense bills for motor carriers are legal documents

and contain sufficient information for the agency to be able to fulfill its

Bioterrorism Act responsibilities. The information to be included on the bill

of lading and freight/expense bills is prescribed by the United States

Department of Treasury at 49 CFR 373.101 and 373.103.

(Response) FDA agrees in part with the comments. The final rule has been

revised from the proposal. The final rule provides five alternatives for

transporters to meet their obligation to establish and maintain records. First,

transporters can meet the requirements of this final rule by keeping the records

listed in § 1.352(a) of this final rule. Second, transporters can meet the

requirements of this final rule by keeping the records listed in § 1.352(b) of

this final rule, which are included within the current requirements for roadway

interstate transporters under FMCSA regulations as of the date of publication

of this final rule (49 CFR 373.101 and 373.103). Third, transporters can meet

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the requirements of this final rule by keeping the records listed in § 1.352(c)

of this final rule, which are included within the current requirements for rail

and water interstate transporters under STB regulations as of the date of

publication of this final rule (49 CFR 1035.1 and 1035.2). Fourth, transporters

can meet the requirements of this final rule by keeping the records listed in

§ 1.352(d) of this final rule, which are included with the current requirements

for international air transporters under the Warsaw Convention. Fifth,

transporters can meet the requirements of this final rule by entering into an

agreement with a nontransporter immediate previous source in the United

States or a nontransporter immediate subsequent recipient in the United States

to keep records for them. Such agreements must contain the elements specified

in § 1.352(e) of this final rule. Failure by the immediate previous source or

immediate subsequent recipient who enters into an agreement under § 1.352(c)

of this final rule to keep such records is a prohibited act under § 1.363 of this

final rule.

FDA notes that the FMCSA and STB regulations only apply to interstate

transporters, and this final rule applies to both interstate and intrastate

transporters. Intrastate transporters will be subject to the requirements of this

final rule because FDA has determined that imposing such requirements on

intrastate transporters comports with the Constitution, and these requirements

are necessary to allow FDA to identify the immediate previous sources and

immediate subsequent recipients of food in order to address credible threats

of serious adverse health consequences or death. Intrastate transporters can

meet this obligation by complying with either § 1.352(a), (b), (c), (d), or (e) of

this final rule.

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As a practical matter, because the final rule’s requirements for interstate

shipments can be satisfied by existing records relating to interstate shipments,

the final rule only establishes new requirements for (1) intrastate transporters;

and (2) intrastate shipments conveyed by interstate transporters. FDA

estimates that there are approximately 115,000 intrastate carriers, and based

on DOT data, almost one million commercial drivers report intrastate travel.

In reviewing the truck tonnage by commodity, approximately 12 percent of

the intrastate shipments are of FDA-regulated food products. The average

distance these products are shipped is 231 miles, which means many

shipments are intrastate, especially in the larger western states.

For some foods, distribution may be limited primarily to intrastate

transportation, depending on the time of year and state. Many businesses have

their own delivery trucks that are used intrastate, several use employee

vehicles for deliveries, and many rent vehicles to deliver product. These

vehicles are used to deliver all types of food products—refrigerated, cooked,

as well as fresh food and produce, and grocery items. Some local firms pick

up their own merchandise from ‘‘warehouse’’ facilities to stock their own

locations. Many of these ‘‘warehouses’’ (commonly referred to as ‘‘bin

warehouses’’) may receive product via interstate transporter and subsequently

deliver to a variety of intrastate retail customers via many different intrastate

means.

Data on the volume of foods that move in intrastate commerce are

maintained by individual state Departments of Agriculture and by DOT. For

example, from CA, LA, TX alone, DOT reports over 12 percent of intrastate

truck tonnage is FDA-regulated products. Past traceback investigations provide

examples of the need to regulate intrastate transport. For example, in 2003,

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there were two produce-associated outbreaks that occurred in CA from

intrastate shipments. There were also two Salmonella enteritidis outbreaks in

WI associated with intrastate shipments of eggs. Other foods, such as

pasteurized milk, nearly all raw products, seafood, and sprouts, may be

shipped either intrastate or interstate depending on the production or

processing site.

Most seafood consumed in FL is transported only intrastate, but in OK,

most seafood is transported interstate. In 2002, there was an outbreak in NJ

and FL linked to seafood. Intrastate records assisted us in pinpointing the

portion of the Indian River, FL that was causing the problem. In reviewing

egg tracebacks from 1996 to 2003, 35 percent of the tracebacks that resulted

in farm investigations were intrastate. This past summer, the state of Oregon

(OR) was able to stop a sprout-associated outbreak from becoming a serious

one by tracing back to a WA sprouter just over the border from OR after some

initial cases but before the Salmonella serotype had been identified. The

sprouts were recalled. If the sprouter had been located in OR so that the

sprouts were not transported interstate, it would have been problematic to a

traceback investigation for FDA to be limited to records only from interstate

transporters.

The NC green onion traceback investigation in 2003, which was part of

the largest Hepatitis A outbreak that has ever occurred in the United States,

is another example of the importance of intrastate records. There, the amount

of time spent on the traceback within that State was twice as long as the other

three tracebacks done in other states because the distributor in NC did not

have records. Traceback from the TN outbreak took over a month, the GA

traceback took a month, and Pennsylvania (PA) traceback took a week. Because

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we had no intrastate records in the NC outbreak, the traceback was determined

to be inconclusive after two months, which meant that we would not have

been able to identify the farms involved if it had not been for the other

outbreaks.

This year, there was an Escherichia coli (E. coli) O157:H7 outbreak

associated with bagged lettuce product in CA that was only in intrastate

commerce. That traceback might have been lost had records not have been

available. Exempting intrastate transporters could significantly impede FDA’s

ability rapidly and effectively to respond to a public health emergency

involving a food transported within a state, particularly if the adulteration

occurred during transport and the food was delivered to multiple sources

within the State. In scenarios where time is of the essence to prevent serious

injuries or death on a large scale, having records available becomes even more

critical. In addition, not only must FDA be able to rapidly obtain records, it

is imperative that FDA be assured that those records contain certain essential

information to allow FDA to prevent further harm in an efficient and effective

manner.

Additional examples of circumstances involving food products that have

significant intrastate manufacturing/processing or distribution are provided in

the following paragraphs:

• An intrastate sandwich/snack food company that sells to retail outlets

for consumption had an outbreak of Listeriosis or Salmonellosis that was traced

back to the sandwiches. The product was completely distributed using the

company trucks within the state. FDA was unable to determine which

sandwiches caused the outbreak. The sandwiches were delivered to retail

customers, and it was impossible to track which sandwiches went to which

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retailer. The transporter did not track which product was delivered to which

location. In this case, the firm had to recall all of its products.

• Retail stores regularly purchase food, especially locally grown produce,

from ‘‘truck farmers.’’ These farm trucks travel from store to store within a

state, sometimes selling an entire truckload to a store, other times a portion.

There is no manifest or record other than a bill of sale—e.g., 200 cantaloupes

from Farmer Brown. If the contamination occurred on the truck, FDA would

not have a record from the truck of all other delivery sites.

• Several days into the investigation of a Hepatitis A outbreak from

chicken salad in one city, FDA learned that the chicken was ‘‘cubed’’ at

another facility in another city within the state, and transported to the

‘‘manufacturing facility.’’ The source of the outbreak was the site where the

chicken was ‘‘cubed’’ by an ill employee; however, there were no records to

indicate when the cubed product was shipped or received by the salad

manufacturing facility.

(Comment 83) One comment suggests that the final regulation should

clarify that ‘‘transportation record’’ includes the various documents that may

be developed by a company that contain the information specified in the

regulation. They do not believe that it would be necessary to include all of

this information in one shipping document. The comment notes that industry

currently collects much of the data that would be requested by FDA but these

data are not found in one document, and in some instances, may be found

at various locations within the manufacturing facility. Significant time and

expense could be involved in making the modifications to the company’s

computer and recordkeeping systems to have a system that develops a

transportation record that contains all of this information on one form. Such

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a requirement would be unreasonably onerous, particularly if the company’s

system is designed to make certain that the company can provide all of this

information to the agency within the specified time. The respondent asks the

agency to clarify in the final rule that it is not necessary to develop one

transportation record that contains all of the information in a single form.

(Response) FDA confirms that it is not necessary to develop one record

that contains all of the information. FDA’s intent is to have as little impact

as possible on current recordkeeping practices if those records can meet the

requirements of these regulations. The final regulation has been clarified to

explicitly provide in § 1.360 that you must create the required records when

you receive and release food, except to the extent that the information is

contained in existing records. FDA is requiring that specific information be

kept by a covered person, but is not specifying the form or type of system

in which those records must be maintained. The required information may be

contained entirely in one record or spread among many different records. The

person subject to these regulations is responsible for ensuring that it keeps all

applicable records and that those records are available to FDA under the record

availability requirements in § 1.361 of this final rule.

(Comment 84) A few comments note that the recordkeeping requirements

under existing FDA regulations, such as Substances Prohibited From Use in

Animal Food or Feed (21 CFR part 589), Current Good Manufacturing Practice

for Medicated Feeds (21 CFR part 225), and Fish and Fishery Products (seafood

Hazard Analysis Critical Control Point (HACCP)) (21 CFR part 123) should be

sufficient and deemed adequate to meet the requirements under the

Bioterrorism Act and that FDA should not introduce additional, stand alone,

recordkeeping systems.

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(Response) As discussed in response to comment 79, § 1.330 of the final

regulation states that duplication of existing records is not required if those

records contain all of the information required by subpart J of this final rule.

That includes records kept under the regulations identified in the comment.

(Comment 85) One comment states that it would be beneficial if FDA

announced the suitability of records kept under existing requirements well

ahead of the implementation deadline under the Bioterrorism Act.

(Response) FDA is not able to determine what records currently exist

throughout the entire food industry that satisfy these regulations due to the

diversity and complexity of the food industry and the various existing Federal,

State, and local regulations that require recordkeeping, as well as varying

business practices. The person subject to these regulations is responsible for

ensuring that it keeps all applicable records and that those records are available

to FDA under the record availability requirements in § 1.361 of this final rule.

FDA points out that the earliest compliance date of this final rule is [insert

date 12 months after date of publication in the Federal Register], and that

many persons are not required to comply with this final rule for up to 2 years

after publication. Therefore, FDA believes that it has provided sufficient time

for persons to determine what, if any, additional information must be kept to

comply with these provisions well ahead of the compliance date of this final

rule.

(Comment 86) A few comments note that most food companies currently

maintain the chain of distribution information that FDA proposed, but the

diversity and complexity of the food industry means that the information is

maintained in many different ways and formats, ranging from computerized

records systems to file folders of paper records. The comments state that it

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should be of no concern to FDA and, therefore, not the subject of the

regulations to prescribe any specific manner or form of maintaining the

information.

(Response) As discussed in response to comments 1 and 83 of this

document and in the proposed rule, FDA’s intent is to have as little impact

as possible on current recordkeeping practices if those records can meet the

requirements of these regulations. FDA is requiring specific information be

kept by a covered person, but not specifying the form or type of system in

which those records must be maintained. The person subject to these

regulations is responsible for ensuring that it keeps all applicable records and

that those records be made available to FDA under the record availability

requirements in § 1.361 of this final rule. To satisfy the requirements in this

final rule, paper or electronic records or a combination of the two may be used.

H. Comments on What Information is Required in the Records You Must

Establish and Maintain to Identify the Nontransporter and Transporter

Immediate Previous Sources and Immediate Subsequent Recipients? (Proposed

§§ 1.337 and 1.345)

1. General Comments

(Comment 87) Several comments state that the information required by

the recordkeeping regulations exceeds the information required by the

Bioterrorism Act, thereby exceeding FDA’s statutory authority. Some of these

comments state that according to the Bioterrorism Act, the regulations need

to provide that those persons subject to the recordkeeping requirement

maintain the ‘‘one-up and one-back’’ information in a records maintenance

system in which the information is reasonably accessible to FDA upon request.

The comments ask that FDA consider the diversity and complexity of the food

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industry and allow for more flexibility. They contend that the name and

address of the person from whom an article of food was received or to whom

it was shipped and a description of the article of food should be sufficient.

The comments further suggest that not all companies require or need the same

type of identification as other members in the food chain, e.g., lot numbers

and identity preserved ingredients. They request that, because of this diversity

in the supply chain, the agency not define rigid identification requirements.

The comments contend that this flexibility is in keeping with the intent of

the Bioterrorism Act and will avoid dramatic changes to what are currently

efficient and effective business practices.

(Response) FDA disagrees that the information required by the rule

exceeds FDA’s authority under the Bioterrorism Act. The Bioterrorism Act

authorizes FDA to require records needed to ‘‘allow the Secretary to identify

the immediate previous sources and immediate subsequent recipients of food,

including its packaging, in order to address credible threats of serious adverse

health consequences or death in humans or animals.’’ FDA believes the

information it is requiring to be established and maintained meets this

standard.

Information such as the specific name of the food will allow FDA to limit

its investigation to the implicated food. For example, if FDA has a reasonable

belief that a shipment of cheddar cheese is contaminated, traceback or trace

forward would be better facilitated if the records contained the identifier

‘‘cheddar.’’ This would help FDA narrow its investigation and increase the

speed of the trace. The information would also help the involved firm limit

the scope of any recall, should it be necessary. However, FDA does recognize

the diversity of the food chain and has allowed for flexibility in the final rule.

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For example, the requirement to record lot/code number or other identifier

applies only to persons who manufacture, process, or pack food and only to

the extent that information exists. Also, the final rule allows covered persons

to use existing abbreviations or codes currently used to identify the food.

However, if these abbreviations and/or codes are used, they must be readily

deciphered for FDA upon request so that an ‘‘adequate description’’ of the food

is recorded.

(Comment 88) One comment questions the need for the extensive

recordkeeping requirements in the regulations and suggests that much of the

facility information required in the recordkeeping rule is already required in

the registration interim final rule. The comment gives as an example the

duplicate requirements that the nontransporter must maintain a record of the

responsible individual, fax number, and e-mail address for: (1) The facility that

shipped product to your facility, (2) the transportation company that delivered

the product, (3) the transportation company that picked up product from your

facility, and (4) the facility where your product is being shipped.

(Response) FDA does not agree that much of the information required

under this recordkeeping rule is already required under the registration interim

final rule. Information required under the registration interim final rule

pertains to the facility itself, including information about the general food

product categories that the facility manufactures/processes, packs, or holds.

Information that this final rule mandates be established and maintained in

records is information pertaining to food that will assist FDA in identifying

the immediate previous sources and the immediate subsequent recipients of

all food that is received and released by a person. In addition, to complete

the tracing investigation, the identity of the transporters who transported the

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food to and from the sources and recipients is required, which is not covered

by the facility registration. Moreover, the scope of section 305 of the

Bioterrorism Act (registration) is not as broad as section 306 of the Bioterrorism

Act (establishment and maintenance of records). Specifically, registration

applies only to facilities that manufacture, process, pack, or hold food for

consumption for humans or animals in the United States. Recordkeeping

applies to these facilities, as well as those who transport, distribute, receive,

or import food. Recordkeeping also applies to all food regardless of whether

it will be consumed in the United States or exported.

However, FDA has deleted the requirement that persons subject to subpart

J of this final rule identify a responsible individual in the records. Instead,

for those facilities required to register under part 1, subpart H, FDA will use

the emergency contact telephone number provided by those facilities. For other

facilities, FDA does not believe requiring such facilities to provide an

emergency contact telephone number is needed to assist the Secretary to

identify the immediate previous sources and immediate subsequent recipients

of food, since that telephone number would be contained in the very records

FDA would be seeking assistance in locating.

(Comment 89) One comment states that it is unreasonable to require

nontransporters to have a record of the intermediate transporters, i.e.,

transporters who do not have direct contact with the nontransporters.

(Response) Neither the proposed rule nor the final rule requires

nontransporters to establish and maintain records identifying intermediate

transporters. With respect to transportation records, § 1.337(a)(6) of this final

rule only requires nontransporters to establish and maintain records of the

transporter that brought the food to them. Similarly, § 1.345(a)(6) of this final

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rule only requires nontransporters to establish and maintain records of the

transporter that took the food from them. The transporters are required to keep

records that identify intermediate transporters.

(Comment 90) One comment states that some firms use carriers such as

United Parcel Service, Federal Express, and the United States Postal Service

to deliver their products and conduct all their transactions with these carriers

via the Internet. The address and fax numbers of these carriers are not relevant.

The comment requests that FDA revise the section on identifying information

of the transporter to require only ‘‘sufficient identifying information.’’

(Response) FDA disagrees with this comment. In the event that FDA has

a reasonable belief that an article of food is adulterated and presents a threat

of serious adverse health consequences or death to humans or animals, FDA

would need to determine from the source and recipient records who

transported the subject food to complete the tracing investigation. Although

the transportation may be arranged over the Internet, companies such as those

mentioned in the comment have fixed addresses, such as a corporate

headquarters, that would need to be included in the record so that if FDA had

to access their existing records under section § 1.361 of this final rule, FDA

would know where to go.

(Comment 91) One comment states that wines produced in France are sold

by someone other than the producer and that the producer never knows the

destination of the wine. The comment states that the recordkeeping

requirement is an unnecessary burden on the producer because much of the

producer’s wine may be sent to destinations other than the United States.

(Response) There is no requirement for a person that manufactures or

processes food to know the ultimate destination of its product. A person

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subject to subpart J of this final rule is only required to establish and maintain

records to identify the transporter and nontransporter immediate previous

sources and transporter and nontransporter immediate subsequent recipients

of food. Further, FDA notes that it has excluded all foreign persons, except

foreign persons who transport food in the United States, from all of the

regulations in subpart J.

(Comment 92) One comment requests clarification on the records

requirements for products produced before the regulations take effect.

(Response) Covered persons are required to establish and maintain records

to identify the immediate previous sources and the immediate subsequent

recipients of all food as of the compliance date of this final rule, keeping in

mind the staggered compliance dates provided in § 1.368 of this final rule. If

a food was received before the compliance date of this final rule, then there

is no obligation to keep records of the immediate previous sources of that food.

If a food is released on or after the compliance date of this final rule, you

must establish and maintain records of the immediate subsequent recipients

of the food, regardless of when that food was produced or received.

2. Information Reasonably Available to Identify the Specific Source of

Each Ingredient

(Comment 93) A few comments state that the requirement to keep records

that identify the specific source of each ingredient to a lot of finished product

exceeds the intent of the Bioterrorism Act. One comment adds that the

language in the Bioterrorism Act clearly authorizes a regulation to require the

maintenance of records that show the person from whom a product is received

and the person to whom a product is sent. The comment states that there is

nothing in the language of the Bioterrorism Act or in its legislative history that

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would support including a requirement that products received be directly

associated with products that are shipped.

(Response) FDA does not agree with these comments. Section 306(b) of

the Bioterrorism Act expressly states that the Secretary

* * * may by regulation establish requirements regarding the establishment and

maintenance, for not longer than two years, of records by persons (excluding farms

and restaurants) who manufacture, process, pack, transport, distribute, receive, hold,

or import food, which records are needed by the Secretary for inspection to allow

the Secretary to identify the immediate previous sources and the immediate

subsequent recipients of food, including its packaging, in order to address credible

threats of serious adverse health consequences or death to humans or animals’’

(emphasis added).* * *

Thus, the Bioterrorism Act clearly gives FDA the authority to determine what records are needed to achieve this objective.

The final rule contains those requirements that FDA has determined are necessary to help FDA identify the immediate previous sources and immediate subsequent recipients of food to address credible threats of serious adverse

health consequences or death to humans or animals. If FDA cannot immediately narrow its tracing to a specific source, tracing becomes much more difficult and time-consuming, there is an increased risk to consumers, and some food sources may be unfairly implicated. FDA notes, however, that

the final rule (§ 1.345(b)) only requires nontransporters to identify the specific

source of each ingredient that was used to make every lot of finished product

to the extent such information is reasonably available.

(Comment 94) A few comments state that they are not able to provide

information that ties the specific source of each ingredient to a lot of the

finished product. Several comments agreed with FDA’s decision to require

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identification of the specific source of an ingredient in a finished product only

when the information is ‘‘reasonably available.’’ Some comments request that

the agency make clear in the final rule that, in many instances, it will be

impossible to identify the specific source of a material that is held in bulk

and that multiple sourcing information in recordkeeping is to be anticipated

for raw materials that are held in bulk form.

Several other comments state that, because their ingredients are

commingled, they are unable to provide FDA with information that ties the

specific source of each ingredient to a lot of the finished product. Certain bulk

products such as flour, shortening, vegetable oil, fructose syrup, and milk

cannot be identified as ingredient lots. Other comments state that the ability

to identify specific sources of ingredients will vary based on many factors. One

comment states that produce is often commingled to meet marketplace needs.

A few comments state that some processors commingle ingredients in their

processing operations, which makes it impossible to trace the specific source

of ingredients to a lot of finished product. One comment states that most

companies would only be able to produce possible sources of ingredients in

batches of final products. The comment asserts that companies should only

be required to do so in a crisis.

(Response) FDA acknowledges that certain business practices are not

amenable to linking incoming ingredients with outgoing product and that it

may not always be possible to identify the specific source of an ingredient

that was used to make a lot of finished product. It is not FDA’s intent to

mandate reengineering of long-standing existing processes. For this reason, the

final rule requires the identification of the specific source of each ingredient

that was used to make every lot of finished product only when the food is

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released and only if this information is reasonably available. With respect to

the comment that companies should only be required to produce records

during a crisis, the agency notes that FDA will request access to the records

under section 306 of the Bioterrorism Act only when it has reasonable belief

that an article of food is adulterated and presents a threat of serious adverse

health consequences or death to humans or animals.

(Comment 95) One comment requests that the agency accept testing of

each delivery of incoming product as a substitute for the requirement to tie

the specific source of each ingredient to a lot of the finished product. The

comment asserts that this testing provides the needed safeguards and would

ensure that the ingredient is not contaminated chemically, physically, or

biologically.

(Response) The agency does not agree with this comment. The comment

fails to specify the nature of the chemical, physical, or biological tests being

proposed, or what sampling scheme would be conducted to ascertain that the

incoming ingredient is not contaminated. Moreover, only nontransporters are

required to identify the specific source of each ingredient that was used to

make every lot of finished product, and they are required to do so only if this

information is reasonably available. FDA also notes that it has deleted this

provision from § 1.337(a) of this final rule and instead inserted it in § 1.345(b)

of this final rule. The agency believes records are more likely to be reasonably

available to persons when they release food made from the ingredients than

when the persons receive the ingredients under § 1.337 of this final rule.

(Comment 96) A few comments request that the agency treat processing

aids and incidental additives as it does commingled ingredients. The

comments state that they are able to identify the source(s) in use in a facility

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when specific food products were produced, but are not able to identify the

source of the processing aid or incidental additive used to produce a specific

lot of food.

(Response) The recordkeeping requirements in these regulations apply to

all food unless specifically exempted. Processing aids may be food additives

or a generally recognized as safe ingredient. In either case, they fall within

the definition of food and are subject to these regulations. If the manufacturing

process is such that a processing aid was used to make a specific lot of a

finished food product, then the specific source of each processing aid should

be identified in the records to the extent that information is reasonably

available.

(Comment 97) Several comments ask that the agency clarify the term

‘‘reasonably available’’ and provide guidance on what the agency considers is

‘‘reasonably available.’’ One comment suggests that the agency use

hypothetical case studies as guidance.

(Response) What is ‘‘reasonably available’’ is going to depend on the

particular circumstances. To illustrate this point in the proposed rule, FDA

used a hypothetical case of a cookie maker. (See 68 FR 25188 at 25197.) A

company that bakes cookies may source flour from five different companies

rather than depend on a single company as its supplier. The flour from the

five companies may be stored in one common silo before being used in the

manufacture of the cookies. In this scenario, the manufacturer could identify,

depending on the date the flour was received from each company and placed

in the silo and when the silo was emptied, the various companies that were

the sources of the flour. Under this situation, the information is not reasonably

available to determine a single source of the flour used in a particular lot of

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cookies. The information reasonably available to the manufacturer would be

the identity of all of the potential sources of the flour for each finished lot

of cookies. However, if the manufacturer had dedicated silos for each supplier

of flour, then the information would be reasonably available to the

manufacturer to specify the specific source of the flour for each finished

product. If we determine that additional guidance is needed, FDA will consider

issuing guidance in the future to explain this requirement further. Again, FDA

notes that this requirement now appears in § 1.345(b) of this final rule and

has been deleted from § 1.337(a) of this final rule.

(Comment 98) One comment states that manufacturers of packaging face

the same issues as processors who deal with commingled ingredients. The

comment explains that, during the manufacture of multiple-layer packaging

products, it is common to use multiple lots of raw material within a master

roll of semifinished or finished product. An example of this condition would

be a paper/foil lamination where one roll of foil and three to four rolls of paper

are used in the same production run. In this situation, the lot numbers of the

raw materials and the lot numbers of the finished products may be known,

but it cannot be determined with precision which lot of the input materials

is in an individual roll of finished product.

(Response) Manufacturers of packaging (the outer packaging of food that

bears the label and does not contact the food) are excluded from all

requirements of subpart J of this final rule unless such persons also

manufacture, process, pack, transport, distribute, receive, hold or import food

in the United States, in which case they are subject to §§ 1.361 and 1.363 of

this final rule as to the food’s packaging. Manufacturers of food contact

substances, whether or not the substances are the finished container that

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directly contacts the food, are excluded from all of the requirements of subpart

J, except §§ 1.361 and 1.363 of this final rule. Therefore, such manufacturers

are not required to know which lot of the input materials is in an individual

roll of finished product.

(Comment 99) Several comments request that the agency clarify the term

‘‘ingredient’’ with respect to distilled spirits that have innumerable sources of

ingredients dependent upon the category and particular brand. The comments

state that there is a question of interpretation as to what is meant by

ingredients, given that the distilling process changes substantially the character

and chemical composition of the raw materials and some of them may even

be absent from the final product.

(Response) Alcoholic beverages are within the definition of ‘‘food’’ in

§ 1.328 of this final rule. A manufacturer of alcoholic beverages is required

under § 1.337 of this final rule to identify the source of each ingredient that

was received to make the alcoholic beverage, regardless of whether it later

changes character and chemical composition.

(Comment 100) One comment suggests that the agency reconsider the

requirement for immediate previous sources of bottled water. The comment

asserts that the detail of records required under the regulations will not exist

in many cases because the bottled water source will be directly out of the

ground and that the bottler will capture any potential concerns of a serious

threat of adverse health consequences. The comment suggests that water be

viewed as other primary agricultural food ingredients.

(Response) Bottled water is within the definition of food as defined in

§ 1.328 of this final rule. If water is obtained from a public water system, then

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the public water system is the immediate previous source. If ground water is

used, then the location where the water was extracted should be provided.

(Comment 101) One comment recommends that, in requiring a record of

the raw material of a product, the agency should limit its requirement to that

of major ingredients of the product.

(Response) FDA does not agree with the comment. The comment neither

explains what distinguishes a major ingredient from a minor one, nor why the

agency should limit its requirement to ‘‘major’’ ingredients only. Even if an

ingredient is present only in small quantities, it may pose a risk and could

be the focus of an intentional attack (e.g., the deliberate addition of a chemical

toxin or pathogens), which would further contaminate food products to which

they are added.

3. Requirement to Record Responsible Individual

(Comment 102) Several comments object to the requirement to name a

responsible individual as duplicative of a requirement in the registration

interim final rule. The majority of these comments ask that FDA use the

emergency contact information required in the registration interim final rule

in place of the responsible individual. The comments suggest that using the

emergency contact information would give the agency rapid access to the

information and provide the industry with flexibility. The comments state that

there is no demonstrated need for the record of each commercial transaction

involving the distribution of food to contain the name of a responsible

individual, and that the requirement for a responsible individual is too rigid,

as there is a high turnover of employees in many companies and the naming

of a specific person as the responsible individual would require frequent

updating.

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(Response) FDA agrees with the comments that there is little utility from

requiring that the record of each commercial transaction involving the

distribution of food contain the name of a responsible individual, due to the

fact that individuals change jobs within and among companies very often,

making it unlikely that the person named in the record will have responsibility

for the food at issue when FDA seeks to effect a traceback. FDA further notes

that, for those facilities required to register under part 1, subpart H, FDA

already has the emergency contact designated in the registration under

§§ 1.232(d) and (e) and 1.233(d) or § 1.233(e). As explained previously, FDA

does not believe this information is necessary for those facilities not required

to register under 21 CFR part 1, subpart H, because including an emergency

contact telephone number in records being kept will not assist the Secretary

in locating the records because FDA would not have the emergency number

until it had already accessed the records.

(Comment 103) Some comments suggest that, rather than requiring a

specific individual, the agency require a department such as a quality

assurance department.

(Response) As explained in response to comment 63 of this document,

FDA has deleted the proposed requirement that a responsible individual be

listed in each record.

4. Adequate Description of Type of Food

(Comment 104) One comment notes that ‘‘specific variety’’ is not

appropriate for many food ingredients and should be changed to ‘‘common

name.’’

(Response) FDA is requiring an adequate description of the type of food

received or released to include brand name where applicable and specific

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variety where applicable (e.g., brand x cheddar cheese, not just cheese; or

romaine lettuce, not just lettuce). FDA agrees that ‘‘specific variety’’ may not

apply in all cases, but should be provided where it applies because it will

help narrow the investigation and help FDA identify the immediate previous

sources and immediate subsequent recipients of food to address credible

threats of serious adverse health consequences or death to humans or animals.

(Comment 105) Some comments recommend that the agency allow the use

of company specific codes or an existing abbreviation system. One comment

states that commercial documents often incorporate code numbers and

abbreviations that identify the food products very specifically. The comments

add that, as long as these codes and abbreviations can be deciphered readily

for FDA in the event of an agency request for records, the product descriptions

should be considered sufficient in their present form.

(Response) As discussed in response to comment 103 of this document,

in keeping with FDA’s intention to ensure these regulations are not

unnecessarily burdensome, FDA agrees that covered persons may use existing

abbreviation or code systems that identify the food very specifically, provided

the abbreviations or codes can be readily deciphered at the time the records

are made available to FDA following an agency request.

(Comment 106) Some comments who represent warehouses state that they

rely on the customer’s description of the product as the food comes to them

in shrink-wrapped pallets and cartons and the warehouse is not permitted to

open the packaging.

(Response) It is not clear from the comment what the ‘‘customer’s

description’’ entails; however, FDA is requiring an adequate description of the

type of food to be able to narrow the scope of the implicated food in the event

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of a public health emergency. For this reason, each entity within the chain

of distribution of the food must establish and maintain records that adequately

describe the type of food received and released so that FDA can identify the

immediate previous sources and immediate subsequent recipients of food to

address credible threats of serious adverse consequences or death to humans

or animals. It is the responsibility of the covered entity to revise its

recordkeeping system so that it establishes and maintains records containing

all required information. In the previous example, the warehouse may need

to require its customers to provide it with a more detailed description when

food is delivered or released than it currently receives.

5. Date Food Received or Released

(Comment 107) One comment agrees with the proposed requirement.

Another stated that the term ‘‘released’’ is ambiguous in a commercial

environment and asked for clarification.

(Response) Under §§ 1.337 and 1.345 of this final rule, if you are a

nontransporter, you must establish and maintain records to identify the date

you received and released food. Food is ‘‘released’’ when it moves from one

covered activity to another covered activity (unless both activities are

conducted by the same person). For example, an article of food is released

from the manufacturer when it is given to the transporter. The food is released

again when the transporter delivers the food to a grocery store. Where the

manufacturer transports its own food to the grocery store, however, the food

is not released when the manufacturer loads his trucks, but rather when the

manufacturer delivers the food to the grocery store.

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6. Lot or Code Number/Other Identifier

(Comment 108) Several comments state that some products do not have

lot numbers (e.g., bulk produce and restaurant foods). The comments state that

‘‘character/number string’’ on the package may be hard to identify as a lot code;

food product with closed lot codes requires deciphering; lot codes may be on

nonvisible portions of the packaging or on the invoice; the integrity of the lot

code may be compromised or unreadable if the outer packaging is damaged;

and this requirement potentially forces the manufacturer either to stop using

or to shorten the lot codes, which would be counterproductive to addressing

public health concerns in this initiative. Another comment states that the

requirement to record lot or code number/other identifier would be time

inefficient and time consuming. One comment states the agency should require

lot number tracing when information is ‘‘reasonably available.’’

(Response) FDA recognizes the difficulties in some situations of recording

lot/code number or other identifiers of food. FDA has revised the final rule

to only require that persons who manufacture, process, and pack food to record

lot/code numbers or other identifiers. See §§ 1.337(a)(4) and 1.345(a)(4) of this

final rule. Furthermore, this requirement only applies to the extent the

information exists. FDA has learned through comments that tracking lot/code

numbers or other identifiers throughout the manufacturing/processing and

packing of food is not a problem, because in most cases it is currently being

done or capable of being done. It is during the transporting, distribution, and

holding of food (e.g., from the warehouse distribution centers to the retail store

or restaurant) that such tracking becomes a problem. FDA also learned that

the food industry is moving in the direction of being able to track the lot or

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code number or other identifier throughout the entire food chain, but that the

current technology has not made such tracking cost efficient.

(Comment 109) Several comments state that the requirement to record lot/

code number or other identifier would cost the industry millions of dollars

in operational changes. They state that more warehouse space would be

required to separate food by lot number, expensive computer system upgrades

would be needed to handle lot code information, and the industry would incur

significant administrative and labor costs to enter lot code information into

the system. Comments further state that bar code tracing/scanning or radio

frequency identification (RFID) systems are costly, and the RFID technology

is new. The food distribution business will be affected every minute of every

day compared to the infrequent costs associated with investigating food safety

issues as the need arises. RFID is being studied and involves placing tagging

chips in packaging. It may not be necessary to invent an elaborate system of

paper recordkeeping if RFID proves to be useful in the future.

(Response) As discussed in response to comment 108 of this document,

FDA recognizes the difficulties in tracking lot/code numbers or other

identifiers throughout the entire food distribution chain. This final rule

accounts for those difficulties. FDA is aware that technology is developing that

will enable lot/code number tracking in the future to be cost efficient for all

of the food industry.

(Comment 110) One comment states that food is not sorted by lot code

identification. One pallet/bin, slot, or stockkeeping unit may contain multiple

lot numbers.

(Response) The final rule does not require warehouse distribution facilities

to track lot/code number or other identifiers in these final regulations.

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(Comment 111) A comment states that lot numbers are not scannable or

machine readable, and manual transcription of these numbers would introduce

errors. The comment states that small businesses would be buried in a

mountain of paperwork and this would make it impossible for them to track

products accurately.

(Response) As explained in response to comment 108, FDA recognizes the

difficulties in tracking lot/code numbers or other identifiers. This final rule

reflects those considerations. FDA has balanced the need to provide

information that would expedite a traceback in a food-related emergency with

the ability to record lot numbers. Because food almost always passes through

at least one small business in the distribution chain, FDA cannot exempt small

businesses entirely from this important requirement. The final rule, however,

does give small and very small businesses more time to comply with its

requirements. FDA is aware that technology is developing that will enable lot/

code number tracking in the future to be cost efficient for all of the food

industry.

(Comment 112) Some comments state that if foods are distributed to the

store via direct store delivery (DSD) (i.e., baked goods, breads, soda, snack

foods, beer/wine, ice, and milk) the vendor provides the food directly to the

store and sometimes stocks the shelves. DSD has no system to track the

information the FDA will require.

Several comments note that protecting public health does not necessitate

the maintenance of records in every step of the distribution process. The

comments state that the current recall system is the most efficient and practical

way to identify and remove product from distribution. These comments state

that consumers typically return all products in a recall with no regard to the

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lot code, and that this is the most appropriate response in the event of a

terrorist attack. In these comments’ opinion, complex lot numbers may slow

or substantially limit the recall of contaminated food. Additionally, requiring

distributors to compromise the integrity of food packaging to determine lot

codes defeats the purpose of the proposal. Some comments state that this

requirement represents a disproportionate burden to packaged food

distributors.

Some comments state that food manufacturers may use independent

delivery persons who pick up product from several manufacturers for delivery

to retailers. There may be as many as 75 to 100 different products on each

truck. The independent delivery person has no capability to capture the lot

numbers of the products of several different manufacturers.

(Response) (Response) The final rule does not require distributors to track

lot/code numbers or other identifiers. DSD vendors will not be subject to the

lot code requirement in § 1.345(a)(4) for activities other than manufacturing,

processing, and packing food. Thus, activities such as holding and

transportation are not subject to the requirements.

(Comment 113) Many comments request clarifications for the terms ‘‘other

identifiers’’ and ‘‘to the extent information this information exists.’’

(Response) FDA acknowledges that most firms use lot or code numbers

to identify specific batches of their products. However, some may use other

technologies such as barcodes. The term ‘‘other identifier’’ is intended to

capture any other methods that the food industry may be using to identify

specific lots of product. FDA is mandating that this information be captured

in the records, where required, to the extent this information exists. It is

conceivable that certain sectors of the industry may not use lot or code

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numbers, or other identifiers to identify specific lots of products. In this case,

the regulations do not specify that these sectors start using such identifiers.

The identifiers are required only to the extent that they already exist.

(Comment 114) A number of comments suggest that, in lieu of lot numbers,

purchase orders numbers would serve as acceptable identifiers.

(Response) To the extent that a purchase order contains all required

identifiers of food received or released, the purchase orders may be used to

satisfy the requirement. To the extent that a purchase order only contains some

of the required information, those records will need to be supplemented to

satisfy all the requirements contained in §§ 1.337 and 1.345 of this final rule.

FDA notes that the final rule only requires that persons who manufacture,

process, or pack food maintain lot or code number or other identifier of the

food, and only requires this information to the extent that the information

exists. Furthermore, FDA is not specifying the form or the format of the

information that is required to be established and maintained.

(Comment 115) One comment states the FDA should standardize lot codes.

(Response) FDA does not agree. The agency has determined that the least

burdensome way of issuing the recordkeeping requirements mandated by the

Bioterrorism Act is to specify the information that must be contained in the

records, but not the format in which the records are kept. As indicated by other

comments summarized previously, persons subject to this final rule already

have various means to identify food, including lot numbers. The final rule

allows such persons to use lot numbers or other appropriate identifiers,

including abbreviations, provided such information can readily be decoded to

identify particular foods if FDA makes an appropriate request to access records.

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7. Quantity and How the Food is Packaged

(Comment 116) A few comments recommend that FDA allow quantity of

products in bulk containers to be expressed in gross quantity, e.g., 1 to 5,000

gallon (gal) tank load; 5 to 1,000 gal totes.

(Response) FDA agrees with this comment that, when recording quantity

of bulk food, the gross quantity, or weight, (e.g., 5,000 gal) is acceptable. To

satisfy the requirement to record how the food is packaged, ‘‘tank load’’ or

‘‘totes’’ is acceptable. FDA has revised §§ 1.337(a)(5) and 1.345(a)(5) of this

final rule accordingly.

(Comment 117) One comment representing warehouses recommends that

the final rule require that the information relating to quantity and how a food

is packaged be maintained by the warehouse customer.

(Response) FDA disagrees with this comment. Warehouses ‘‘hold’’ food

and are, therefore, subject to all of the regulations in subpart J of this final

rule. The comment has not explained why a warehouse would not know or

could not obtain information regarding the quantity of food received and how

it is packaged. FDA believes it is necessary to maintain this information at

each step of the distribution chain to be able to effectively and efficiently

conduct a tracing investigation.

8. Name, Responsible Individual, Address, Telephone Number, Fax Number,

E-Mail Address of Transporters Who Transported the Food To You and From

You

(Comment 118) Several comments state that the identity of the transporter

is known to the shipper but is not typically known to the receiver. The

comments assert that it is unreasonable to expect the receiver to have, seek,

or maintain information on the identity and related contact information for

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the transporter that delivered the product, especially if multiple transporters

may have been involved. The comments state that such information would be

available from the shipper that arranged the transport. One comment states

that it is not usual business practice for distributors to keep records about the

transporter who delivers food.

(Response) FDA believes that excluding a source from keeping records on

the immediate previous source if that immediate previous source is a

transporter would hinder a traceback investigation. The proposed and final

rule require nontransporters to identify the name of the firm, address,

telephone number and, if available, the fax number and e-mail address of the

transporter who transported the food to and from them. See §§ 1.337(a)(6) and

1.345(a)(6) of this final rule. These provisions however, do not require the

nontransporter to record transactions to which they were not a party, e.g.,

where multiple transporters are involved.

I. Comments on Who is Required to Establish and Maintain Records for Tracing

the Transportation of All Food? (Proposed § 1.351)

(Comment 119) Several comments stated that foreign transporters are not

included in the definition of ‘‘foreign facilities’’ and that the final rule should

be applied to foreign transporters as it is to domestic transporters.

(Response) FDA has excluded all foreign persons, except foreign persons

who transport food in the United States, from all of the regulations in subpart

J of this final rule. Therefore, foreign transporters are subject to the same

requirements as ‘‘domestic’’ transporters when transporting food in the United

States.

(Comment 120) A number of comments noted that many ‘‘nontransporters’’

own trucks or other vehicles and transport food or feed as an incidental part

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of their operations. They express concern that they would be required to keep

two sets of records, one as a nontransporter, and the other as a transporter.

One comment recommends that the final rule be applicable to both private

and ‘‘for-hire’’ transporters.

(Response) ‘‘Transporter’’ is defined in § 1.328 of this final rule to mean

a person who has possession, custody, or control of an article of food in the

United States for the sole purpose of transporting the food, whether by road,

rail, water, or air. Transporter also includes a foreign person that transports

food in the United States, regardless of whether that person has possession,

custody, or control of that food for the sole purpose of transporting that food.

If a person is considered a nontransporter under the rule, then the person is

not subject to the transporter provisions when transporting food, but must

comply with the requirements applicable to nontransporters. The final rule

applies to transporters regardless of their status as private or for-hire. For

example, if a U.S. manufacturer hires a company to deliver its food, the

delivery company is subject to the transporter provisions whether or not it is

private or for-hire.

If a person is considered a nontransporter under the final rule, then the

person is not subject to the transporter provisions when transporting food. For

example, a U.S. manufacturer that delivers its food to a grocery store must

only keep the records required of a nontransporter. In this situation, the

immediate previous sources of the manufacturer are the sources and

transporters of the ingredients, and the immediate subsequent recipient of the

manufacturer is the grocery store.

(Comment 121) A number of comments note that the specific records being

required of transporters are duplicative of the information being required of

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the immediate prior sources and the immediate subsequent recipients with

respect to each other and that such redundancy is unnecessary because the

agency could get the information from either or both of the immediate prior

sources or immediate subsequent recipients.

(Response) The requirements in the final rule ensure that transporters have

records that would assist FDA in a tracing investigation. For example, if a

manufacturer of a food product sends 300 boxes of that product to its buyer

(the immediate subsequent nontransporter recipient), and the recipient only

receives 200 boxes, records created by the transporters (or multiple transporter

companies if more than one is used to transfer food between the nontransporter

immediate previous source and the nontransporter immediate subsequent

recipient) will be the only means of enabling FDA to learn how and when

the remaining 100 boxes were diverted, and to where. In addition, under a

similar scenario where a manufacturer of a food product sends 300 boxes of

that product to its buyer and the recipient receives 400 boxes, transportation

records will be the only means of enabling FDA to determine when the

additional 100 boxes were introduced into the system and where they came

from. Further support for requiring transporters to establish and maintain

records is provided in response to comment 82 of this document.

J. Comments on What Information is Required in the Transportation Records?

(Proposed § 1.352)

(Comment 122) Several comments recommend that FDA exempt

transporters from all recordkeeping elements except the immediate source and

immediate subsequent recipient. They note that the cost of complying is not

proportional to the risk.

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(Response) FDA disagrees with this comment. FDA, however, has taken

steps to minimize the burden on transporters by including five alternatives to

meet their obligations to establish and maintain records under this final rule.

FDA notes that transporters also are subject to the records access requirements

in §§ 1.361 and 1.363 of this final rule. This will ensure that FDA has access

to all applicable records that will enable FDA to perform a tracing investigation

quickly and effectively. Additionally, to ensure there are no gaps in transporter

coverage in a traceback investigation, the final rule applies to both interstate

and intrastate transporters of food.

(Comment 123) Comments arguing for exemption of transporters state that

it is difficult or impossible for the crew of the transporter to open each

container of food, contaminate it, repackage it, replace seals, and arrive on time

without leaving any trace of their intervention. Other comments suggest that

a known and trustworthy transport company will not risk their business by

doing something of this nature.

(Response) FDA disagrees that the transportation process is any less

vulnerable to attacks on the food supply than any other part of the food

industry. FDA believes that recordkeeping requirements are necessary for

transporters, but, as discussed previously, it has taken steps to minimize the

burden on transporters.

(Comment 124) A number of comments state that the transporter has no

access to detailed information about the shipment and is dependent on the

information listed on the bill of lading provided by the shipper. Therefore,

the information required of transporters should be limited to the information

on the bill of lading. One comment states that a bulk shipper, for example,

has a 5,000 gal shipment of orange juice and has access to only this

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information, and detailed descriptive information such as brand names,

specific variety, and package types are not applicable to bulk loads. Several

comments state that transporters are frequently provided with preloaded and/

or sealed vehicles for transport, and the transporter does not have knowledge

of the contents other than what is on the bill of lading prepared by the shipper.

They argue that they cannot access the sealed cargo to obtain specific

information to confirm or supplement the bill of lading information. Similarly,

other comments advise that they cannot verify bill of lading information for

food contained in shrink-wrapped pallets. These comments believe that the

carriers responsibility should be limited to the description provided by the

shipper.

(Response) As discussed in response to comment 82 of this document,

transporters are not required to establish and maintain the detailed information

about a particular shipment of food that nontransporters are required to

establish and maintain under §§ 1.337 and 1.345 of this final rule. The final

rule provides five alternatives for interstate and intrastate transporters to meet

their obligation to establish and maintain required records.

(Comment 125) One comment notes that air transporters may have a record

of the consignee (immediate subsequent recipient), but may not have a record

of the truck transporter the consignee sent to pick up the freight. The comment

believes that the consignee who arranged for the pickup should be responsible

for the record, not the air transporter who released the shipment to the agent

of the consignee.

(Response) The final rule provides five alternatives for transporters to meet

their obligation to establish and maintain records. Failure by the immediate

previous source or immediate subsequent recipient who enters into an

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agreement under § 1.352(e) of this final rule to keep such records is a

prohibited act. The requirements for transporters in the final rule ensure that

FDA has records identifying how a food traveled between a nontransporter

supplier and nontransporter recipient when multiple transportation companies

or multiple modes of transportation are used. FDA does not believe that the

nontransporter will always have this information. For example, if a trucking

company that picks up the food from a manufacturer in State A for delivery

to a grocery store in State B subcontracts with an airline and subsequent

trucking company to deliver the food to the grocery store, the manufacturer

may have no knowledge that the food was transported on the airline and

subsequent trucking company. Similarly, the grocery store is aware that the

second trucking company delivered the food, but may not be aware that before

that, the food was transported on an airline and a different trucking company.

In the event that FDA has a reasonable belief that food is adulterated and

presents a threat of serious adverse health consequences or death to humans

or animals, such records could be critical to determining whether such

adulteration occurred during transportation, and if so, during which leg.

(Comment 126) One comment observes that the Bioterrorism Act does not

mention ‘‘transporters’’ in providing the Secretary with record access. The

comment concludes that Congress chose not to give the Secretary access to

the records of transporters and asks why there is a recordkeeping requirement

for those transporters.

(Response) FDA disagrees with this comment’s assertion that the statute

does not provide FDA with access to transporters’ records. Section 306 of the

Bioterrorism Act amends section 704(a) of the FD&C Act, Factory Inspection,

to read:

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* * * In the case of any person (excluding farms and restaurants) who

manufactures, processes, packs, transports, distributes, holds, or imports foods, the

inspection shall extend to all records or other information described in section 414

when the Secretary has a reasonable belief that an article of food is adulterated and

presents a threat of serious adverse health consequences or death to humans or

animals * * *. (Emphasis added.)

FDA is imposing a record establishment and maintenance requirement on

transporters to ensure that transporters have records that would assist FDA in

a tracing investigation in a food-related emergency.

(Comment 127) Numerous comments state that a requirement for

specificity as to brand names, specific variety names (e.g., ‘‘romaine lettuce’’

rather than ‘‘lettuce’’), lot numbers, and the way the food is packaged would

require information neither readily available to transporters, nor routinely

recorded by transporters. They further state that, if needed, such information

could be obtained from both the shipper and receiver. They contend that these

requirements are not necessary to effectuate the purposes of the statute. Other

comments state that air carriers typically rely on information from those

tendering the freight and, in some instances, shipments may not even be

identified as containing food, particularly since chewing gum and pet foods

are included in the definition of food.

(Response) The final rule does not require transporters to establish and

maintain records with brand name or lot numbers. However, FDA believes it

is necessary to obtain some information about the shipment of food from

transporters to conduct tracing investigations. Transporters are responsible for

knowing that they are transporting food.

(Comment 128) Some comments state that requiring brand name

descriptions raises cargo security concerns because having more detailed

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descriptions on paperwork will increase the risk of theft and make it easier

for bioterrorists to target certain shipments.

(Response) FDA does not agree with this comment. Interstate transporters

are already required to keep similar records under the DOT regulations, and

FDA is not aware of these records presenting a security risk; thus, there should

not be any increased security risks as a result of this rulemaking. Furthermore,

FDA notes that the final rule does not require transporters to establish and

maintain records of brand name, specific variety names, or lot numbers.

K. Comments on What are the Record Retention Requirements? (Proposed

§ 1.360)

(Comment 129) Many comments state that because an infrastructure for

long-term record retention does not exist to the extent FDA envisions, more

reasonable time requirements for retention of records should be established.

Another comment states that, although the proposed record retention periods

seem simple and straightforward, in practice, they are difficult and confusing

for some companies to apply because of the other record retention

requirements of varying lengths with which they also must comply. The

comment urges FDA to review the recordkeeping retention periods now in

effect for specific food categories (e.g., acidified foods, low acid canned foods,

bottled water, juices, seafood, and milk) and work to harmonize the proposed

record retention requirements with those periods. A few comments question

the value of a 2-year record retention period for a product with a shelflife of

60 days, particularly in light of the additional costs associated with the

extended retention requirements for perishables. Another comment states that

the proposed timeframes for maintaining records for all food products, based

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solely on whether a food has a shelflife of 7 days, does not appear to utilize

sound risk management principles.

(Response) FDA agrees in part with these comments and has revised the

record retention requirements in the final rule. FDA used similar criteria as

the NIST definitions for perishable, semiperishable and long shelf-life food.

The record retention requirements in § 1.360(b) of this final rule now require

record retention of: (1) 6 months for food for which a significant risk of

spoilage, loss of value, or loss of palatability occurs within 60 days after the

date you receive or release the food; (2) 1 year for food for which a significant

risk of spoilage, loss of value, or loss of palatability occurs only after a

minimum of 60 days, but within 6 months, after the date you receive or release

the food; and (3) 2 years for food for which a significant risk of spoilage, loss

of value, or loss of palatability does not occur sooner than 6 months after the

date you receive or release the food, including foods preserved by freezing,

dehydration, or being placed in a hermetically sealed container.

Transporters, or nontransporters retaining records on behalf of a

transporter, are required to retain records for 6 months for any food having

a significant risk of spoilage, loss of value, or loss of palatability within 60

days after the date the food is received or released and 1 year for any food

having a significant risk of spoilage, loss of value, or loss of palatability only

after a minimum of 60 days after the date the food is received or released.

FDA chose this approach because: (1) The food industry already is familiar

with classification of foods into these three categories due to existing

regulations and practices and (2) it will mitigate the problem raised by some

comments of inadequate infrastructure for long term storage of records for the

shorter shelf life foods. FDA believes that a tracing investigation involving food

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for which a significant risk of spoilage, loss of value, or loss of palatability

occurs within 60 days after the date you receive or release the food will not

be compromised by providing for the reduced record retention of 6 months

because most of these tracebacks are initiated within 6 months of the outbreak.

(Comment 130) Comments from the transportation industry indicate that

FDA should revise the record retention requirements for transporters to be the

same for both nonperishable and perishable food shipments, rather than the

1 and 2-year periods FDA proposed, and that the final rule should adopt the

FMCSA 1-year retention period required for bills of lading.

(Response) FDA agrees with this comment and has revised the final rule

accordingly. Section 1.360(f) of the final rule requires transporters, or

nontransporters retaining records on behalf of a transporter, to retain records

for 6 months for any food having a significant risk of spoilage, loss of value,

or loss of palatability within 60 days after the date the food is received or

released and 1 year for any food having a significant risk of spoilage, loss of

value, or loss of palatability only after a minimum of 60 days after the date

the food is received or released.

(Comment 131) One comment suggests that records retention timeframes

should be based on a simple partitioning of shelf perishable and shelf stable

products, e.g., retain records for products with a shelflife up to 90 days for

1 year and retain records for products with a shelf life greater than 90 days

for 2 years from the time of manufacture.

(Response) As stated previously in response to comment 129 of this

document, FDA has considered various options and has chosen to require

record retention based on criteria similar to the NIST definitions for perishable,

semi-perishable and long shelf-life food. FDA is convinced such an approach

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is the most efficient and effective because the food industry already is familiar

with classification of foods into these three categories due to existing

regulations and practices; and it will mitigate the problem raised by some

comments of inadequate infrastructure for long term storage of records for the

shorter shelf life foods. FDA believes that a tracing investigation involving food

for which a significant risk of spoilage or significant loss of value occurs within

60 days will not be compromised by providing for the reduced record retention

of 6 months because most of these tracebacks are initiated within 6 months

of the outbreak.

With regard to the comment’s statement that records be retained from the

time of manufacture, FDA does not agree. The record retention periods begin

at the time the food is received and released. Under § 1.360(a) of this final

rule, you must create the required records at the times you receive and release

food, except to the extent that the information is contained in existing records.

(Comment 132) One comment suggests that retaining records for 6 months

after the product expiration date should be more than adequate for

investigations for potential threats associated with the food. The comment

indicates that expanding system capacity to accommodate much longer record

retention is a major cost associated with implementing the proposed regulation

and that FDA should either justify the value for longer record retention periods

against the increased burden being placed on the industry or substantially

decrease the number of records that must be retained for longer duration.

(Response) As previously noted in response to comment number 129, FDA

has considered various options and has chosen to require record retention

based on criteria similar to the NIST definitions for perishable, semiperishable

and long shelf-life food. FDA is convinced such an approach is the most

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efficient and effective because the food industry already is familiar with

classification of foods into these three categories due to existing regulations

and practices; and it will mitigate the problem raised by some comments of

inadequate infrastructure for long term storage of records for the shorter shelf

life foods.

FDA notes that a traceback may not begin until well past the time the

food has been consumed, as explained in the response to the following

comments.

(Comment 133) A few comments contend that a shorter record retention

time, such as 3 to 6 months, should be sufficient time for retention of records

because any harmful effect directly related to a perishable food would be

detected well within the life expectancy of the food.

(Response) FDA does not agree that harmful effects directly relating to

perishable foods always can be detected within the shelflife of the food. FDA

has experienced some situations in which the health hazard was not

immediately apparent, but only emerged several months after the food was

consumed. Also, FDA recognizes the potential for serious adverse health

consequences caused by novel contaminants or novel food sources for known

contaminants. In such situations, it may take months to identify the source

of contamination, or the contaminant itself.

(Comment 134) Several comments suggest that record retention be based

on three categories of food, i.e., perishable, semiperishable, and long shelflife,

as defined by NIST. NIST defines perishable food as any food for which a

significant risk of spoilage, loss of value, or loss of palatability occurs within

60 days of the date of packaging. The corresponding time frames for

semiperishable and long shelflife food are 60 days to 6 months, and greater

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than 6 months, respectively. Several comments suggest the record retention

time should be 6 months for perishable food; 12 months for semiperishable

food and 18 months (or product shelflife plus 12 months or 24 months,

whichever is greater) for long shelflife food.

(Response) FDA agrees with this comment. FDA has concluded that this

objective can be achieved by inserting language directly in § 1.360(b) of this

final rule using similar criteria as the NIST definitions for perishable, semiperishable

and long shelf-life food. Therefore, FDA has changed the record

retention requirements in § 1.360(b) of this final rule to require record retention

by nontransporters for: (1) 6 months for food for which a significant risk of

spoilage, loss of value, or loss of palatability occurs within 60 days after the

date you receive or release the food; (2) 1 year for food for which a significant

risk of spoilage, loss of value, or loss of palatability occurs only after a

minimum of 60 days, but within 6 months, after the date you receive or release

the food; and (3) 2 years for food for which a significant risk of spoilage, loss

of value, or loss of palatability does not occur sooner than 6 months after the

date you receive or release the food, including foods preserved by freezing,

dehydrating, or being placed in a hermetically sealed container.

Transporters, or nontransporters retaining records on behalf of

transporters, are required to retain for 6 months records for food having a

significant risk of spoilage, loss of value, or loss of palatability within 60 days

after the date the food is received or released and for 1-year records for all

food having a significant risk of spoilage, loss of value, or loss of palatability

after a minimum of 60 days after the date the food is received or released.

FDA chose this approach because: (1) The food industry already is familiar

with classification of foods into these three categories due to existing

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regulations and practices and (2) it will mitigate the problem raised by some

comments of inadequate infrastructure for long term storage of records for the

shorter shelf life foods. FDA believes that a tracing investigation involving food

for which a significant risk of spoilage, loss of value, or loss of palatability

occurs within 60 days will not be compromised by providing for the reduced

record retention of 6 months because most of these tracebacks are initiated

within 6 months of the outbreak.

(Comment 135) One comment states that records should be retained for

2 years from the date they are created, and not for 2 years from the date of

shipment of the product. The comment points out that wine may be shipped

several years after it has been manufactured, and that establishing the

timeframe from the date of shipment of the product would be an unwarranted

burden. One comment suggests that the minimum record retention periods

should be stated as time from the date of production, e.g., a minimum of 2

years after the date of production of the food, except perishables, and a

minimum of 1 year after the date of production for perishables.

(Response) FDA does not agree with the comment’s suggestion, as this will

not ensure that FDA has access to the requisite records at the time of a

traceback investigation. Often, a traceback begins after consumers become

sickened or die. In the comment’s example, if the wine was adulterated and

presented a threat of serious adverse health consequences or death to humans,

FDA may not know this until the wine has been consumed, i.e., after the

product was released by the manufacturer into commerce and consumers

became seriously ill. If the record retention period began at the time of

production, but the wine was aged at the manufacturer’s facility 2 years before

distribution into commerce, the record retention period would have expired

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before the wine entered commerce. In the final rule, FDA retains the

requirement that records required under subpart J must be established at the

time food is received or released and maintained from that time until the end

of the time period specified in § 1.360 of this final rule.

(Comment 136) One comment notes that mechanisms for keeping records

updated have not been established. The comment asked what should be done

if a record’s 2-year deadline expires, e.g., is there a requirement to open a new

record?

(Response) The final rule does not mandate specific mechanisms, systems,

or processes for establishing and maintaining the required records, only the

information that must be kept. The record retention period is from the time

the food is received or released. Persons are not required to update, modify,

or transfer information in a record to a new record after the end of the required

retention period.

(Comment 137) One comment expressed concern that, under the proposed

regulation, persons who do not know if perishable food is intended for

processing into nonperishable food would have to assume it is and maintain

records for 2 years. A few comments state that persons, such as distributors,

carriers, farms or orchards, roadside stands, and small collection centers

generally have no way of knowing whether a perishable food will be processed

into a nonperishable food by other parties. A few comments ask FDA to clarify

that companies selling perishables can rely on the applicability of the 1-year

records retention period unless they have actual knowledge at the time of sale

that the perishables will be used for processing into nonperishable foods.

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(Response) Section 1.360 of the final rule specifies retention periods based

on the type of food being received or released, not on the end use of the food

being delivered.

(Comment 138) One comment states that the proposed requirements are

more burdensome than is necessary to enable food producers to respond

quickly and appropriately to a food safety emergency. The comment further

states that the proposal does not take into account the sheer volume that retail

grocery stores deal with on a daily basis. According to the comment, the

average retail grocery store currently is capable of retaining such records for

only approximately 1 week. The comment concludes that the requirement to

maintain records for 2 years is completely unworkable and will not serve in

the interest of public health in times of crisis.

(Response) FDA has revised the record retention periods for

nontransporters to 6, 12, and 24 months as discussed in response to comment

number 129. FDA believes that these timeframes are within the period

Congress believed appropriate because the Bioterrorism Act gives FDA

authority to require records to be retained for up to 2 years. Moreover, Congress

did not exempt retailers (e.g., retail grocery stores) from the recordkeeping

requirements, as they did in section 305 of the Bioterrorism Act (registration

of food facilities). FDA believes that the benefit to FDA and consumers in

conducting an efficient and rapid traceback in a public health emergency

justifies the burden to industry.

For the final rule, FDA has changed the record retention requirements in

§ 1.360(b) to require record retention by nontransporters for: (1) 6 months for

food for which a significant risk of spoilage, loss of value, or loss of palatability

occurs within 60 days after the date you receive or release the food; (2) 1 year

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for food for which a significant risk of spoilage, loss of value, or loss of

palatability occurs only after a minimum of 60 days, but within 6 months, after

the date you receive or release the food; and (3) 2 years for food for which

a significant risk of spoilage, loss of value, or loss of palatability does not occur

sooner than 6 months after the date you receive or release the food, including

foods preserved by freezing, dehydrating, or being placed in a hermetically

sealed container.

Transporters or nontransporters retaining records on behalf of a transporter

are required to retain 6 months records for food having a significant risk of

spoilage, loss of value, or loss of palatability within 60 days after the date the

food is received or released and 1 year all food having a significant risk of

spoilage, loss of value, or loss of palatability after a minimum of 60 days after

the date the food is received or released.

FDA chose this approach because: (1) The food industry already is familiar

with classification of foods into these three categories due to existing

regulations and practices and (2) it will mitigate the problem raised by some

comments of inadequate infrastructure for long term storage of records for the

shorter shelf life foods. FDA believes that a tracing investigation involving food

for which a significant risk of spoilage or significant loss of value occurs within

60 days under normal shipping and storage conditions will not be

compromised by providing for the reduced record retention of 6 months

because most of these tracebacks are initiated within 6 months of the outbreak.

In addition, FDA has excluded the distribution of food directly to

consumers from the requirement to keep records of immediate subsequent

recipients of food because FDA can obtain information from consumers and

notify them when necessary. Often, consumer illness is the first common

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indicator that food may be adulterated and present a threat of serious adverse

health consequences or death. Requiring retailers to retain records for only

weeks or months would greatly impede FDA’s ability to conduct a rapid and

effective traceback. FDA has selected those timeframes for record retention

based on the amount of time perishable and nonperishable food may remain

in commerce, and thus, may be the subject of a traceback investigation. FDA

further notes its understanding that many retailers currently maintain records

for 2 years.

Also, retail food establishments that employ 10 or fewer full-time

equivalent employees are now excluded from all of the requirements in this

subpart, except §§ 1.361 and 1.363. (See response to comment 38 of this

document for a further discussion of FDA’s rationale underlying this

exclusion.)

(Comment 139) A few comments state that the requirement to maintain

records for 2 years is very burdensome for those who obtain a variety of fresh

produce from a large number of small farmers and commingle lots of produce

for distribution.

(Response) FDA notes that these foods for the most part would fall into

the category of foods for which a significant risk of spoilage or significant loss

of value occurs if held longer than 60 days under normal shipping and storage

conditions for the food. As stated previously, the record retention period for

this category of foods in this final rule is 6 months.

(Comment 140) A few comments state that, for alcoholic beverages and

distilled spirits, retention of records for a period of only 2 years would be

inadequate to trace a matured product back to the source. They suggest that

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FDA should rely on alcoholic beverage importers’ and producers’ own existing

record systems to facilitate tracebacks.

(Response) Although retaining records for 2 years may not be enough for

products with long shelflives, the agency notes that the Bioterrorism Act sets

the maximum time the agency can mandate record retention at 2 years. FDA

further notes, however, that when FDA has a reasonable belief that an article

of food is adulterated and presents a threat of serious adverse health

consequences or death to humans or animals, any records and other

information accessible to FDA under section 414 or 704(a) of the FD&C Act

must be readily available for inspection and photocopying or other means of

reproduction. Therefore, as a practical matter, FDA may be able to access

additional information about food products after the 2-year retention period

required by subpart J of this final rule has elapsed.

(Comment 141) Several comments offer suggestions on where the required

records should be maintained. One comment recommends that, for

intracorporate transfers, companies should be permitted to make all required

records accessible at one location. The comment states that this would not

delay, and could even enhance, efficiencies in an FDA traceback investigation.

Several comments state that companies should have flexibility for determining

where to maintain the required records. The comments note that it should be

sufficient that the records are maintained and are accessible at some location,

including the headquarters office for specific locations within a company. One

comment requests clarification on whether records may be stored in separate

locations, as long as the combined records adequately provide the required

information. The comment notes that confidentiality requirements may cause

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records that contain part of the required information to be maintained in

different locations.

One comment states that, in the context of air transportation of food, the

location where the activity occurred may be difficult to determine, and may

not be a feasible place to store records or to make them available to FDA at

a future date. According to the comment, the option to store records offsite,

combined with the flexibility to maintain records in an electronic format, is

critical to ensuring prompt access to the records.

(Response) FDA requires in the final rule that the required records must

be retained at the establishment where the covered activities described in the

records occurred (onsite) or at a reasonably accessible location. The agency

clarifies that the intent of this provision of the regulation is to provide

flexibility for a company to determine the most efficient and readily accessible

means of storage, consistent with the company’s business practices. Access to

the records may be provided to FDA electronically, by facsimile, or by other

appropriate means consistent with the availability requirements in § 1.361 of

this final rule, once FDA makes a written request under section 414(a) or 704(a)

of the FD&C Act. Each individual company may determine the appropriate

location for maintaining the required records and for ensuring that the record

availability requirements can be met.

L. Comments on What Are the Record Availability Requirements? (Proposed

§ 1.361)

(Comment 142) Some comments state that the proposed time is reasonable

for record production if the requested records are onsite and of recent

transactions (i.e., within the last 3 months). One comment urges the agency

to clarify that, although companies must make the records available within 4

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hours, the agency does not expect companies to link the sources of each

ingredient with every finished lot of product within that timeframe. Another

comment states that, within the 4-hour proposed time, a firm will not be able

to make records available that are stored offsite and currently are subject to

contracts that allow the vendors to deliver records on the next business day.

The comment recommends that FDA consider the possibility of allowing

records stored offsite to be produced at locations more convenient than the

manufacturing facility, such as FDA offices, headquarters, or other locations

mutually agreed upon to expedite record examination.

Some comments also state that the cost of renegotiating record storage

contracts would cost thousands of dollars, more than the $151 per firm cost

that FDA estimated. They recommend that FDA allow companies to provide

records ‘‘within a reasonable period of time’’ or that the final rule give

companies 24 hours to make records available to FDA from the time of receipt

of FDA’s official request. Several comments state that the proposed time does

not reasonably reflect the following: The scope of requested records; the

accessibility, degree of compatibility and number of recordkeeping systems

involved; the limitations on record maintenance of some systems; the limited

physical access to nonelectronic records; and the presence or absence of a

quality assurance system. Comments further state that, with millions of foods

transported annually, many firms utilize various data systems and have

implemented records maintenance procedures to meet their specific company

needs. Compliance with this new rule requires establishing new protocols and

developing new database systems, which would require a substantial capital

investment.

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Comments also note that the proposed rule does not consider the time

required to verify the completeness and accuracy of records, transmission of

data to appropriate authorities and the availability of knowledgeable personnel

to access specific records. They suggest that FDA should focus on the

information contained in the records, rather than on the records themselves.

Comments suggest FDA change the proposed language to include: As soon as

possible within 24 hours from the time the request is made. Other comments

state that the proposed time is not enough, particularly if the request for record

is made late during the day, or on Friday, or on a day (Sunday) when the

location where records are maintained is closed and insufficient staff is

available to retrieve the requested records. Comments urge FDA to allow

companies to provide records as quickly as is practicable, given the nature of

the recordkeeper’s operations.

(Response) FDA agrees with these comments in part and has amended the

proposed records availability requirements in this final rule. Section 1.361(a)

of this final rule states: ‘‘* * * Such records and other information must be

made available as soon as possible, not to exceed 24 hours from the time of

receipt of an official request * * *.’’ FDA notes that, although the rule sets

an outer limit of 24 hours to provide records, it requires that records be

provided ‘‘as soon as possible.’’ (Comment 143) Other comments suggest that

records be available within 12 hours regardless of what time of day the FDA

request is made or the next business day, in the event the next day falls on

a weekend or a holiday. Some suggest a timeframe within 24 hours if the

request is made during a working week and within 72 hours if a request is

made during a weekend.

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Several comments state that the majority of businesses, especially small

businesses, store records that are older than 3 weeks ‘‘offsite’’ where many

storage facilities are not open on weekends and holiday. Comments also state

that more than 24 hours is needed to retrieve such records and to impose

criminal liability for noncompliance is unworkable and unfair. Comments urge

FDA to allow companies to provide records within a reasonable period of time

or that the final rule gives companies 24 hours to make records available to

FDA from the time of receipt of an official request.

(Response) FDA agrees with these comments in part. In this final rule, FDA

is requiring that records be made available as soon as possible, but not more

than 24 hours from the time of receipt of an official request. FDA does not

agree with the comments’ suggestion that more time be made available if a

request for records is made outside of the working week. FDA notes that it

would only access the records if FDA has a reasonable belief that an article

of food is adulterated and presents a threat of serious adverse health

consequences or death to humans or animals. Under these circumstances, it

is critical for FDA to move as quickly as possible to trace backwards to identify

the source of any such adulteration and trace forward from that source to

remove all similarly adulterated food from commerce to protect the public

health. FDA notes that although the rule sets an outer limit of 24 hours to

provide records, it requires that records be provided ‘‘as soon as possible.’’

(Comment 144) Several comments urge FDA to reconsider its proposed

definition of work hours (8 a.m. to 6 p.m.). The comments state that in most

ports of entry, the hours of operation of the trade community are established

to mirror the hours of the commercial operations of CBP. If FDA requests

records outside of those hours of operation, FDA could encounter difficulty

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in contacting the appropriate parties from whom to request records. Comments

suggest that FDA use the phrase ‘‘during times in which a firm is operating’’

or ‘‘during a firm’s normal business hours.’’

(Response) FDA is no longer defining work hours, and has modified its

proposed records availability requirement to ‘‘as soon as possible, not to

exceed 24 hours from the time of receipt of the official request.’’

(Comment 145) Some comments state that the agency has not considered

difficulties of compliance in the real world where there are different time zones

within the United States and foreign countries. According to these comments,

mandating an unattainable compliance time may cause great confusion globally

and may actually impede the information gathering process. Comments urge

FDA to allow for records to be provided to FDA within a timeframe not to

exceed 24 hours or other timeframe appropriate to the scope of records being

sought. Others suggest 24 hours for domestic and 36 hours for foreign facilities.

(Response) FDA agrees in part with these comments. FDA has deleted the

4-hour and 8-hour requirements. The final rule requires all records to be made

available as soon as possible, not to exceed 24 hours from the time of receipt

of the official request. With respect to the comments suggestion that foreign

facilities be given 36 hours, FDA notes that foreign persons (except for foreign

persons who transport food in the United States) are not subject to these final

recordkeeping regulations.

(Comment 146) Many foreign governments express concern that FDA does

not have authority regarding recordkeeping and record access when a firm is

located in a foreign country. One foreign government urges FDA to recognize

the role of another competent authority with respect to records access as

provided for under the World Trade Organization Agreement on Sanitary and

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Phytosanitary Measures. Foreign governments request that FDA operate under

agreements with these governments so that FDA will convey its request to the

competent authority in that country. The competent authority can then carry

out investigations on behalf of FDA and provide FDA with any resulting

relevant information.

(Response) Foreign persons, except those who transport food in the United

States, are not subject to these final recordkeeping regulations. If FDA needs

to access food records that are established and maintained by foreign persons,

FDA will work with the relevant competent authorities in those countries to

do so.

(Comment 147) One comment notes that the proposed rule does not take

into account the time required to translate into English records in other

languages that are obtained from firms located in foreign countries.

(Response) Foreign persons, except those who transport food in the United

States, are not subject to these final recordkeeping regulations. In the event

FDA needs to access records kept by foreign persons, FDA intends to work

with the relevant competent authorities in those countries to do so.

(Comment 148) One comment states that, for rurally-located industry, it

is difficult for primary agricultural dealers from any location to meet the

proposed requirements, because, in some of these small businesses, one person

assumes many responsibilities.

(Response) FDA has considered this and other comments and has changed

the record availability requirement from the proposed rule. Under this final

regulation, records shall be made available as soon as possible, but not to

exceed 24 hours after FDA has made the request. In the circumstances in which

FDA would access the records, it is critical for FDA to move as quickly as

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possible to trace backwards to identify the source of any such adulteration and

trace forward from that source to remove all similarly adulterated food from

commerce to protect the public health. FDA notes that, although the rule sets

an outer limit of 24 hours to provide records, it requires that records be

provided ‘‘as soon as possible.’’

(Comment 149) One comment states that the proposed time for records

access is problematic for small-scale exporters that do not have any

representation in the United States; hence, they need special treatment.

(Response) Foreign persons are not subject to these final recordkeeping

regulations, except to the extent they transport food in the United States.

(Comment 150) Several comments state that the Bioterrorism Act only

provides authority to access and copy records for the purpose of determining

whether a food believed to be adulterated is actually so and for conducting

a tracing investigation in regard to such an adulterated food. Comments express

concern over possible unlawful conduct and abuse of discretion by FDA field

inspectors and other officials. They urge FDA to clearly define legal violations

concerning recordkeeping and record access requirements so corporate officers

can make responsible decisions. They also urge FDA to integrate the

constitutionally required safeguards into the regulations.

Comments recommend that FDA establish procedural safeguards to protect

manufacturers and their customers by providing the affected company with

a reasonable written notice that explains how the ‘‘reasonable belief’’ standard

is being met and identifies the type of records being requested. According to

comments, this would inform the affected company which records are being

sought and the legal basis for the request. Several comments also request that

FDA develop procedures requiring that the written notice be examined and

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approved by the District Director in whose district the implicated food is

located, or by any FDA official senior to such District Director. They urge FDA

to develop guidelines to define ‘‘reasonable belief’’ and base a decision to

access records on laboratory analyses confirming adulteration and/or on an

affidavit sworn under penalty of perjury.

Other comments state that FDA should issue interim final regulations with

an opportunity for comment on the procedural protections that will be utilized

to implement the record maintenance and inspection provisions of the

Bioterrorism Act. Specifically, the comments state that the regulations should

at least delineate agency procedures for authorizing the review, those officials

who are permitted to review the documents, the standard for when such review

may occur, an appellate procedure for those who disagree with the agency’s

determination, and the reasonable times, limits and circumstances to which

the Bioterrorism Act limits FDA’s review, as well as the procedures FDA must

implement to prevent the unauthorized disclosure of any trade secret or

confidential information that is obtained by FDA under the Bioterrorism Act.

Others urge FDA to incorporate these procedures into regulations and ask that

the public be granted an additional 60 days to comment.

(Response) FDA’s record access authority under sections 414(a) and 704(a)

of the FD&C Act became effective upon enactment of the Bioterrorism Act on

June 12, 2002. The record access provisions of the Bioterrorism Act do not

require FDA to issue implementing regulations. FDA intends to issue guidance

to FDA personnel regarding FDA’s exercise of this provision in accordance

with FDA’s GGPs regulations (§ 10.115). The previously stated comments will

be considered as FDA develops the agency’s guidance. FDA does not agree

that these procedures need to be codified.

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(Comment 151) One comment observes that, depending on the length of

the distribution chain involved in a contamination event, FDA may need to

examine records of numerous food handling facilities. As a result, it could still

take FDA several days to obtain needed records. The comment suggests that

source labeling could help FDA determine the ultimate source faster.

(Response) The comment’s suggestion is outside the scope of the proposed

rule. The authority granted in section 306 of the Bioterrorism Act relates to

establishing requirements for records to identify immediate previous sources

and recipients of food, not establishing labeling requirements.

(Comment 152) One comment requests specific guidelines and an

opportunity to object to providing the records for a period before access of

the records.

(Response) FDA disagrees. FDA does not currently provide a period of

time in which a person subject to an inspection may object prior to that

inspection. As discussed in response to comment 171 of this document, FDA

plans to issue a guidance document regarding the record access provisions.

M. Comments on What Records Are Excluded From This Subpart? (Proposed

§ 1.362)

(Comment 153) Several comments express concern that information that

FDA would view, copy, or otherwise access could contain confidential

information, such as confidential commercial or trade secret information. Two

comments ask FDA to permit a person subject to the requirements of section

414 of the FD&C Act to redact what they consider to be nonpublic information

from records properly sought by FDA. One comment asks FDA to permit a

person to create a separate document containing only that information FDA

is entitled to inspect. Examples of confidential information that comments

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have described include formulas, recipes, information about their businesses,

where the product was purchased or sold, product development information,

and location and business operations of farms.

One comment requests that FDA allow the affected person to either redact

confidential information from the source records (purchase orders, bills of

lading, etc.), or create separate records containing the information required by

section 414 of the FD&C Act, but not including the information excluded by

§ 1.362 of this final rule or any other confidential information.

(Response) FDA understands the comments’ concerns about protecting the

confidentiality of nonpublic information. If a person wishes to create separate

records that do not contain certain confidential information, the person may

do so, as long as the records are created at the time the food is received or

released and the records contain the information required by the regulations.

In addition, section 306 of the Bioterrorism Act excludes many types of

confidential data from the record requirements: Recipes for food (see § 1.328

for the definition of recipe), financial data, pricing data, personnel data,

research data, and sales data (other than shipment data regarding sales).

Section 306 of the Bioterrorism Act, however, does not allow other types of

confidential data to be withheld from FDA even if they are confidential. The

laws governing FDA’s activities, however, require it to protect certain trade

secret and confidential information. See responses to comments 74 and 154

of this document.

Further, because timely information is critical to a tracing investigation,

records and other information must be made available to FDA as soon as

possible, not to exceed 24 hours from the time of a request (§ 1.361 of this

final rule). If the provision of information and records to FDA is delayed so

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that information can be redacted, the information and records may not have

been provided ‘‘as soon as possible.’’

(Comment 154) Comments ask that FDA take steps to maintain the

confidentiality of the information it receives. One comment asks that FDA

develop and inform the public of procedural safeguards it will follow to obtain

the information needed without jeopardizing the confidentiality of business

information. Two comments ask that FDA provide guidance about its

information disclosure procedures. Other comments ask how FDA will ensure

the confidentiality of sensitive business information.

Comments ask that FDA provide for special procedures to safeguard the

confidentiality of the identities of flavors and spices and other secret

ingredients in a recipe. Two comments request that FDA issue a regulation

and another comment suggests that FDA issue an interim final regulation

concerning the statutory requirement under section 414(c) of the FD&C Act

to prevent unauthorized disclosure of any trade secret or confidential

information.

A comment asks that FDA provide a paragraph in a regulation requiring

that FDA maintain the confidentiality of nonpublic information. That comment

expresses concern about information FDA might receive from an ‘‘unaffected

source,’’ ‘‘incorrectly implicated sources’’ in the distribution chain, or the

identity of a food company that was the victim of ‘‘food contamination in

premeditated form.’’ A comment asks that FDA amend its public information

regulations to provide that information obtained under the records access

authority is exempt from disclosure under FOIA.

(Response) As discussed in response to comment 74, several statutes and

the agency’s information disclosure regulations at parts 20 and 21 govern the

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agency’s ability to disclose information to the public, including information

obtained under section 306 of the Bioterrorism Act. For example, section 301

of the FD&C Act prohibits any person from using

* * * to his own advantage, or revealing, other than to the Secretary or officers

or employees of the Department, or to the courts * * *, any information acquired

under authority of [section 414 or 704] concerning any method or process which as

a trade secret is entitled to protection * * *.

FDA already has procedures in place to ensure that FDA staff follow these

laws. See, e.g., FDA Staff Manual Guide sections 2280.10, 3250.15, and 3291.5.

Furthermore, the record provisions in the Bioterrorism Act recognize that FDA

may obtain trade secret or confidential information, and direct the Secretary

to ‘‘* * * take appropriate measures to ensure that there are in effect effective

procedures to prevent the unauthorized disclosure of [such information]

* * *’’ (21 U.S.C. 414(c)). FDA is planning to reemphasize in instructions to

FDA personnel the importance of current protections and legal requirements

against the unauthorized disclosure of any trade secret or confidential

information that is obtained.

FDA has previously issued information disclosure regulations applicable

to information FDA obtains, and these regulations are applicable to information

FDA obtains under the Bioterrorism Act (parts 20 and 21). FDA notes that these

regulations are applicable regardless of whether the person supplying the

information is ultimately determined to be an ‘‘unaffected source,’’ ‘‘incorrectly

implicated source,’’ or the victim of ‘‘food contaminated in premeditated

form.’’ Therefore, it is not necessary for FDA to issue additional information

disclosure regulations.

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Moreover, FDA routinely reviews, evaluates, investigates and maintains

confidential, trade secret information that encompasses sophisticated, cutting

edge technologies, as well as confidential records that contain formulations

and other trade secret information. Based upon FDA’s track record of

consistently ensuring the confidentiality of this type of information, we have

attained the trust of the pharmaceutical, medical device and biologics

industries. Moreover, the utilization of such information by an FDA employee

for his or her own advantage, or the revelation of such information to outside

parties beyond the scope allowed by the FD&C Act, is a prohibited act (21

U.S.C. 331(j)) subject to criminal prosecution.

(Comment 155) One comment asks that FDA not disclose personal details

(name of responsible person) about secondary suppliers. The comment notes

that disclosure of personal details of secondary supplies might be contrary to

international and European privacy regulations. One comment notes that

disclosure to the public of the names of the firm and the responsible individual

might conflict with foreign confidentiality rules of law. Other comments

express concern about protecting personal privacy information. Another

comment states that farmers are concerned about the effect of possible

information disclosure on the personal and physical security of their farms

where they reside with their families.

(Response) Foreign persons, except for those who transport food in the

United States, are exempt from all of the requirements in subpart J of this final

rule. Farms are also exempt. FDA follows Federal statutes (e.g., FOIA, the

Privacy Act) and its regulations (e.g., parts 20 and 21) in determining the

proper treatment of information it receives, including personal information.

FOIA, for example, contains exemptions that allow FDA to withhold personal

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information from the public in certain circumstances (5 U.S.C. 552(b)(6) and

(b)(7)).

(Comment 156) A few comments ask what assurances FDA can give to

a person subject to the Bioterrorism Act that the information will not be subject

to unauthorized disclosure. Other comments ask that CBP and FDA guarantee

nondisclosure of the information. A comment asks how FDA can guarantee

the confidentiality of confidential and secret information such as formulas.

(Response) FDA complies with Federal law (e.g., the FD&C Act, FOIA,

Trade Secrets Act) and regulations (e.g., parts 20 and 21) regarding the

dissemination of the information it receives. FDA employees are subject to

criminal penalties for disclosing information in violation of section 301(j) of

the FD&C Act or the Trade Secrets Act. FDA plans to reemphasize to its field

personnel the importance of current protections and legal requirements against

unauthorized disclosure of any protected information FDA obtains.

(Comment 157) A comment concerned about adverse publicity asks with

whom might FDA share information.

(Response) FDA is authorized to share certain nonpublic information with

others. For example, FDA may share confidential commercial information with

a sister agency within the Department of Health and Human Services, a State

government agency official whom FDA has commissioned to act on its behalf

under section 702 of the FD&C Act (21 U.S.C. 372) (§ 20.84), its contractors

(§ 20.90), other Federal government agencies (§ 20.85), or foreign government

agencies (§ 20.89). Procedural and other safeguards must be followed for FDA

to share nonpublic information with other persons. For FDA to share

confidential commercial information with CBP under § 20.85, CBP must sign

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a written agreement that it will not further disclose the information except with

FDA’s written permission.

(Comment 158) Several comments express concern about the risk of

disclosure of information about a formula or recipe. One of these comments

noted that, even if the complete formula may not be disclosed, listing the

source of each ingredient in a product would reveal the recipe for that product.

Other comments ask how FDA would handle commercially sensitive

information that might be derived if FDA provides information about a ‘‘oneup’’

source nontransporter for each of the ingredients in a recipe.

(Response) As discussed in response to comment 74 of this document,

several statutes and the agency’s information disclosure regulations at parts

20 and 21 govern the agency’s ability to disclose information to the public,

including information obtained under section 306 of the Bioterrorism Act. For

example, section 301 of the FD&C Act prohibits any person from using

* * * to his own advantage, or revealing, other than to the Secretary or officers

or employees of the Department, or to the courts * * *, any information acquired

under authority of [section 414 or 704] concerning any method or process which as

a trade secret is entitled to protection * * *.

FDA follows these laws in determining the proper treatment of the information

it receives.

N. Comments on What Are the Consequences of Failing to Establish and

Maintain Records or Make Them Available to FDA as Required by This

Subpart?’’ (Proposed § 1.363)

(Comment 159) Three comments state that imposition of criminal liability

would be inappropriate and excessive if they performed to the best of their

abilities. The comments state that taking time beyond 4 hours to locate,

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compile, and provide records on a detained article’s manufacture should not

be viewed as a prohibited act.

(Response) As noted previously, FDA has changed the proposed times in

§ 1.361 of this final rule for responding to a request for access to records to

a requirement that all records be made available as soon as possible, not to

exceed 24 hours from the time of receipt of the official request. Failure to

establish or maintain records or refusal to permit access to or verification or

copying of any record is a prohibited act under section 301 of the FD&C Act.

(Comment 160) One comment states that the rules on recordkeeping are

not enforceable outside the United States. The comment states that any legal

proceedings based on failure to comply with the final rule that could result

in confiscation of assets held in the United States or action against foreign

executives visiting U.S. territory would be considered by a foreign country to

be a very grave step. This would be unworkable in practice and problematic

in terms of bilateral relations. The comment requests that FDA clarify that no

enforcement action will be taken against foreign persons outside the United

States.

(Response) Foreign persons, except those who transport food in the United

States, are not subject to subpart J of this final rule and thus, for the most

part, the concerns raised by the comment are moot. If FDA needs to access

records kept by foreign persons, FDA intends to work in cooperation with the

relevant competent authorities to do so.

(Comment 161) One comment encourages FDA not to use incidental

infractions of its final recordkeeping regulations as a pretext for bringing

additional enforcement actions for alleged violations of other agency

regulations that are outside the scope of the Bioterrorism Act.

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(Response) Nothing in the proposed or final rule suggests that FDA would

take such actions.

O. Comments on What Are the Compliance Dates for This Subpart? (Proposed

§ 1.368)

(Comment 162) Many comments strongly urge FDA to revise the

compliance dates in the proposed rule. The comments state that given the

scope of the proposed requirements it is not possible for industry to be in

compliance within the 6, 12, or 18 months proposed by FDA. The comments

state that each of the new requirements imposes programming, training, and

business practice adjustments that FDA must take this into account in setting

an appropriate effective date for the regulation. The recommendations that

FDA received from comments are as follows: 9 to 12 months for larger

businesses; 1 year regardless of the size of the business; 18 months regardless

of the size of the business; 18 months for large firms and 24 to 30 months

for smaller firms, depending on their numbers of employees; an additional 1

year for each entity group; and 2 to 7 additional years.

(Response) FDA has carefully considered these comments and agrees that

businesses should be given additional time to comply in view of the

programming, training, and business practice adjustments that will be needed.

Section 1.368 of the final rule requires large businesses (500 or more full-time

equivalent employees) to be in compliance within [insert date 12 months after

date of publication of publication in the Federal Register]. Small businesses

(those with fewer than 500, but more than 10 full-time equivalent employees)

must be in compliance within [insert date 18 months after date of publication

of publication in the Federal Register], and very small businesses that employ

10 or fewer full-time equivalent employees must be in compliance within

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[insert date 24 months after date of publication of publication in the Federal

Register]. The extended compliance times for small and very small businesses

are based on the total number of full-time equivalent employees within the

entire business, not just at each individual establishment. FDA does not believe

that extending more time is appropriate given the need for the regulations to

help improve FDA’s ability to address credible threats of serious adverse health

consequences or death to humans or animals from accidental or deliberate

contamination of food. In the event of an outbreak of foodborne illness, such

information will help FDA and other authorities determine the source and

cause of the event. In addition, the information will enable FDA to notify more

quickly the consumers and/or facilities that might be affected by the outbreak.

Further, the Bioterrorism Act directs FDA to take into account the size

of a business in promulgating regulations. Consistent with this provision, FDA

has: (1) Provided a full exemption for very small retailers based on the

rationale stated previously; (2) provided a partial exemption for small (11 to

500 employees) and large (more than 500 employees) retailers from having to

establish and maintain records as to immediate subsequent recipients; and (3)

provided extended compliance times for very small businesses and small

businesses in all sectors.

(Comment 163) Some comments state that the transportation chain

information requirements, by themselves, are so complex they simply cannot

be developed in such a short timeframe even if industry were not dealing with

several other major security-related regulatory efforts under the Trade Act of

2002 and the Maritime Transportation Security Act of 2002. The comments

ask FDA to require more reasonable timetables that would be less costly and

have a more realistic chance of successful compliance.

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(Response) As stated in the response to the comment 162, FDA has

modified the compliance timeframes proposed. The final rule gives covered

persons 12, 18, or 24 months after the date of publication to come into

compliance, depending on the size of the business. The extended compliance

times for small and very small businesses are based on the total number of

full-time equivalent employees within the entire business, not just at each

individual establishment.

(Comment 164) Several comments state that the food distribution chain

is comprised of multiple links or components, some of which will qualify as

small or very small businesses, such as independent truck operators or some

DSD operations. For example, some large national baked goods companies

deliver products directly to stores through individuals who function as

independent businesses (e.g., they own their own trucks, purchase the food

from the vendor and sell it to the store, and hold licenses to the particular

delivery routes). The comments state that, if these businesses are covered by

the small business exemption, they will not be required to provide the

information that larger businesses will be required to retain. The comments

recommend that FDA either extend the exemption through all subsequent links

in the distribution chain, or else recognize the interconnectedness of the

systems and impose a single, more realistic compliance date with which all

in the food distribution chain will be able to comply, e.g., establish a universal

compliance date for the regulations of [insert date 18 months after date of

publication in the Federal Register].

(Response) FDA does not agree that all businesses should be subject to

a universal compliance date. FDA has considered the interconnectedness of

the food distribution system and contractual relationships that exist between

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very small, small, and large businesses. FDA has determined that large, small,

and very small businesses will have 12, 18, and 24 months, respectively, from

the date of publication of this final rule, with which to comply. These

timeframes represent an extra 6 months over the timeframes in the proposed

rule for all business sizes to come into compliance. FDA believes that many

large businesses and possibly many small businesses already establish and

maintain records that contain most or all of the information required by these

regulations, and thus should not require longer than 12 and 18 months,

respectively, to come into compliance. Very small firms would have 24 months

to comply.

FDA anticipates that the very small and small businesses will be able to

lower their compliance costs by learning from the experience of the large

businesses. The extended compliance times for small and very small

businesses are based on the total number of full-time equivalent employees

within the entire business, not just at each individual establishment.

(Comment 165) One comment notes that small businesses doing business

with large businesses would have to comply with the large business timeframe

and asks FDA to reconsider this exception, and allow small businesses to

comply on the 12 and 18 month schedule.

(Response) FDA has considered the interconnectedness of the food

distribution system and contractual relationships that exist between very small,

small, and large businesses. FDA has determined that small and very small

businesses will have 18 and 24 months, respectively (not the 12 and 18 months

that were proposed that the comment alludes to) to comply with the

regulations, regardless of whether they are engaged in doing business with

large firms.

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(Comment 166) Several comments express support for the different

implementation dates based on the size of a business. The comments state that

the extra time will ensure that small businesses have adequate time to

understand the new rules, reorganize their administrative recordkeeping, and

spread the costs of the new rules over a greater volume of their (limited)

production. In addition, within the first year of implementation, the comments

note that the larger companies and FDA will resolve many of the problems

that will arise with the new rules. The comments maintain that large

companies are better able to adjust to any problems than are small businesses.

(Response) FDA agrees with this comment, and for the reasons stated in

the preceding paragraphs, has modified the compliance dates and extended

each of the proposed compliance dates by an additional 6 months.

(Comment 167) Several comments request that FDA clarify the method

used to determine business size for deciding the timeframe for compliance.

The comments ask whether a company’s size is determined based on all

employees of the parent company, the entire corporation as a whole, or upon

each individual enterprise or location or manufacturing facility. The comments

also question how full- and part-time employees are counted.

(Response) The size of the business is determined using the total number

of full-time equivalent employees in the entire business, not each individual

location or establishment. A full-time employee counts as one full-time

equivalent employee. Two part-time employees, each working half time, count

as one full-time equivalent employee.

(Comment 198) Some comments state that the criterion used to determine

small and very small businesses is the number of employees, whereas in other

countries, especially the developing ones, other criteria are used to better

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reflect the nature of the businesses. The comments ask FDA whether the value

of investment and value of assets can be considered as other criteria in

determining if a business meets the definition of a small or very small business

in order to be allowed extended time to comply with the regulations. The

comments also ask FDA to consider factors such as production capacity and

production value for labor-dense firms such as in China, where the production

rate per person is lower than that in the United States.

(Response) FDA continues to believe it is appropriate to use the number

of full-time-equivalent employees as a criterion to differentiate between very

small, small, and large businesses. This is consistent with other regulations

the agency has issued where staggered compliance dates were utilized, e.g.,

the juice HACCP regulation (21 CFR 120.1(a)).

(Comment 169) Two comments ask FDA to phase in enforcement of these

provisions once the regulations are in effect, especially as to the critical

elements of the regulation. One of the comments requests that FDA allow a

grace period of 1 year before enforcing any of the rule’s requirements against

any organization that is taking good faith steps to achieve compliance.

(Response) Rather than phase in enforcement, FDA has extended the

compliance dates for all covered persons subject to this final rule. The earliest

that covered persons would have to be in compliance is 1 year for large firms,

and the latest is as much as 2 years for very small firms.

(Comment 170) Two comments ask whether the staggered timeframes

apply to foreign businesses of varying sizes.

(Response) Foreign persons, except for those who transport food in the

United States, are not subject to the recordkeeping regulations in this final rule.

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For foreign persons who transport food in the United States, the staggered

compliance dates based on size of business applies.

(Comment 171) Two comments ask how the proposed rule affects long

shelflife products prepared before the introduction of the new rule still in

storage when full compliance is required. Is the rule retroactive or does it apply

to food manufacturers from the date of full compliance?

(Response) Once applicable compliance dates occur, covered persons must

establish and maintain records. As explained previously, records must be

created at the times you receive and release the food. Persons do not need

to keep records of the immediate previous sources of food if that food is

received before the compliance date of the rule. Likewise, persons do not need

to keep records of the immediate subsequent recipients if that food is released

before the compliance date of subpart J of this final rule.

(Comment 172) One comment states that implementation may prove to be

a major barrier to foreign shipments due to the additional strains and demands

upon communication systems, port and airport facilities, and on the inspection

infrastructure. The comment also states that it may overlap with the beginning

of the fresh fruit export season.

(Response) Foreign persons, except those who transport food in the United

States, are not subject to this final rule; however, persons that import food

from foreign countries are subject to the rule. FDA believes that the compliance

timeframes specified in § 1.368 of this final rule give all persons subject to

this final rule, including importers, sufficient time to determine what steps

are needed to be able to comply with the final rule, and to be in compliance

on their respective compliance dates, while allowing FDA to meet its statutory

objective of ensuring that persons that manufacture, process, pack, hold,

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transport, distribute, receive, or import food in the United States establish and

maintain records that will significantly improve FDA’s ability to address

credible threats of serious adverse health consequences or death to humans

or animals.

(Comment 173) One comment states that the proposed delay in the

compliance date for small businesses does not adequately address small

business needs. One comment states that FDA should provide businesses with

additional assistance with compliance.

(Response) FDA has increased the compliance period for small businesses

from 12 months to 18 months, and for very small businesses from 18 months

to 24 months. With respect to additional assistance, in accordance with the

Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA), FDA

plans to publish a small entities compliance guide to assist small and very

small businesses with complying with the recordkeeping requirements. As

described previously, FDA also plans to conduct outreach activities to explain

the requirements of this final rule to affected entities.

(Comment 174) One comment states that the phase-in for small and very

small businesses is not a good idea because if the consequences are as grave

as FDA claims, everyone must be required to comply at the earliest possible

time, allowing for systems and procedural development and employee training.

The comment states that a phase-in of the regulations would pose a threat to

public health and safety, should not be part of this regulation, and would be

against the public interest.

(Response) The Bioterrorism Act specifically states that, in issuing these

regulations, the Secretary shall take the size of a business into account. FDA

considered reduced requirements for, or even exempting, small businesses.

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However, most food products and ingredients pass through at least one small

business during commerce. In addition, more than 80 percent of the covered

entities are considered very small businesses. If FDA were to exempt small

businesses from these regulations, permit shorter record retention periods, or

subject them to reduced records requirements, FDA’s tracing investigations

would be severely compromised. Given the foregoing, FDA believes it is

appropriate to give small and very small businesses additional time to come

into compliance with the regulations.

(Comment 175) A few comments point out that the burden for maintaining

records is proportionately similar for large transporter companies and small

independent transporters. Therefore, according to the comments, the relative

regulatory burden for small, independent transporters is no greater than for

large companies. The comments contend that all carriers, regardless of the size

of the company, should be required to comply with the same requirements

on the same timetable.

(Response) As stated previously, the Bioterrorism Act specifically states

that, in issuing these regulations, the Secretary shall take the size of a business

into account. FDA believes it is appropriate to give small and very small

businesses additional time to come into compliance with the regulations.

IV. Analysis of Economic Impacts—Final Regulatory Impact Analysis

FDA has examined the economic implications of this final rule as required

by Executive Order 12866. Executive Order 12866 directs agencies 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). Executive Order 12866

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classifies a rule as significant if it meets any one of a number of specified

conditions, including: Having an annual effect on the economy of $100 million,

adversely affecting a sector of the economy in a material way, adversely

affecting competition, or adversely affecting jobs. A regulation is also

considered a significant regulatory action if it raises novel legal or policy

issues. FDA has determined that this final rule is an economically significant

regulatory action as defined by Executive Order 12866.

This final regulatory impact analysis reflects changes made in the

regulation from the proposed rule to the final rule, as well as changes in

estimates in response to comments. It also includes responses to comments

on the preliminary regulatory impact analysis (PRIA) (see 68 FR 25188). Where

there were no changes in the estimates provided in the PRIA, the estimates

are summarized here. Interested persons are directed to the text of the PRIA

for a fuller explanation of the estimates over which there were no significant

comments or changes. As noted in the previous section of this preamble, FDA

received 212 submissions in response to the proposed rule, which raised over

200 issues. We continue with the discussion of the comments and FDA’s

responses to those comments using the same presentation as in section III of

this document, focusing here on the comments FDA received on the PRIA.

Accordingly, the word ‘‘Comment’’ again will appear in parenthesis before the

description of the comment, and the word ‘‘Response’’ will appear in

parenthesis before FDA’s response.

A. Summary of the Costs and Benefits of the Final Rule

We revised the estimated costs of the final rule in response to comments

on the proposed rule and to account for the changes between the proposed

and final rules. The final rule will cover more than 1 million entities at a cost

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of approximately $1.41 billion in present value with a 7-percent discount rate.

With a discount rate of 3 percent, the estimated present value of the costs is

approximately $1.94 billion. Costs for learning, records redesign, and planning

for records access requests are one-time costs incurred in the first 2 years

following publication of the final rule. Additional records maintenance costs

and records retention costs are incurred each year following publication of the

rule beginning in the second year for large and small firms, and in the third

year for very small firms. Learning costs and records access planning costs for

new entrants are also incurred each year following publication of the final rule

beginning after the second year. The total cost estimate can be computed by

summing the costs estimated for learning, records redesign, additional records

maintenance, records retention, and planning for a records access request. The

annual and total costs of the final rule are reported in table 1 of this document.

The recurring annual costs of the final rule (the sum of additional records

maintenance and learning for new firms) are about $123 million. The

annualized costs of this final rule are $108,000 using a 3-percent discount rate

and $110,000 using a 7-percent discount rate.

TABLE 1.—ESTIMATED ANNUAL AND TOTAL RECORDKEEPING COSTS1

21 CFR Section Costs (in dollars)

1.337, 1.345, and 1.352 (learning) $85,082,000

1.337, 1.345, and 1.352 (records redesign) $205,239,000

1.337, 1.345, and 1.352 (additional records maintenance) $114,701,000

1.337, 1.345, and 1.352 (learning for new firms) $8,508,200

Discounted present value of total costs2 $1,406,356,000

1 The annual costs are reported in undiscounted terms. Records access planning costs and records retention costs are estimated to be zero and are not reported

here.

2 The reported discounted present value of total costs assumes a 7-percent discount rate and a 20-year time horizon over which annual costs are summed.

The final rule will help reduce the numbers of people who become ill

during foodborne outbreaks by reducing the time required for preventive

action. Furthermore, the final rule will eliminate the recurrence of outbreaks

that may have been prevented had poor records quality not resulted in

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prematurely terminating the initial traceback investigation. The number of

illnesses prevented (excluded those associated with food security will be

approximately 1,204. The food safety benefits reported in the table are the

values of averted illnesses from increased food safety. Averted illnesses are

valued by low, middle, and high cost of illness estimates for both $5 million

and $6.5 million values of a statistical life. The estimated annual benefits from

enhanced food safety range from $7 million to $25 million. These estimates

should be interpreted as the minimum benefits from this final rule because

they do not include the benefits from enhanced food security.

TABLE 2.—VALUE OF AVERTED ILLNESSES FOR THE FINAL RULE

Low2 Medium3 High4

VSL1 = $5 million $7,388,685 $15,905,182 $24,421,229

VSL = $6.5 million $8,199,494 $16,715,991 $25,232,038

1 Value of a statistical life used to value the averted deaths.

2 A value of $100,000 was used to value a year in good health.

3 A value of $300,000 was used to value a year in good health.

4 A value of $500,000 was used to value a year in good health.

B. Description of Proposed Rule

The proposed rule required the establishment and maintenance of records

by certain domestic persons who manufacture, process, pack, transport,

distribute, receive, hold, or import food intended for human and animal

consumption in the United States and also by certain foreign facilities that

manufacture, process, pack, or hold food for human or animal consumption

in the United States. The proposed regulations would implement section 306

of the Bioterrorism Act. FDA expected that the requirements the agency

proposed would result in a significant improvement in FDA’s ability to

respond to and help contain threats of serious adverse health consequences

or death to humans or animals from accidental or deliberate contamination

of food.

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C. General Comments

(Comment 176) FDA received a number of comments that asserted that

the costs of the proposed rule were incorrectly estimated.

(Response) If the comment asserted costs or benefits were incorrectly

estimated without specifying which costs or benefits, there was not sufficient

information for FDA to respond. Comments that specified which costs or

benefits the comments believed were incorrectly estimated are addressed in

later sections of this analysis.

(Comment 177) There were several general comments that the costs that

result from the rule are too high and would result in the failure of enterprises

and small businesses.

(Response) In the PRIA, FDA estimated the impacts of the costs of

compliance on small businesses using FDA’s small business model using a

cash flow metric (Ref. 1). In this analysis, we use the small business model

to calculate the effects on small businesses using the difference between

revenue and variable cost as the metric. A finding that firms incur costs greater

than revenues as a result of this rule can be interpreted to mean that they may

be driven out of business. We incorporated both the annualized value of onetime

costs and the recurring costs for computing the effects of this final rule

on small firms.

We computed the effects for firms manufacturing dietary supplements,

candy, and ready-to-eat foods, including breakfast cereals, beverages, canned

foods, baked items and breads, and dressings and sauces. While these firms

do not represent every category of food establishment covered by this final

rule, they do reflect a large number of firms in the food industry, including

manufacturers, input suppliers, and distributors. FDA assumes that the cost

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and revenue structures of firms not explicitly included in the computation of

the model do not differ substantially from those that are included.

Consistent with FDA’s assumption that the rule will require only small

changes in current recordkeeping practices, the findings from the small

business model indicate that virtually no small businesses will incur negative

cash flows (defined as revenues less than variable costs) as a result of this

rule. The percentages of firms predicted to incur negative cash flows range

from 0.2 percent to a high of 1.9 percent for the ready-to-eat food

manufacturing industry. These findings strongly suggest that very few firms,

if any, will be driven from business as a result of this rule.

D. The Tradeoff Between Costs and Risk Reduction

(Comment 178) Many comments argue that the benefits from the rule do

not justify the costs to the food industry. Another comment states that it

remains doubtful that the benefits from the regulation justify the costs, while

another comment expressed the need for a proper model to compare the costs

of the recordkeeping provisions with a measure of the risks averted from the

provisions.

(Response) FDA agrees that the measure of the net benefits used to justify

the regulation remains uncertain. A large portion of the uncertainty arises from

FDA’s inability to quantify the benefits from the regulation. In the PRIA, we

used epidemiological evidence from four outbreaks to suggest qualitative

results.

In the final rule, we develop a more comprehensive and detailed model

to estimate the food safety benefits using information generated from FDA

outbreak investigations (Ref. 2). We use this information to estimate the

number of illnesses averted as improved recordkeeping practices lead to faster

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traceback investigations and higher rates of successful traceback completions.

These estimates understate the true expected benefits from the rule, because

they are derived solely from food safety data and do not take into account

the expected benefits of this rule to food security. The estimate of strictly food

security benefits is based on classified data and is not used in this analysis.

A qualitative description of the security benefits is provided below under

section IV.E.1 of this document, entitled ‘‘Bioterrorism Considerations’’.

Although benefit-cost analysis is primarily a quantitative exercise, the

existence of non-quantified benefits and costs, as well as uncertainty around

the quantified measures, means that assessing whether costs justify benefits

entails a qualitative element. Decision aids such as uncertainty analyses are

used to help decision makers in these instances.

(Comment 179) There were several comments stating that the costs of

compliance for specific sectors, including foreign facilities, food contact

suppliers, and transportation facilities, did not justify the benefits of reducing

the risks of contamination posed by those sectors.

(Response) In the final analysis that follows, we refine the analysis of the

benefits of selected policy options including those expected from foreign firms,

food contact substance suppliers, and transportation facilities.

(Comment 180) One comment states the need to measure benefits from

the regulation against the existing traceback and recall capability of the

industry. This comment questions whether the provisions in the recordkeeping

rule would improve response times for removing product from the market, and

potentially reduce the number of illnesses from a foodborne outbreak. The

comment suggests that FDA should consider what the savings would be in

anticipated response times and records recovery times, as well as how this

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would translate into a reduction in illnesses and enhanced product recovery.

Finally, the comment states that the burdensome exercise to produce records

could actually slow and hinder the objectives of recalling a suspected product.

(Response) FDA agrees with the comment that a model is needed to

determine the savings in investigation traceback times, and the numbers of

illnesses that would be avoided from this regulation. FDA has developed a

model of the benefits, which is described later in this section. However, FDA

does not agree that the benefits should be compared to the current system for

recalling products since few investigations result in recalls. Instead, FDA

believes that benefits from this final rule will primarily be from faster

investigations leading up to preventive actions, including recalls. A recall or

other preventive action is made only after a product has been implicated. The

benefits from the recordkeeping rule are to improve the accuracy and speed

with which a product is implicated. If recalls or other preventive actions are

made too quickly and cover too wide a range of products, there is the very

real danger of a recurrence of the outbreak if the source is not investigated.

For that reason, the benefits from the regulation include not only faster

traceback investigation times, but also higher rates of completed traceback

investigations, and the commensurate reduction in outbreak recurrences.

(Comment 181) One comment states that the analysis failed to meet Office

of Management and Budget (OMB) guidelines for regulatory impact analysis

by failing to do the following: (1) Adequately consider the need and

consequences of the regulation and (2) show that the benefits outweigh the

costs of the regulation. In addition, the comment states that the purpose of

the regulation is to expand the agency’s jurisdiction, rather than to maximize

the net benefits to society, and that alternatives with the highest net benefits

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(including the alternative not to regulate) were not chosen. Finally, the

comment states that the analysis failed to consider the condition of the affected

food industries, potential future regulatory actions, and the weak state of the

national economy as required.

(Response) In the PRIA, we stated that the need for these regulations is

to enable FDA to respond to, and help contain, food for which the agency has

a reasonable belief that it is adulterated and presents a threat of serious adverse

health consequences or death to humans or animals. In the final rule we bolster

the explanation of the need for the regulation by analyzing vulnerabilities due

to shortfalls in current recordkeeping practices. These shortfalls are shown to

inhibit current outbreak investigation efforts and, by extension, efforts to

mitigate serious adverse health consequences or death to humans or animals.

The perceived vulnerability of the U.S. food supply to an attack, as articulated

by Congressional passage of the Bioterrorism Act, elevates the importance of

addressing these shortfalls.

The analysis of the benefits of the final rule uses characteristics of

conventional outbreaks and investigations to more clearly identify and quantify

shortfalls in existing recordkeeping practices and how each is addressed by

the recordkeeping regulation. We measure the effects in terms of the number

of illnesses averted due to reductions in the duration of outbreak investigations

and reductions in the number of investigations that are prematurely terminated

because of poor records quality. When an investigation is prematurely

terminated, there is both a loss of data that might prevent recurrences of the

outbreak and a decrease in the effectiveness of any preventive action. The need

for this regulation is underscored when the potentially large sizes of outbreaks

from intentional attacks on the food supply are considered. Although the

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probability of such an intentional attack is unknown, the size of the benefits

from this regulation are larger, the larger the size of such an outbreak.

We estimate benefits using data from FDA outbreak investigations. We

then compared estimated benefits for a number of regulatory options. In this

way, the benefits of each regulatory option can be compared to its costs. While

the costs and benefits of the policy alternative ‘‘not to regulate’’ are not

considered in the final rule, they were analyzed in the proposed rule. We did

not estimate the effects of potential future regulatory actions because we do

not anticipate any such actions that would affect the estimated costs or benefits

of this final rule.

In response to the comment that we have not shown that benefits exceed

costs, the Executive Order requires that costs must be justified by benefits. We

believe we have done so in this analysis. Finally, in the PRIA, FDA addressed

the state of the national economy by examining the impact of the final rule

on the most vulnerable firms in the industry, through simulations using our

small business model (Ref 1.), and also in the Unfunded Mandates section by

examining the impact of the rule on all consumers as well as producers in

the food economy in general.

In this analysis we use the small business model to calculate the effects

of the costs of this final rule on the survival of small businesses. We

incorporated both the annualized one-time costs and the recurring costs for

computing the effects on cash flows. We computed the effects for firms

manufacturing dietary supplements, candy, and ready-to-eat foods, including

breakfast cereals, beverages, canned foods, baked items and breads, and

dressings and sauces. While these firms do not represent every category of food

establishment covered by this final rule, they do reflect a large number of firms

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in the food industry, including manufacturers, input suppliers, and

distributors. FDA assumes that the cost and revenue structures of firms not

explicitly included in the computation of the model do not differ substantially

from those that are included.

Consistent with FDA’s assumption that the rule will require only small

changes to current recordkeeping practices, the findings from the small

business model indicate that virtually no small businesses will shut down as

a result of this rule. In the Unfunded Mandates section of the PRIA, we also

consider the impacts of the proposal on food prices and conclude that any

effect would be negligible.

E. Estimating the Benefits

The benefits from the recordkeeping rule will be from illnesses averted

due to faster traceback components of outbreak investigations, and an

increased ability to complete investigations that previously would have been

prematurely terminated due to poor records quality. Because of this new

recordkeeping rule, a greater number of traceback investigations will be

completed, and traceback investigations will take less time because of shorter

records access times and better records quality.

The benefits estimated in this analysis are realized only in the event of

a foodborne outbreak (intentional or unintentional) because the probability of

a terrorist attack is unknown. However, the estimated costs are incurred at all

times regardless of whether there is an outbreak investigation underway, as

well as by all facilities, regardless of whether they are implicated in the

outbreak.

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1. Bioterrorism Considerations

Interviews with FDA traceback personnel indicate that traceback and

source investigations involving fresh produce find that the contamination often

occurs at the farm level (Ref. 2). The interviews suggest that bioterrorism

scenarios envision possible intentional contaminations on the farm, in

distribution, at processing, and at retail. Moreover, fresh products may be more

likely targeted for intentional contamination when they are at intermediate

levels of processing than when they are at the farm level.

The benefits from the recordkeeping rule are from enhanced food safety

and enhanced food security. We can estimate the food safety benefits, but we

cannot estimate the food security benefits, as the probability of the occurrence

of a deliberate outbreak is unknown. The tangible benefits from the

recordkeeping rule occur after an outbreak of food-related illness. With the

records required by this rule, the agency can investigate outbreaks more

quickly and will not be forced to terminate an investigation because of poor

or nonexistent records. The speeding up of investigations generates benefits

in some cases because the information from the records will enable the agency

to take actions to reduce the size of the outbreak. Both the increased

completion rate and faster investigations may reveal more sources of outbreaks

and help to prevent recurrences.

The food security benefits of recordkeeping come from mitigating a

terrorist attack on the food supply, and preventing unnecessary expense in the

event of a hoax or a small terrorist event. While we are unable to estimate

the benefits from such scenarios, we can point to investigative speed as a

principal mechanism for mitigating their costs. The first benefit—mitigating

the effects of an attack—is similar to the food safety benefit. Investigations will

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be quicker because of better records. Investigation speed may be crucial in the

early period after a terrorist attack to more quickly determine the likely scope

and scale of the contamination. With quicker investigations, the government

can act sooner to reduce the public health and other effects of a terrorist attack

on the food supply. These benefits should be qualitatively the same as in the

case of an accidental outbreak of food-related illness, but we expect them to

be potentially larger for a terrorist attack on the food supply.

The second counterterrorism benefit from recordkeeping is also difficult

to quantify but may be important: the ability to identify quickly a potential

food security hoax. The hoax could be completely false, or it could be a small

event masquerading as a large event. For example, a terrorist could

contaminate a single container of some food and send out an Internet message

stating that the entire national stock of that food was contaminated. If the goal

is to spread terror rather than to cause mass illness, then a small attack or

even an Internet announcement with no contaminated products could

persuade consumers that the risk is real.

With a sufficiently plausible background story implicating a widelyconsumed

food, the hoax might lead to extensive protective efforts by

businesses and consumers. Consumers might take costly preventive actions,

such as throwing away food, stopping their consumption of the suspect food

item, or visiting physicians or emergency rooms to determine if they have been

exposed to some hazard. Producers and distributors might destroy inventories

of the suspect food as a preventive measure. If there is widespread uncertainty

about the extent of contamination, this protective behavior could easily

generate high costs. If the terrorist attack on a food is a small-scale event

masquerading as a national event, a full system of records will allow the

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agency to trace the suspect foods through the food chain to determine the

extent of contamination. The government could quickly narrow down the range

of suspect foods and, if the risk is absent, reassure the public that the suspect

foods are indeed free of contamination by terrorists. The ability to move

quickly and authoritatively will possibly generate real benefits by preventing

costly defensive actions by businesses and consumers.

2. Benefits: Model Framework

The primary food safety benefits from this rule are from the number of

illnesses averted due to improved recordkeeping practices. Improved

recordkeeping practices result in faster traceback investigations and higher

traceback completion rates, which will reduce the expected number of illnesses

from intentional and unintentional outbreaks.

The following diagram visually depicts the benefits from faster traceback

times from the recordkeeping rule. The number of onsets of new illnesses and

outbreak investigation duration curves overlap to estimate the number of days

that an investigation is likely to reduce the duration of an outbreak. With faster

traceback times, the distribution of the durations of outbreak investigations

shifts to the left from ‘‘existing’’ to ‘‘improved,’’ reducing even further the

number of days of an outbreak. This diagram assumes the outbreak is still going

on at the time the traceback investigation begins. The reduced number of days

of an outbreak can then be translated into a reduced number of illnesses from

an outbreak.

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[INSERT FIGURE HERE]

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There are two ways that the recordkeeping rule speeds up traceback

investigations: (1) Higher records quality means that traceback investigators

spend less time trying to find and analyze information that might have been

missing or incomplete had there been no rule and (2) the rule makes failure

to provide records within the required time period a violation, thus increasing

cooperation with investigators who need rapid access to records. Greater

traceback speeds result in more recalls (if the product is still in the

marketplace), administrative detentions (under section 303 of the Bioterrorism

Act), import actions, closures, and other preventive actions that reduce the

number of illnesses during an outbreak. The following is a description of the

model used to measure the benefits from the recordkeeping rule.

i. Given the speed of the initial recognition and epidemiological

investigation of an outbreak, the benefits from the recordkeeping rule depend

on the following factors: (1) the average duration of a traceback investigation,

(2) the average number of traceback investigations prematurely terminated for

reasons of poor records quality, and (3) the distributions of outbreak durations

and sizes.

ii. The average duration of a traceback investigation depends on the

number of point-of-service and distributor investigative visits per traceback

investigation, and the average duration of an investigative visit. The quantity

of records that needs to be reviewed is an important determinant of the

duration of a traceback investigation. However, we assume that the change in

the quantity of records requested is much smaller than the change in the

quality of the records requested as a result of this final rule. We therefore omit

the quantity of records reviewed during a traceback investigation as a modeling

consideration when measuring the impact of the final rule.

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iii. Because traceability information, such as lot codes, may be readily

identified on the label of packaged products but is largely absent for fresh

produce, the average number of investigative visits per outbreak may depend

on the food category (e.g., fresh and packaged) of the contamination source.

iv. The average duration of an investigative visit depends on the following

factors: Average records access times, which depend in part on how records

are stored and maintained; average travel times and overnight stays required

to complete an investigative visit; and average records analysis times. The time

required to analyze records depends on the quality of the records.

v. The rate that traceback investigations are prematurely terminated due

to poor records quality will decline as the average quality of records improves.

This improvement will reduce the number of outbreaks that result from

recurring contaminations that may otherwise have been prevented.

vi. The size, contaminating agent, and duration of an outbreak determines

the number of illnesses averted from faster preventive action and higher

success rates of traceback completion. The value of the averted illnesses is

the averted medical expenses, and the averted loss in welfare, including pain,

suffering, and productivity that would otherwise result from the illness.

Thus, the model may be summarized as the following:

i. Benefits are determined by: (1) The sizes of outbreaks, and the nature

of contaminating agents, which determine the baseline number and severity

of illnesses potentially averted; (2) the reduced time needed to complete a

traceback investigation, which reduces the number of illnesses by allowing

faster preventive action; and (3) the increased rates of successful traceback

completion, which reduce the number of illnesses that result from outbreak

recurrences.

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ii. Time to complete a traceback investigation is determined by the time

needed to complete an investigative visit, and the number of investigative

visits.

iii. Time to complete an investigative visit is determined by the record

access times, and the record analysis times.

iv. Record analysis times are determined by records quality (we ignore the

quantity of records requested on the assumption that the changes in the

quantity resulting from this final rule will be negligible compared with changes

in the quality).

v. The rate of successfully completed traceback investigations is

determined by the quality of the records.

vi. The value of the averted illnesses is computed by adding together the

estimated value of averted healthy life days lost, and the averted medical

expenses due to the illness.

3. Data on Outbreak Sizes, Durations, and Contaminating Agents

Data used to estimate the numbers of illnesses, contaminating agents, and

outbreak durations are taken from FDA information documenting

investigations monitored by the agency from 2000-2003 (Ref. 2). The

investigation information is drawn from multiple, non-standardized sources

that irregularly document different aspects of investigations. The number of

investigations reported in the table is not exhaustive; more investigations may

be documented elsewhere. Moreover, it is possible that the information does

not perfectly reflect the universe of FDA outbreak investigations because the

methods for its collection and distribution are non-standardized. Nevertheless,

we believe the information is sufficiently accurate, and that the list of

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outbreaks is sufficiently exhaustive for purposes of estimating the benefits from

the recordkeeping final rule.

The outbreak duration is calculated as the time between the first and last

illness, and the sizes of the outbreaks are calculated as the numbers of known

illnesses attributed to an outbreak. The charts that follow depict the sizes and

durations of the outbreaks from 2000 to 2003 as estimated from FDA outbreak

investigation data.

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[INSERT FIGURE HERE]

221

[INSERT FIGURE HERE]

222

The next diagram combines information from the two preceding diagrams

and depicts the cumulative distribution by outbreak duration of the percent

of all onsets of illnesses. The horizontal axis in the following diagram gives

the number of days that outbreaks lasted, and the vertical axis gives the

fraction of all illnesses that occurred during outbreaks of a given duration. The

diagram shows that approximately 80 percent of illnesses were from outbreaks

that lasted for 33 or fewer days, and 20 percent of all illnesses were from

outbreaks that lasted more than 33 days.

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[INSERT FIGURE HERE]

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Estimates of the durations and magnitudes of outbreaks based on FDA

outbreak investigation information may overestimate the true average outbreak

magnitudes and durations. The outbreaks monitored by FDA may be the most

difficult to investigate because they involve interstate commerce (so illnesses

are geographically dispersed), and may sicken a greater number of people.

Consequently, the duration and magnitudes of the outbreaks may be longer

and more severe than the average duration and magnitude of all investigations,

which includes investigations at the local level in addition to the national

level. However, as indicated earlier, the estimates presented here are based

on food safety considerations and may understate the benefits of this final rule

when the possibility of bioterrorism (food security) is considered.

4. The Total Number of Illnesses

The following table 3 of this document reports agents, illnesses, and deaths

taken from the FDA outbreak investigation information. The 129 outbreaks

from approximately 21 agents resulted in reports of 8,325 illnesses, 444

hospitalizations, and 21 deaths. The data reported in the table are drawn from

multiple, non-standardized, sources that irregularly document different aspects

of investigations.

TABLE 3.—THE DISTRIBUTION OF ILLNESSES BY AGENT FROM OUTBREAKS MONITORED BY FDA FROM 2000 TO 2003

Agent Number of Outbreaks Attributed

to the Agent

Number of Known Illnesses

Attributed to Outbreak

Agents

Number of Illnesses That

Were Known to Be Hospitalized

Bacteria

Campylobacter 1 20 0

E. coli 0157:H7 13 287 45

Listeria 2 51 10

Salmonella 59 4,411 253

Shigella 3 672 30

Vibrio P. 4 124 0

Chemical

Ammonia 1 141 42

Methomyl 1 26 0

Sodium nitrite 1 5 0

Parasitic

Cryptosporidium 1 19 0

Cyclospora 4 78 3

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TABLE 3.—THE DISTRIBUTION OF ILLNESSES BY AGENT FROM OUTBREAKS MONITORED BY FDA FROM 2000 TO 2003—Continued

Agent Number of Outbreaks Attributed

to the Agent

Number of Known Illnesses

Attributed to Outbreak

Agents

Number of Illnesses That

Were Known to Be Hospitalized

Toxin

Ciguatera or Ciguatoxin 3 26 3

Histamine 3 26 7

Saxotoxin 1 17 0

Scromboid 2 14 4

Star Anise 1 20 0

Toxin 1 78 0

Viral

Hepatitis A 4 945 18

Norovirus 18 1,246 11

Viral or Vitri 1 35 4

Unknown 5 84 14

Total 129 8,325 444

The number of illnesses reported in table 5 of this document represents

only the known cases, cases that have been recorded elsewhere in the public

health system. For each reported illness, there are many illnesses that are

unreported, so the actual number of illnesses from outbreaks is much larger

than the reported number. For example, CDC states that the ratio of total

(unreported plus reported) illnesses to reported sporadic illnesses from

Salmonella is 38 (Ref. 3).

To estimate the number of unreported illnesses from outbreaks that FDA

monitors, we assume the same pathogen-specific hospitalization rates as those

used in the CDC estimates for the burden of foodborne illness (Ref. 3). For

example, CDC assumes a 0.295 hospitalization rate for all illnesses caused by

the pathogen E. coli 0157:H7. Moreover, CDC assumes that about one-half of

hospitalizations related to foodborne illnesses are reported or diagnosed (Ref.

3). Consequently, we estimate that there were 90 hospitalizations due the E.

coli pathogen from outbreaks monitored by FDA 2000 to 2003 (i.e., twice the

number of hospitalizations from E. coli 0157:H7 reported in table 3 of this

document). Based on the CDC hospitalization rate for E. coli, we estimate that

the total number of illnesses (reported and unreported) from outbreaks caused

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by E. coli contamination is approximately 305 (i.e., 90 divided by 0.295, the

hospitalization rate for illnesses caused by E. coli 0157:H7).

In order to characterize uncertainty in the estimates, we assumed that the

total number of unreported illnesses from outbreaks for almost all pathogens

would be distributed as a negative binomial with the parameters defined by

the case hospitalization rates, and twice the reported number of

hospitalizations. The estimated total number of illness for each agent is

extrapolated from the estimated number of hospitalizations, with two

exceptions: Estimates obtained of the total number of illnesses from Listeria

monocytogenes and Vibrio parahaemolyticus were less than the reported total

from those pathogens, so we used the reported total instead of the estimated

total.

Case hospitalization rates for chemical poisoning and for other toxins are

not reported in the CDC report, and (because such cases are unusual and

characterized by severe acute distress) we assumed that half of such cases

would be hospitalized. Finally, we assumed that the total number of illnesses

from unknown agents is the same fraction of the estimated total summed over

all pathogens, as the reported total summed over all pathogens. The estimated

ratio of the total number of illnesses to reported illnesses was computed by

dividing the estimated total by the reported total summed of all pathogens.

The average estimate of the ratio of total illnesses to reported illnesses

from all pathogens, as well as the high and low estimates representing the 95

percent and 5 percent levels are reported in the following table. We estimate

a total of 71,928 reported and unreported illnesses from outbreaks monitored

by FDA from 2000 to 2003. This total reflects 8,325 illnesses that were

reported, and approximately 63,603 that were estimated to be unreported.

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TABLE 4.—ESTIMATED RATIO OF THE TOTAL NUMBER OF ILLNESSES TO REPORTED NUMBER OF ILLNESSES

Mean Low (greater than 5% of the

range)

High (greater than 95% of the

range)

8.64 7.89 9.51

5. The Costs of Each Illness

We estimate the direct medical costs as well as the indirect costs of

illnesses from outbreaks monitored by FDA. The direct medical costs include

the costs of any doctor visits and hospitalizations that are required. Indirect

costs are from the loss in productivity and quality of life as a result of the

symptoms and severity of the illness. We estimate the indirect and direct costs

of each illness for mild, moderate, and severe cases.

Mild cases are assumed to remain untreated with no direct medical costs.

We assume that persons with moderate cases visit a physician and that those

with severe cases require hospitalization. The average costs of $64 for a

physician visit was obtained from the online source, Medical Economics (Ref.

4), and hospitalization costs were obtained from the Health Cost and Utility

Project’s (HCUP) Nationwide Inpatient Sample (Ref. 5) by type of illness.

The numbers of days that symptoms persist for each illness and severity

were estimated from the FDA-Center for Food Safety and Applied Nutrition

(CFSAN) Bad Bug Book (Ref. 6), CDC’s National Center for Infectious Diseases,

Infectious Disease Information fact sheets (Ref. 7), and from a CFSAN report

entitled ‘‘Estimating the Value of Consumers’ Loss from Foods Violating the

FD&C Act’’ (Ref. 8). These estimates were assumed to be uniformly distributed

with the means reported in table 5 of this document.

TABLE 5.—DURATION OF THE ILLNESS FOR MILD, MODERATE, AND SEVERE CASES

Mild Moderate Severe

Bacteria

Campylobacter 4 8 8

E. coli 0157 3 8 18

Listeria 4 30 37

Salmonella 4 12 16

Shigella 3 11 18

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TABLE 5.—DURATION OF THE ILLNESS FOR MILD, MODERATE, AND SEVERE CASES—Continued

Mild Moderate Severe

Vibrio P. 2 2 3

Chemical

Ammonia 3 5 7

Methomyl 3 5 7

Sodium nitrite 3 5 7

Parasitic

Cryptosporidium 17 22 60

Cyclospora 17 22 60

Toxin

Ciguatera or Ciguatoxin 2 5 19

Histamine 2 5 19

Saxotoxin 2 5 19

Scromboid 2 5 19

Star Anise 2 5 19

Toxin 2 5 19

Viral

Hepatitis A 22 22 28

Norovirus 2 2 6

Viral or Vitrio 2 2 6

The distributions over mild, moderate, and severe cases for most of the

illnesses were estimated from the CDC (Ref. 3), and a CFSAN report entitled

‘‘Modeling the Effects of Food Handling Practices on the Incidence of

Foodborne Illness’’ (Ref. 9). The case distributions over mild, moderate, and

severe cases were estimated for chemical and marine toxin poisoning from a

study by Brevard et al. (Ref. 10), and a study reported by CDC (Ref. 11).

The indirect costs of an illness are the loss in welfare measured as a loss

in life quality or, in the extreme case, death from the illness. This loss in

quality of life also includes lost worker productivity while ill. Estimates of

the indirect costs will vary depending on the symptoms of the illness and their

severity. We use a quality of well-being scale for a typical gastrointestinal

illness to adjust the well-being of a person with mild, moderate, or severe

symptoms (Ref. 12). The well-being scale assumes a value of 1 for a person

in good health, and is reduced according to the symptoms and impaired

mobility, reduced physical activity, and reduced social activity that result from

the illness.

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We compute an index of lost quality adjusted life days (QALD) by

subtracting the individual’s health status when ill from one and then

multiplying that fraction by the number of days the illness lasts. The result

represents the number of health days lost from an illness; we estimate the loss

for varying severities for each illness. The QALD losses for an average

foodborne illness are reported in the following table 6 of this document.

TABLE 6.—LOST QALDS DUE TO AN AVERAGE CASE OF FOODBORNE ILLNESS

Severity of Illness Symptom Mobility Physical Social Quality Adjustment

QALDs Lost

Mild -0.29 -0.062 -0.077 -0.061 0.51 0.49

Moderate -0.29 -0.062 -0.077 -0.061 0.51 0.49

Severe -0.29 -0.090 -0.077 -0.061 0.48 0.52

To reflect uncertainty in the literature, FDA uses a range to estimate the

values of the health days lost. We use a low estimate of $100,000 for the value

of a life year. This is consistent with that proposed by Garber and Phelps, who

suggest a value of approximately twice the annual income (Ref. 13). U.S.

Census data reports that the median family income in 2001 was approximately

$51,000 (Ref. 14).

Middle and high estimates of the value of a health day are derived from

estimates reported in the literature of the value of a statistical life. A value

of a statistical life of $6.5 million is consistent with the findings of a literature

survey of the premium for risk observed in labor markets, reported by Aldy

and Viscusi (Ref. 15). We derive middle and high estimates of the value of

a health day by annualizing the value of a statistical life of $6.5 million over

35 years at discount rates of 3 percent and 7 percent. These computations yield

middle and high estimates for the value of an additional year of life of about

$300,000 and $500,000. We estimated the range in values of a health day by

dividing each of the estimates of the value of an additional year of health by

365, which yields estimates of $274, $822, and $1,370.

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To calculate the indirect costs of mild, moderate, and severe cases of the

illnesses, we multiplied the low, middle, and high estimates of the value of

a health day by the QALD estimated for each illness and severity. Consistent

with OMB’s guidance on the use of multiple values for a statistical life, we

used values of $5.0 million and $6.5 million to compute the value of a death

from an illness.

The estimated range of the average cost of an illness resulting from

outbreaks monitored by FDA from 2000 to 2003 is reported in the following

table. The averages reported in table 7 of this document are weighted by the

total number of reported and unreported illnesses from each agent, as well as

the assumed distributions of mild, moderate, and severe cases, including

deaths, from those illnesses. As explained earlier, we valued statistical deaths

at $5 million and $6.5 million, and the low, medium, and high estimates

assume values of a healthy year of $100,000, $300,000, and $500,000.

TABLE 7.—AVERAGE COST OF AN ILLNESS ACROSS OUTBREAKS

Low Medium High

VSL = $5 million $6,136 $13,209 $20,282

VSL = $6.5 million $6,810 $13,883 $20,955

6. The Stages of an Outbreak Investigation

There are four stages in an outbreak investigation. The first stage is the

preliminary investigation of laboratory results and epidemiological evidence

used to determine the parameters of the outbreak, including the following:

number ill, food vehicle contaminated, microbial or other agent responsible,

potential commercial sources of contamination, as well as the degree of

confidence in the information on each of these parameters. The second stage

of the outbreak investigation is the decision making part, when FDA

determines what resources will be committed to proceed further in the

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investigation. The third stage is the traceback investigation, which is

conducted to do the following: (1) Identify the source and distribution of the

implicated food and remove the contaminated food from the marketplace; (2)

distinguish between two or more implicated food products; and (3) determine

potential routes and sources of contamination in order to prevent future

illnesses, or to treat persons sooner for the identified contaminants. The

traceback investigation involves investigative visits by FDA inspectors to

points of service, which are the facilities where consumers had purchased the

contaminated food, and also distribution facilities.

A fourth stage is the source investigation of the specific practices at the

farm, transportation, or other facility that may have led to the outbreak. For

many outbreaks, the source investigation occurs well after any preventive

action can be taken to limit the number of illnesses. This would be true for

outbreaks from contaminated foods with short shelf lives that no longer are

in circulation at the time of the source investigation, or from contaminations

occurring at banquets, parties, or other one-time events where the source

investigation cannot limit the size of the outbreak. For these outbreaks, the

improved recordkeeping practices specified in the final rule would not

improve FDA’s current ability to limit the size of the outbreak, or prevent

additional illnesses.

However, for certain products such as eggs, sprouts, and other fresh

products, additional illnesses due to conditions at the source may continue

if shipments from contaminated facilities continue. The same may also be true

for perishable foods imported on a frequent basis from contaminated facilities.

For these kinds of outbreaks, the ability to more rapidly implicate a

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contaminated farm or manufacturing source will improve FDA’s ability to limit

the size of the outbreak, or prevent its recurrence.

7. The Duration of Traceback Investigations, and Numbers of Premature

Terminations

FDA outbreak investigation personnel estimate that a full outbreak

investigation lasts at least 3 to 5 weeks, with a most likely duration of 2 to

6 months, and a maximum duration of 10 months (Ref. 2). The numbers of

outbreak investigations and investigative visits come from internal interviews

with investigation personnel and from other data maintained by FDA (Ref. 2).

The annual numbers of outbreaks investigated, investigative visits, and

investigations that are prematurely terminated for reasons of poor records

quality are reported in table 8 of this document. A traceback is defined to be

prematurely terminated for records quality reasons if investigators noted in

summarizing information that data quality impeded the investigation which

ended before investigators were able to determine the specific cause of the

outbreak. We used the simple averages over the 4 years reported in the table

to estimate the annual numbers of outbreaks investigated, the annual numbers

of investigative visits per outbreak investigated, and the annual rates of

investigations prematurely terminated for reasons of poor records quality. We

characterized the uncertainty of these estimates as normal distributions with

means and standard deviations taken from the data on annual numbers of

outbreaks and investigative visits per outbreak. For the annual rate of

prematurely terminated investigations, we characterized the uncertainty with

a beta pert distribution using the average, low and high values reported in the

table 8 of this document.

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TABLE 8.—OUTBREAK INVESTIGATION DATA

Year Number of Outbreaks Investigated

Number of Investigative

Visits per outbreak

Rate of records quality related

premature terminations

2000 9 12 0.11

2001 9 11 0.33

2002 18 7 0.06

2003 17 6 0.00

The recordkeeping requirements of this final rule will improve the quality

of records established and maintained by persons that manufacture, process,

pack, transport, distribute, receive, hold, or import food. For options that

provide comprehensive coverage of all food facilities, we estimate that the

number of investigations prematurely terminated because of poor records

would fall to zero. For options that provide less than comprehensive coverage,

the reduction in premature terminations is reduced in proportion to the

coverage.

Because outbreaks whose investigations are prematurely terminated may

recur, the benefits from reducing that number may be high (if many people

continue to become ill as a result of the recurrence). Based on FDA outbreak

investigation information, the average number of reported illnesses in

outbreaks that occurred between the years 2000 and 2003 was approximately

65. However, many illnesses from outbreaks go unreported, so the average total

number of illnesses from an outbreak is much larger than the reported number.

Using the estimated average ratio of total illnesses to reported illnesses

reported earlier, we estimate that by avoiding just one outbreak recurrence,

approximately 559 persons would avoid becoming ill.

Traceback durations may be different for processed food sold in packages

with labels with identifying barcodes than for fresh food items sold in packages

with no labels. Eggs and fresh produce account for 90 percent of all outbreaks

investigated by FDA, while labeled packaged foods account for only 10 percent

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(Ref. 2). To determine the likely length of time it takes to investigate a packaged

food product, we use a range that includes the low end, where investigators

are able to obtain the exact package that contains the identifying barcodes, and

the high end that assumes the package, with the identifying barcodes, is not

available. In the latter case, any subsequent recalls would likely include more

foods than the implicated lot.

The final rule relaxes the proposed requirement for lot codes to be

established and maintained on all records. If FDA were to require all persons,

including distributors, transporters, and retailers, to include lot numbers in

the records they establish and maintain under this final rule, the traceback

durations for many products would be reduced and would be comparable to

those currently reported for tracebacks of packaged products that contain

barcode information. If all retailers and distributors were required to establish

and maintain lot codes for all processed products, then the duration of the

traceback component of an outbreak investigation for many products could be

reduced to 1 to 14 days. Examples of reported traceback times for fresh

products and for packaged products that contain lot code information in bar

code format are reported in table 9 of this document.

TABLE 9.—DURATION OF THE TRACEBACK COMPONENT OF AN OUTBREAK INVESTIGATION1

Most Likely Low High

Eggs and fresh produce 6 to 8 weeks 2 to 5 weeks 12 weeks

Packaged products 3 days 1 day 14 days

1 Estimates reported in Ref. 2 of this document.

8. The Duration of Investigative Visits

The main delays in traceback investigations are long travel times and

overnight stays, slow and poor cooperation from recordkeepers, and

inconsistent and incomplete records. Many recordkeepers may not be inclined

to devote sufficient labor to providing records to inspectors during business

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hours because that is a costly time of day to reallocate resources. Furthermore,

sometimes companies follow time-consuming procedures before approving

FDA’s request for records access. The legally binding provision in this rule

will expedite cooperation from recordkeepers and reduce access times. When

we take into account the requirement in the rule that access be provided on

weekends, we estimate a substantial amount of time saved due to the records

access provision—especially when there are multiple point of service or

distributor visits.

The inconsistency and incompleteness with which some records are

maintained are also important causes for delay in an investigative visit.

Records from approximately 50 percent of access requests require additional

information from the recordkeeper. Examples of information that may be

incomplete include supplier contact information, a description of a product

received or shipped, or date of receipt or shipment. This information is used

by analysts located at headquarters, along with inventory rotation and control

information, to determine precisely what was shipped, by whom, and when

it was received. Often, many similar products from different suppliers are

received during the course of the day by any given receiver.

Frequently, records document transactions from regular suppliers or

customers where the identity of the shipper and description of the product

can be determined readily based on the regularity and composition of the

shipments. Sometimes, an entity will receive an unusual shipment (especially

during holiday seasons), or it may receive multiple shipments of similar

products from different suppliers, making it difficult to precisely link an

incoming product with an outgoing shipment. Other times, descriptions of

products received differ from how they are referenced on the shipping

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documents, making it difficult for the analyst to link the incoming product

with an outgoing shipment.

Each category of incidents may result in confusion on the part of the

analyst located at central headquarters and require an additional visit by the

field inspector to the recordkeeper for further clarification. Because travel

times account for a significant amount of time in a traceback investigation,

and an estimated 20 percent of all point of service or distributor visits require

an overnight stay, we estimated that the final rule would result in substantially

reduced traceback durations.

Including travel time, 1 full day is usually required to obtain records after

a request. A second full day is required when the records are not available

on the first day. Furthermore, although records analysis times are typically

only 7 to 10 hours, approximately 50 percent of all investigative visits require

a return trip to clarify inconsistencies in the records, or to obtain additional

information to compensate for incomplete records. In addition to slow

compliance with records access requests, the unavailability of personnel and

flight schedules may necessitate an overnight stay and an extra day of travel

by an FDA investigator. Approximately 20 percent of all investigative visits

require an overnight stay.

The duration of each component of an investigative visit, both inclusive

and exclusive of travel times, is reported in the following table. We assume

a uniform distribution of between 1 and 3 days including travel times for

obtaining requested records. We assume that the times for records analysis are

uniformly distributed between 0.8 and 1.6 days, including travel times. The

lower bound reflects the time for records analysis when documents are able

to be quickly transferred to headquarters. The upper bound reflects 1 full day

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of travel with 50 percent requiring an additional follow-up and 20 percent

requiring an overnight stay.

TABLE 10.—DURATION OF THE COMPONENTS OF AN INVESTIGATIVE VISIT

Including Travel Time and Overnight Stays

Obtaining requested records 4 to 48 hours Uniformly distributed between 1 and 3 days

Records analysis 7 to 10 hours Uniformly distributed between 0.8 to 1.6 days

We estimate the time for a traceback investigation by multiplying the

duration of an average investigative visit by the number of investigative visits

per traceback investigation. We estimate the duration of an investigative visit

by adding the time to comply with a records access request to the time required

to analyze those records. If obtaining requested records takes 1 to 3 days (i.e.,

1 to 2 days to comply with the access request and 1 day of travel) and records

analysis, inclusive of travel, takes between 0.8 and 1.6 days (i.e., 50 percent

require return trips and 20 percent of trips require an overnight stay), the

duration of an investigative visit is assumed to be uniformly distributed

between 1.8 and 4.6 days (i.e., 1 to 3 days plus 0.8 to 1.6 days), with a simple

average of 3.2 days.

From annual data we assume that the number of investigative visits per

outbreak for the years 2000 to 2003 is normally distributed with a mean of

approximately 9 visits and standard deviation of approximately 3 visits per

traceback investigation. Using just the mean numbers of visits in a traceback

investigation and visit durations, we estimate that the traceback component

of an outbreak investigation takes approximately 29 days (the duration of an

investigative visit multiplied by the number of investigative visits per

outbreak).

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9. Adjustments to Account for Records Requests Made on the Weekends

If there are 4 sets of weekends during the 29 day traceback time period

in which records are inaccessible, then the estimated calendar duration

(including weekends) of a current traceback investigation becomes much

longer. To allow more accurate comparison of the time savings between current

traceback times with those projected under alternative policy options requiring

4 and 8 hours, and up to 24 hours records access, we adjust the estimate of

current traceback times to account for requests that would be made on

weekends following issuance of this final rule. Most current records requests

are made during the week, because establishments may not be open or key

personnel may be absent on weekends. However, this final rule requires

records access when requests are made on either weekdays or weekends.

Consequently, we assume that there is a 1 in 7 chance of requesting records

on a Saturday, and a 1 in 7 chance of requesting records on a Sunday if FDA

were conducting a traceback investigation of a food for which it had a

reasonable belief the food was adulterated and presented a serious threat of

serious adverse health consequences or death to humans or animals.

A 24-hour records access requirement would improve current traceback

times by allowing weekend records access requests. We assume that a records

access request that would be made on a Saturday or Sunday following issuance

of this final rule, would currently not be made until the following Monday.

Taking this assumption into account, we estimate that the current time to

satisfy a records request made on a Saturday to be 3 to 5 days (i.e., 2 days,

plus 1 to 3 days), or an average of 4 days for 1/7 of all access requests (i.e.,

records requested on a Saturday), and 2 to 4 days (i.e., 1 day, plus 1 to 3 days),

239

or an average of 3 days for 1/7 of all access requests (i.e., records requested

on a Sunday).

With the average of 1.2 days for records analysis times, the adjusted

estimate of the total time for satisfying a records access request and records

analysis is an average of 5.2 days (1.2 days, plus an average of 4 days) for

requests made on a Saturday, and 4.2 days (1.2 days, plus an average of 3

days) for requests made on a Sunday. The adjusted estimate of current

traceback times is computed as an expectation of traceback times taking into

account the probabilities of records requests made on weekdays and weekends.

Assuming nine investigative visits per traceback investigation, the adjusted

estimate of the current traceback time is approximately 33 days (((3.3 days x

5/7) + (4.2 days x 1/7) + (5.2 days x 1/7)) x 9 visits). The adjusted estimate

of the current traceback duration is reasonably consistent with the current

traceback durations reported by traceback personnel of between 6 and 8 weeks

for eggs and fresh produce, and 3 days for packaged products that contain lot

code information on the labeling.

10. Estimate of the Time Required Before Preventive Action

We estimated the time required before taking preventive action using FDA

outbreak investigation information. We estimated the time required for a

preventive action as the time that elapsed between the onset of the first

reported illness and the first action taken by FDA or a commercial or state

entity. In 11 of 26 traceback investigations considered from 2000 to 2003, an

average of 78 days had elapsed between the time of the onset of the first illness

in the outbreak and any initial preventive measure.

The estimate of the time required for a preventive action may be overstated

because for those investigations that had entries reporting an initial action, but

240

did not report a specific date of the action, we used the information entry date

to approximate the date of the initial action. The information entry date is the

date on which the initial action is recorded by FDA. Consequently, this

procedure likely overestimates the time to preventive action because the

information entry date is later than the date of the initial action it

approximates, and in some cases may be significantly later than that date.

Moreover, many investigations do not involve any preventive action that

would limit the magnitude of the outbreak, because either the investigation

lasts longer than the shelf life of the implicated food product (so that there

is no longer any implicated food in circulation), or the implicated source of

the outbreak is determined to be an isolated event with no possible preventive

action that would limit the size of the outbreak. Because information from such

observations is not used in the analysis, the resulting estimate of the

investigation duration is likely to be shorter than what would otherwise be

obtained.

Based on the outbreak data used to create figure 2 of this document

entitled ‘‘Cumulative Distribution of the Fraction of Total Reported Illnesses

by Outbreak Duration,’’ we estimate that between 15 and 18 percent of all

illnesses were from outbreaks that lasted more than 78 days. This implies that,

with an average of 2,081 reported illnesses per year, the faster tracebacks could

potentially prevent up to a maximum of 312 to 374 (reported) illnesses per

year. The average duration of outbreaks that last longer than 78 days is

approximately 121 days, for an average net excess of 43 days (121 days minus

78 days). By dividing the maximum number of known illnesses per year, by

the average duration of outbreaks that persist beyond 78 days, we estimate a

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maximum daily average of 8 to 9 illnesses that occur each day after the 78

day threshold.

We characterize the uncertainty in the estimate of the time for preventive

action as a Beta-Pert distribution with the most likely value of 78 and the

minimum and maximum values (taken from the data) of 6 days and 150 days.

The Beta-Pert distribution is a Beta distribution that has been re-scaled to run

between values other than 0 and 1. The Beta-Pert uses a minimum, maximum,

and most likely value to generate a distribution running from the minimum

to the maximum, with a mean equal to (minimum + (4 times the most likely)

+ maximum) divided by 6. We use the Beta-Pert distribution since it is less

sensitive to extreme values and generates more outcomes close to the mean

than a Triangular distribution. We assume that the average duration of

outbreaks that persist beyond the time for preventive action is distributed

normally with a mean of 121 minus the time for preventive action, and a

standard deviation (computed from the data) of 17. We assume a uniform

distribution with a range between 0.15 and 0.18 in the estimate in the portion

of annual illnesses that potentially could be averted by faster preventive action.

11. Estimating the Impact on Traceback Performance for Options With Different

Coverage

Our framework for estimating the impact on baseline traceback speeds and

completion rates for policy options with alternative levels of coverage uses the

number of facilities in each sector to weight the sectoral contribution to

baseline traceback performance. We adjusted the weights of the transportation,

warehouse, and mixed-type facilities sectors to account for special

considerations related to their contributions to traceback speeds and

completion rates. For options that distinguish between very small and large

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facility coverage, we also adjusted the contributions to traceback performance

by facility size.

We estimated that options with the most comprehensive coverage will lead

to the greatest decrease in times for preventive action, and eliminate the largest

number of investigations that are prematurely terminated for reasons of poor

records quality or nonexistent records. Options with more limited coverage

will have a more limited impact on traceback speeds and completion rates.

The factors used to scale baseline traceback speeds and rates of premature

terminations are described by the following expression:

Total baseline performance = contribution by grocery outlets, given that

contamination occurred further up the supply chain + contribution by

wholesalers and importers, given that contamination occurred further up the

supply chain + contribution by warehouses, given that contamination occurred

further up the supply chain + contribution by manufacturers, given that

contamination occurred further up the supply chain + contribution by

transporters, given that contamination occurred further up the supply chain

+ contribution by mixed-type facilities.

The contribution to baseline traceback speeds by each sector is adjusted

to reflect the probability that the food was contaminated further up the supply

chain. Based on conversations with traceback personnel, we estimated that 10

percent of outbreaks requiring traceback records are from contamination at

manufacturing facilities, and 90 percent are from contamination at the farm

facilities (which may include mixed-type facilities subject to the recordkeeping

requirements of this final rule).

a. Adjustments to traceback performance for the grocery sector. The

baseline contribution from the retail sector to traceback performance is

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composed of contributions from both the restaurant and grocery sectors. The

contribution to traceback performance from grocery outlets represents only a

fraction of the total contribution of the retail sector. We adjust the probability

of requiring traceback records from grocery outlets downward to account for

the possibility that initial traceback from retail could begin at a restaurant as

well as at a grocery outlet. For the adjustment we use the estimated number

of restaurant locations of approximately 900,000 reported in a recent survey

conducted for the National Restaurant Association (Ref. 16).

b. Adjustments to traceback performance for transportation and

warehouse facilities. We adjusted estimates of the contributions to traceback

performance by warehouse and transportation facilities to reflect the ‘‘checks

and balances’’ nature of traceback records from these facilities for many

investigations. Manufacturers and third party warehouses are both important

links in the supply chain and are required to keep records under the provisions

of this regulation. This requirement allows FDA to determine whether what

was sent at each stage is what was received, and if not, to be able to locate

the unaccounted-for food. It is critical that FDA be able to locate and remove

from commerce any adulterated food that presents a credible threat of serious

adverse health consequences or death to humans or animals.

We assume that there is a uniform likelihood between zero and one that

there are more than two transportation or warehouse facilities used in the

provision of a transportation or storage service. For these cases there is no

adjustment to the value of records from such facilities during a traceback

investigation. When two or fewer facilities provide transportation and

warehouse services (estimated to be approximately half of the total number

of such services) we adjust downward the value of records to acknowledge

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their role of verifying, rather than identifying, the buyer or seller of the food.

For these cases we adjust the value of records to traceback performance by

a factor of 0.5.

c. Adjustments to traceback performance for large and very small facilities.

We adjusted the contributions by large and very small facilities to traceback

performance to reflect the substantially different quantities of food each facility

size is responsible for. While the number of very small facilities accounts for

a large fraction of the total number of facilities, the quantity of food for which

these facilities are responsible is relatively small. Consequently, estimates of

the contributions to traceback performance should reflect the lower likelihoods

of investigative visits at very small businesses.

For options that differentiate between coverage by facility size, we used

estimates of the quantities of food passing through very small establishments

and the quantities of food passing through all other sized establishments to

scale each sector’s contribution to traceback performance. In this way we were

able to estimate the contribution by very small size establishments and other

size establishments to traceback performance for each sector. We used U.S.

Census data (Ref. 17) to estimate the percentage of the total number of food

establishments that are very small, as well as their revenues, by sector and

report them in the chart below. The fraction of the total number of facilities

that are very small ranges from an estimated 73 percent of convenience outlets

to 90 percent of transporters. In contrast, the percentage of total convenience

store revenues from very small facilities is an estimated 18 percent, while very

small transporters are responsible for an estimated 16 percent of total revenues

from that sector.

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TABLE 11.—THE PERCENTAGE OF VERY SMALL FOOD ESTABLISHMENTS THAT MAKE UP EACH SECTOR AND THE PERCENTAGE OF THE

TOTAL SECTOR’S FOOD FOR WHICH THEY ARE RESPONSIBLE

Sector % of Establishments That

Are Very Small

% of Food Sector Revenue

From Very Small

Establishments

Manufacturers 77 15

Wholesalers 81 14

Transporters 90 16

Grocery outlets 88 18

Convenience outlets 73 18

Importers 82 14

Mixed-type facilities 82 15

Source: U.S. Census, 1997 Economic Census.

In addition to a lower probability of an investigative visit at very small

compared with other size facilities, records quality or records access times

might also be different for very small and other size facilities. However,

conversations with FDA investigative personnel revealed that there are no

differences in records quality or records access times across business sizes.

Consequently, we estimate the duration of an investigative visit to be the same

for very small and other size businesses.

12. Estimating the Benefits When Selected Sectors Are Excluded

In this section we describe the estimated reduction in benefits that would

be incurred from excluding certain sectors. We will provide additional

quantitative information on this later in the analysis. We selected specific

sectors for analysis in this section based on comments received on the

proposal. The reduction in benefits from excluding foreign persons, transport

persons, and food contact substance persons (including the finished container

that contacts the food) from establishing and maintaining records are estimated

as affecting traceback performance and the number of outbreak victims. The

final rule excludes food contact substance and foreign facilities from

recordkeeping maintenance requirements. As stated earlier, these estimates all

account for food safety benefits based on traceback investigations currently

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performed and do not consider food security benefits, which are based on

classified information.

a. Excluding foreign facilities. One policy option excludes approximately

225,000 foreign persons from all recordkeeping requirements. Although it is

impossible to estimate the likelihood of intentional contamination at foreign

facilities compared with domestic facilities, in this analysis we assume that

there is no difference between the probabilities of foodborne outbreaks

originating at foreign and domestic facilities. Consequently, the estimated

reduction in benefits from excluding foreign persons is based solely on the

number of facilities that are excluded, and the likely importance of their

records for traceback performance. Because foreign facilities are close to the

beginning of the supply chain for U.S. domestic consumption, the importance

of their records during a traceback investigation is moderate while the costs

to obtain those records during a traceback investigation are high.

b. Excluding persons that manufacture, process, pack, hold, transport,

distribute, receive, or import food contact substances. Another policy option

excludes food contact substance suppliers, estimated to be 37,000

manufacturers and distributors of the finished container that contacts the food,

from the requirement to establish and maintain records. Because of the small

number of manufacturers and distributors of the finished container that

contacts the food compared with the total number of foreign suppliers, their

exclusion from recordkeeping requirements would have a relatively small

impact on traceback performance (if we ignore the possibility that excluding

packaging suppliers increases their profile as potential targets for terrorist

activities). Moreover, because manufacturers and distributors of the finished

container that contacts the food occupy up-stream positions along the supply

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chain relative to foreign entities, we estimate the reduction in benefits from

excluding them to be less than that from excluding foreign entities. Finally,

if the requirements of section 306(a) of the Bioterrorism Act were satisfied,

FDA would have access to existing records at these facilities.

c. Excluding transporters. One policy option would exclude all

transporters from the requirement to establish and maintain records. FDA

determined, however, that the qualitative and quantitative impact on benefits

in the classified and unclassified scenarios would greatly eliminate the

effectiveness of the rule and FDA’s ability to timely and efficiently respond

to a threat of serious adverse health consequences or death to humans or

animals. As a practical matter, because the final rule’s requirements for

interstate shipments can be satisfied by compliance with existing requirements

for interstate shipments, the final rule only establishes new requirements for

the following: (1) Intrastate transporters; and (2) intrastate shipments conveyed

by interstate transporters. FDA estimates that there are approximately 115,000

intrastate carriers, and based on DOT data, almost one million commercial

drivers report intrastate travel. In reviewing the truck tonnage by commodity,

approximately 12 percent of the intrastate shipments are of FDA-regulated food

products. The average distance these products are shipped is 231 miles, which

means many shipments are intrastate, especially in the larger western states.

For some foods, distribution may be limited primarily to intrastate

transportation, depending on the time of year and state. Many businesses have

their own delivery trucks that are used intrastate, several use employee

vehicles for deliveries, and many rent vehicles to deliver products. These

vehicles are used to deliver all types of food products—refrigerated, cooked,

as well as fresh food and produce, and grocery items. Some local firms pick

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up their own merchandise from ‘‘warehouse’’ facilities to stock their own

locations. Many of these ‘‘warehouses’’ (commonly referred to as ‘‘Bin

warehouses’’) may receive product via interstate transporter and subsequently

deliver to a variety of intrastate retail customers via many different intrastate

means. Data on the volume of foods that move in intrastate commerce are

maintained by individual state Department of Agriculture and by DOT. For

example, from CA, LA, and TX alone, DOT reports over 12 percent of intrastate

truck tonnage is from FDA-regulated products (ref. 18). Past traceback

investigations provide examples of the need to regulate intrastate transport.

For example, in 2003, there were two produce-associated outbreaks that

occurred in CA from intrastate shipments. There were also two Salmonella

enteritidis outbreaks in WI associated with intrastate shipments of eggs. Other

foods, such as pasteurized milk, nearly all raw products, seafood, and sprouts,

may be shipped either intrastate or interstate depending on the production or

processing site.

Most of the seafood consumed in Florida is transported only intrastate,

but in Oklahoma most seafood is transported interstate. In 2002, there was an

outbreak in New Jersey and Florida linked to fish. Intrastate records assisted

us in pinpointing the portion of the Indian River, Florida that was causing

the problem. Information on egg tracebacks from 1996–2003 indicates that 35

percent of the tracebacks that resulted in farm investigations were intrastate.

This past summer, the State of Oregon was able to stop a sprout-associated

outbreak from becoming a serious one by tracing back to a Washington sprouter

that was just over the border from Oregon after some initial cases before the

Salmonella serotype had been identified. The sprouts were recalled. If the

sprouter had been located in Oregon so that the sprouts were not transported

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interstate, it would have been problematic to a traceback investigation limited

solely to interstate transporters.

The North Carolina green onion traceback investigation, which was part

of the largest Hepatitis A outbreak that has ever occurred in the U.S., is another

example of the importance of intrastate records. There, the amount of time

spent on the traceback within that State was twice as long as the other three

tracebacks done in other states because the distributor in North Carolina did

not have records. Traceback from the Tennessee outbreak took over a month,

the Georgia traceback took a month, and Pennsylvania traceback took a week.

Because we had no intrastate records in the North Carolina outbreak, the

traceback was determined to be inconclusive after two months, which meant

that we would not have been able to identify the farms involved if it had not

been for the other outbreaks.

This year, there was an E. coli O157:H7 outbreak associated with bagged

lettuce product in CA that was only in intrastate commerce. That traceback

might have been lost had records not have been available. Exempting

transporters could significantly impede FDA’s ability to rapidly and effectively

respond to a public health emergency involving a food transported within a

state, particularly if the adulteration occurred during transport and the food

was delivered to multiple sources within the State. In scenarios where time

is of the essence to prevent serious injuries or death, having records available

becomes even more critical. In addition, not only must FDA be able to rapidly

obtain records, it is imperative that FDA be assured that those records contain

certain essential information to allow FDA to prevent further harm in an

efficient and effective manner.

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Additional examples of circumstances involving food products that have

significant intrastate manufacturing, processing or distribution are provided in

the following paragraphs:

• An intrastate sandwich and snack food company that sells to retail

outlets for consumption had an outbreak of Listeriosis or Salmonellosis that

was traced back to the sandwiches. The product was completely distributed

using the company trucks within the state. FDA was unable to determine

which sandwiches caused the outbreak. The sandwiches were delivered to

retail customers, and it was impossible to track which sandwiches went to

which retailer. The transporter did not track which product was delivered to

which location. In this case, the firm had to recall all of its products.

• Retail stores regularly purchase food, especially locally grown produce,

from ‘‘truck farmers.’’ These farm trucks travel from store to store within a

state, sometimes selling an entire truckload to a store, other times a portion.

There is no manifest or record other than a bill of sale—e.g., 200 cantaloupes

from Farmer Brown. If the contamination occurred on the truck, FDA would

not have a record from the truck of all other delivery sites.

• Several days into the investigation of a Hepatitis A outbreak from

chicken salad in one city, FDA learned that the chicken was ‘‘cubed’’ at

another facility in another city within the state, and transported to the

‘‘manufacturing facility.’’ The source of the outbreak was the site where the

chicken was ‘‘cubed’’ by an ill employee; however, there were no records to

indicate when the cubed product was shipped or received by the salad

manufacturing facility.

Having transporter documents would be critical if there was an intentional

or unintentional contamination of the product while en route. Because of our

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limited experience, we cannot anticipate how much additional time it would

add to our investigation, should records not be available.

The probability that a traceback investigation will require records that

document the movements and packaging of food items between transportation

facilities is uncertain. At least one outbreak involving the contamination of

dairy products while inside a truck that had previously carried nonpasteurized

eggs is estimated to have infected about 224,000 persons (Ref. 19).

This example illustrates only one potential way that food may be contaminated

while in the possession of transporters, and suggests that these risks of

contamination can be considerable.

13. Options With Different Access and Retention Requirements and With

Different Compliance Dates

a. 24 hour and 4- and 8-hour records access requirements. For options

with comprehensive coverage (and using simple average numbers), when

compared with current traceback times, we would save an estimated 10 days

for the proposed option requiring 4 and 8 hour records access, and 5 days

for the option requiring 24 hour records access. When travel times are

included, the provisions of the recordkeeping rule will significantly reduce the

records access as well as the records analysis times. When travel times are

included, the 4 and 8 hour records access times in the proposed rule would

reduce the range of records access times to 1 to 2 days. The final rule requires

records access within 24 hours of a request, which would reduce records

access times by a smaller amount than with the proposed 4 and 8 hour

requirement. Because current records access times are between 1 and 3 days

including travel times, we assume that relaxing the requirement to 24 hours

would only speed up compliance for records requested on the weekends. The

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proposed records access times of 4 and 8 hours would result in estimated

records access times of between 1 and 2 days, and a records analysis time of

1 day (because the improved records quality would preclude the need for

return investigative visits).

We assume that a 10-day reduction in the duration of the traceback

component of an outbreak investigation would reduce the time required to take

an initial preventive action by 10 days as well. A savings of 10 days would

reduce the average amount of time required to take a preventive action to 68

days (based on the estimated current time of 78 days), and a savings of 5 days

would reduce the time required to take a preventive action to 73 days. From

data used to generate the cumulative distribution displayed earlier in this

document in figure 2 entitled ‘‘Cumulative Distribution of the Fraction of Total

Illnesses by Outbreak Duration (2000–2003),’’ we find that between 15 and 18

percent of all outbreak victims became ill from outbreaks that lasted more than

65 days. Consequently, the benefits from reducing traceback times by either

10 days for the 4-and 8-hour records access requirement, or 5 days for the 24-

hour records access requirement can be considerable. We assume that with

comprehensive coverage, the number of traceback investigations that are

prematurely terminated because of poor records quality will fall to zero under

either the 24-hour records access requirement, or under the proposed 4-and

8-hour records access requirement.

The reduced durations of traceback investigations computed in the

previous paragraphs are based on the assumed comprehensive coverage of the

proposed recordkeeping rule. Excluding certain persons from all or part of the

requirements of the regulation results in a reduction in the benefits as

measured by reduced times for traceback investigations. The extent of the

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reduction in benefits from reduced traceback durations depends on the number

of persons (and facilities for which the persons are responsible) that may be

excluded from the regulation and the position along the supply chain of the

excluded facilities. The position along the supply chain influences the

probability of contamination, as well as the probability of losing the paper trail.

We assess the relative benefits of excluding certain sectors as policy options

later in this document.

Finally, if there is a deliberate attack on the food supply, with catastrophic

consequences, then the duration of the preliminary and decision making parts

of the outbreak investigation will likely be substantially compressed, and the

importance of the traceback investigation in preventing additional illnesses

from an outbreak will be elevated. If firms fully understand the seriousness

of an outbreak, their reaction times may be compressed as well, which would

tend to reduce the computed benefits from this rule. However, we expect FDA

to be more likely than all firms to fully understand the seriousness of an

outbreak.

As an example computing how compressed preliminary investigation and

decision making times affect the benefits from faster tracebacks, we estimate

the duration of the preliminary and decision making parts of the outbreak

investigation to currently be approximately 55 days (i.e., the difference

between 78 days for an initial preventive action and 33 days for the traceback

investigation). If we assume a 50 percent reduction in the times for the

preliminary and decision making components of an outbreak investigation,

then a 10-day reduction in traceback times would result in preventive

measures taken after approximately 56 days (28 days, rounding up, for the

preliminary and decision making investigations plus 28 days for a traceback

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investigation) compared with the current 78 day duration. For a 75 percent

reduction in the duration of the initial parts of an outbreak investigation, a

10-day reduction in traceback times would result in preventive measures being

taken after approximately 42 days (14 days for preliminary and decision

making investigations plus 28 days for a traceback investigation) compared

with the current 78 days.

b. Records retention requirements of 6 months, 12 months, and 24 months

based on three NIST definitions. Many comments suggested that product shelf

lives as defined by the NIST should determine which product records would

be subject to retention requirements of 6 months, 12 months, and 24 months.

We estimate a negligible reduction in costs (which we estimate to be zero) and

benefits associated with reducing retention times in the final rule.

The provision specifying the shorter retention requirements of 6 months,

12 months, and 24 months may result in the destruction of records earlier than

would be the case for the longer retention requirements. While we estimate

the reduction in benefits from the reduced retention times to be negligible,

we explain the logic behind the perverse incentive for the early destruction

of records, and its potential impact on traceback performance. The benefits

from the records access requirements cannot be realized without the records

retention requirements. If records no longer exist, there is nothing for FDA to

access.

Given the records access requirement, the records retention requirement

in both the proposed and final rules may create a perverse incentive for entities

to destroy records, even though we estimate that this incentive will lead to

the actual destruction of very few records, and very small reductions in

investigative speed. Private firms are quite reluctant to share their private

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records with outsiders such as federal regulatory agencies. Facilities may

choose to destroy records once legal retention requirements have been met

rather than risk the possibility of sharing them with FDA. Consequently, there

is a nonzero probability that facilities will destroy records subject to the

retention requirements shortly after the legal retention requirement has been

met, and that those records would not exist in the event of an FDA records

access request.

The incentive to destroy records due to the access requirement will likely

result in the destruction of a very small fraction of records because of the

private utility from retaining records, and also the costs of destroying them.

Because of the perverse nature of this incentive, it is informative to estimate

its impact on the benefits from final rule—especially since the costs of the

1 and 2 years records retention provisions were estimated to be zero because

the retention time periods are the same as or shorter than current business

practices.

We used outbreak investigation data to estimate the reduction in benefits

when retention requirements are redefined to be 6, 12, and 24 months based

on NIST definitions of shelf lives. Investigations that remained open 6 months

after initial exposure were considered possible candidates for continued

investigative visits. From FDA investigation information, we estimated that

about 20 percent of all FDA investigations from 2000 to 2003 remained open

6 months after initial exposure to the pathogen. However, it is likely that most

of these investigations did not require access to a firm’s records after 6 months.

We assume that a maximum of 20 percent of all traceback investigations

are candidates for a records access request 6 months after initial exposure to

the pathogen. We assume that half of the investigative visits in one of these

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candidate investigations requires access to records after 6 months, and that 1/

3 of these access requests are for records subject to the 6 month retention

period (i.e., a 1/3 probability for 6 months, a 1/3 probability for 12 months

and a 1/3 probability for 24 months). Consequently, 3.3 percent of records

requests for records subject to the 6 month retention time are estimated to be

made after 6 months (20 percent x 1/2 x 1/3).

We assume that the potential records destroyed (after retention

requirements have been met) as a result of the access requirement would be

from the set of establishments with the poorest food safety practices. To

determine the percent of firms with the poorest food safety practices, we

obtained information from FDA personnel indicating that inspections of

approximately 3 to 4 percent of all FDA-regulated food and cosmetic facilities

from 2001 to 2003 were classified as official action indicated (Ref. 20). Based

on this information, we assume that the incentive for records destruction will

result in approximately 3 to 4 percent of firms destroying their records after

24 months, with destruction taking place shortly after retention commitments

have been met.

We assume that the private utility of records decreases over time, and that

the rate at which records subject to 6 months retention are destroyed shortly

after meeting the retention requirement is half that for records subject to 12

months retention, which is half that for records subject to 24 months retention.

Consequently, an estimated 0.5 percent of records subject to the 6 month

retention time are assumed to be destroyed shortly after the 6 months have

been met (i.e., the solution for ‘‘X’’ when solving the algebraic problem, 3.5

percent = X + 2X + 4X, where 3.5 percent is the midpoint between 3 and 4

percent and the rate at which all records are destroyed, X is the rate that

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records subject to the 6 month retention requirements are destroyed, 2X is the

rate that records subject to 12 month retention requirements are destroyed, and

4X is the rate that records subject to the 24 month retention requirements are

destroyed.). The destruction of records is estimated to affect about 0.02 percent

of access requests (i.e., 0.5 percent records destruction rate x 3.3 percent of

records requests made after 6 months). Finally, we assume that records

destruction will slow down and terminate traceback investigations at the same

rates at which the destruction takes place. Consequently, we estimate that both

traceback speeds and rates of successful traceback completions will decline

by 0.02 percent because of access requests when the requested records had

been destroyed because of retention requirements.

c. Extending the compliance dates. Another policy option considers

extending each of the proposed compliance dates by 6 months: Large, small,

and very small firms would be required to be in compliance with the regulation

12, 18, and 24 months, respectively, after publication of the final rule instead

of the proposed 6, 12, and 18 months after publication. The longer compliance

dates reduce the time savings for a preventive action for 50 percent of the

annual number of traceback investigations, and lead to a 50 percent increase

in the annual number of outbreak investigations prematurely terminated for

records quality reasons. Unlike the reduction in the benefits from the other

policy options considered, these are one-time decreases in the benefits, because

the option only extends the initial baseline compliance times by 6 months.

d. Exemption of all very small entities. FDA also considered whether it

should exempt all entities with ten or fewer employees, not just those in the

retail sector as is provided in the final rule; however, this would create a

‘‘Swiss Cheese’’ approach to trace back, as there would be a potential failure

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of entities to keep records throughout the distribution chain. The number of

very small entities account for a large fraction of the total number of food

establishments.

Moreover, many of our failures in a typical trace back investigation (i.e.,

unclassified scenarios) have been at the wholesaler (distributor) level. As

discussed above, we would have significant concerns if 90 percent of the

transporters (as very small entities) would be excluded from the requirements

to establish and maintain records, particularly if these are predominantly

intrastate transporters that are not currently subject to DOT’s requirements.

(FDA notes that intrastate shipments carried by interstate transporters also are

not subject to DOT’s requirements.)

In light of the above, FDA does not believe we would have an effective

recordkeeping system if we were to exempt all very small entities from the

rule. Unlike the very small retailers who are at the end of the distribution chain

only, a full exemption by size would create holes throughout the distribution

chain and would not provide FDA adequate assurances that, in the event of

a threat of serious adverse health consequences or death to humans or animals,

FDA would be able to conduct an efficient and effective traceback

investigation.

F. Costs

1. Estimates of the Number of Facilities Affected By the Final Rule

In the PRIA, FDA estimated the number of transporters and packers from

data in the 2000 County Business Pattern statistics (Ref. 21) and the 1999

Nonemployer statistics (NES) (Ref. 22). We assumed that local and long

distance specialized freight carriers devoted exclusively to transporting food

were about 20 percent of the total of the specialized freight category. In the

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PRIA, FDA requested comments on the assumption that 20 percent was

appropriate for this estimate.

(Comment 182) Several comments suggest that the number of trucking

entities covered by the rule was substantially underestimated. One comment

suggests that while 20 percent of the specialized carriers transport food

products at any specific time, most specialized carriers transport food at one

time or another. Another comment suggests that FDA’s estimate of the number

of covered trucking entities was low; the comment cites information obtained

from the U.S. DOT that indicated close to 600,000 operating authorities on file,

which includes Mexican, Canadian, and domestic carriers. Moreover, the

comment suggests that if half of the general carrier population (600,000

carriers) transports food on an occasional basis, then over 300,000 companies

would be affected. These numbers suggest an estimate of covered trucking

facilities much larger than FDA’s estimate. To support the assertion of an

underestimate, the comment suggests that FDA-regulated Mexican carriers

alone likely account for 12,000 facilities. Another comment states that

individual transporters, not only transportation firms, will hold food while it

is in transit and that transportation vehicles do not appear to be exempt from

the recordkeeping requirements.

(Response) FDA agrees with the concerns underlying many of these

comments and revises its estimates of the number of transportation entities

in a way that is consistent with the data and framework used in the PRIA.

Although FDA does not dispute the comment that most specialized carriers

transport food items at one time or another, the ease with which transporters

enter and leave the food industry is considered in the PRIA. That analysis

already accounts for the additional learning, records access, and planning costs

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incurred by new entrants. In the PRIA, FDA estimated that there would be

approximately a 10 percent rate of entry and exit of new and existing firms

for all sectors. FDA calculated the startup costs for these new entrants and

added them to the compliance costs incurred by existing facilities.

The County Business Pattern and NES used by FDA in the analysis include

all potentially covered transporters (except foreign-based carriers that transport

food in the United States), including individual carriers. However, in the PRIA,

FDA neglected to include the number of establishments under North American

Industry Classification System (NAICS) code 4841 for general freight trucking

as well as for NAICS code 488510 for freight transportation arrangement. In

the analysis of the final rule, we include entities that fall under both of these

categories.

The combined data from the County Business Pattern and NES contain

384,358 establishments under code 4841 for general freight trucking. In

addition, the County Business Pattern data contain 15,177 establishments for

code number 488510 for freight transportation arrangement. To estimate the

number of facilities under code 488510 in the NES data, we calculated the

ratio of the number for code 488510 to the total number for code 488 in the

County Business Pattern data, and then applied that ratio to the number of

establishments under code 488 in the NES data. We assumed a uniform

distribution of food and nonfood carriers under the general freight trucking

category and estimated the number of establishments that transport food

products under code 4841 to be half of the total for that category. We assumed

the number of establishments under code 488510 that arrange freight

transportation for food products to be 20 percent of the total for that category.

We assumed that the same percentage applies to the total assumed for

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specialized freight carriers dedicated to the food industry. As a result of these

changes, the total number of domestic transportation and packing facilities is

revised upward from 16,773 facilities used in the PRIA to 234,980. The

numbers of establishments by code are reported in table 12 of this document.

TABLE 12.—NUMBER OF TRANSPORTATION ESTABLISHMENTS BY NAICS CODE

NAICS Code Description CBP 2000 NES 99

481112 Scheduled freight air transportation 584 2,413

481212 Nonscheduled chartered freight air

transportation

217

483111 Deep sea freight transportation 485 4,754

483113 Coastal and Great Lakes freight transportation

546

483211 Inland water freight transportation 402

4841 General freight trucking 27,937 164,242

48422 Specialized freight (exclusively used)

trucking, local

6,499 4,946

48423 Specialized freight (exclusively used)

trucking, long distance

2,580 8,189

488320 Marine cargo handling 607 2,415

488510 Freight transportation arrangement 3,035 3,814

488991 Packing and crating 1,315

Foreign transportation carriers that cross the northern and southern U.S.

borders are not counted in the County Business Pattern and NES data, because

they are foreign based. All of these carriers are subject to DOT regulations,

and the costs of compliance for these facilities are assumed to be zero because

the final rule allows a transporter to meet its obligations by keeping the records

currently required by DOT. However, foreign transportation carriers that cross

the northern and southern U.S. borders are assumed to incur learning costs

associated with this final rule.

FDA estimates the number of Mexican carriers that are subject to DOT

regulations from a study conducted for DOT by Economic Data Resources

under the auspices of the International Association of Chiefs of Police (Ref.

23). Using 1999 U.S. Customs and Border Protection data on the use of annual

decals and per-trip payments by commercial vehicles at Southwest border

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crossings, that study estimated the total number of vehicles that cross the

Southwest border to be approximately 76,177. Furthermore, using 1998 data

on Mexican interstate commercial vehicle registrations, the DOT study

estimated the number of commercial carriers of Mexican origin that use the

Southwest border crossings to be approximately 63,000, or approximately 83

percent of the total. If one half of the total number of these trucks carry food

items, then approximately 31,500 carriers of Mexican origin are subject to this

final rule and would not be counted in the CBP or NES data.

In order to estimate the number of commercial carriers of Canadian origin

that would be covered by this final rule, from the DOT study we obtain an

estimate of approximately 79,643 carriers that purchase annual decals at the

Northern border. We assume the same ratio of the total number of trucks that

purchase annual decals for Southwest border crossings as that for northern

border crossings (42 percent) and estimate the total number of trucks that cross

the northern border to be approximately 191,167. Furthermore, we assume the

percentage of these carriers that are of Canadian origin is the same as that used

to estimate Southwest border crossings by Mexican carriers (83 percent). This

assumption yields a total of 158,099 carriers of Canadian origin that are subject

to DOT regulations. If one half of the total number of these trucks carry food

items, then approximately 79,050 carriers of Canadian origin are subject to this

final rule and would not be counted in the CBP or NES data. The number

of transport facilities is revised upward by 110,550 (i.e., 79,050 plus 31,500)

to account for the number of foreign based transporters that are subject to the

final rule and not counted in the NES or CBP data.

(Comment 183) One comment states that direct selling businesses are

clearly not accounted for because there are millions of such entities involved

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on either a full or part-time basis, while the combined estimate of domestic

retailers and wholesalers used in the analysis is only slightly more than

300,000. Furthermore, the comment states that the burden on these retailers

would be higher than for other retailers.

(Response) FDA does not agree that there are millions of direct marketers

of food in the United States. Nor does FDA agree that the burden on direct

marketing retailers would be greater than for other retail establishments.

However, FDA does agree that the data sources used in the PRIA may not

account for many small direct marketers that may not have filed as a sole

proprietorship business with the Internal Revenue Service (IRS). While these

direct marketers may have been omitted in the PRIA, they are considered

exempt in the final rule and are not included in the cost estimates in this

analysis. Nevertheless, in order to respond to comments and to estimate the

cost of policy options that include very small retailers, FDA does revise its

estimate of the number of retail establishments to account for direct marketers

that may not have been included in the PRIA.

FDA found estimates of 10 million (Ref. 24) and 12 million (Ref. 25) direct

marketers in the United States, but these estimates included all the direct

marketers of both nonfood and food products in the United States. FDA does

not have a complete census of the number of marketers of food versus nonfood

products. To approximate the percentage of direct marketers selling food, FDA

divided the number of direct marketing companies selling food by the number

selling all types of products, using data from the directory of companies on

the Web site of a large direct selling trade organization (Ref. 25). Of the 141

companies in the directory, approximately 5 market food or beverages, or

approximately 3.5 percent of the total.

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The number of direct marketing establishments should be captured by the

NES, which are generated chiefly from administrative records of the IRS. These

data are primarily composed of sole proprietorship businesses filing IRS Form

1040, Schedule C (Ref. 22). Many of the nonemployer businesses are very

small, and many are not the primary source of income for their owners.

Furthermore, nonemployers account for 75 percent of all businesses.

There is the possibility that direct marketers are included in the estimate

of the number of direct marketers cited earlier and excluded in the NES if

they are casual market participants, and have temporarily left the industry, or

if they do not file as a sole proprietorship business with the IRS. Casual market

participants might be included in the estimate of the total number of direct

market facilities even if they are not active members. This would tend to inflate

the total number of direct marketers to include both active and inactive

members. Because of the ease of entry and exit by these firms, casual direct

marketers that have temporarily left the industry are assumed to be

approximately half of the number of direct marketers of food, or 1.75 percent

of all direct marketers. This assumption leaves an estimated 1.75 percent

(175,000) of direct marketers that are not counted in the NES statistics because

they did not file as a sole proprietorship business with the IRS. We use this

estimate of the number of direct food marketers that did not file as a sole

proprietorship business with the IRS to revise our estimate of the total number

of retail facilities.

Direct marketers that did not file as a sole proprietorship business with

the IRS are assumed to be part-time suppliers and to sell mostly at the retail

level. Furthermore, because these are very small businesses that only sell food

products on a part-time basis, the additional records maintenance costs for

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these facilities will be considerably less than that for larger, full-time

businesses. We estimate the additional records maintenance costs for these

part-time facilities to be one half that for other retailers. The learning costs,

records redesign costs, and records access planning costs for these facilities

are assumed to be the same as for other facilities.

FDA does not agree that the burden of the rule would be higher for direct

marketers than for other retailers. In the PRIA, FDA estimated that about 88

percent of retailers classified as very small firms have fewer than 10

employees. FDA believes it is reasonable to assume that compliance costs for

direct marketers would be about the same as for other very small firms.

(Comment 184) One comment suggests that FDA underestimated the

number of mixed-type facilities that engage in nut farming. The comment states

that, in the almond industry, there are about 360 hullers and processors who

are also growers, while FDA estimated that there were only 290 mixed-type

facilities that engage in all categories of nut farming. Furthermore, because

there are about 6,000 almond growers, the comment states that this implies

that 6 percent of all almond growers would be classified as mixed-type

facilities, compared to FDA’s estimate of 2 percent of all nut farms.

(Response) FDA acknowledges considerable uncertainty in the estimates

of the numbers of mixed-type facilities that engage in farming and is receptive

to comments from industry that can improve them. There is likely to be more

uncertainty in the estimates of the number of mixed-type facilities that engage

in any individual category of nut farming than that for the estimate of the

number of mixed-type facilities that engage in nut farming over all categories

of nuts. FDA will use the estimate provided by the comment to revise its

estimate of mixed-type facilities that engage in nut farming from 2 percent to

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6 percent. The total number of mixed type facilities that engage in farming

is revised upward to 31,077 from 30,497 used in the PRIA.

Table 13 of this document is a revised table of mixed-type facilities that

engage in farming.

TABLE 13.—MIXED-TYPE FACILITIES ENGAGE IN FARMING

Commodity Total No. of Farms Percent Mixed-Type No. of Mixed-Type Farms

Pig farms (feed mixing) 46,353 1.5% 695

Cattle (feed mixing) 785,672 1.0% 7,857

Poultry (feed mixing) 36,944 1.0% 369

Other animal production (feed mixing) 110,580 1.0% 1,106

Dairy 86,022 1.1% 903

Grain, rice, and beans 462,877 1.0% 4,629

Apples 10,872 1.5% 163

Oranges 9,321 1.5% 140

Peaches 14,459 1.5% 217

Cherries 8,423 1.5% 126

Pears 8,062 1.5% 121

Other fruit 29,413 1.5% 441

Nuts 14,500 6.0% 870

Berries 6,807 1.5% 102

Grapes 11,043 10.5% 1,160

Olives 1,363 3.5% 48

Vegetables and melons 31,030 0.5% 155

Organic vegetables 6,206 50.0% 3,103

Honey 7,688 50.0% 3,844

Syrup 4,850 100.0% 4,850

Herbs 1,776 10.0% 178

Total 31,077

(Comment 185) One comment states that FDA mistakenly omitted the

number of food grade warehouses that are subject to the regulation included

in NAICS code 49311. Consequently, FDA’s estimate that a total of 76,952

wholesaler and public warehouse companies are affected by the regulation is

too low, and these additional warehouses should be included in the cost

calculation of the final rule.

(Response) FDA agrees that public warehouses included in NAICS code

number 49311 were omitted from the count of total warehouse facilities. Table

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14 of this document describes the primary activities performed by the

warehouses included in this classification.

TABLE 14.—DESCRIPTION OF PRIMARY ACTIVITIES PERFORMED BY WAREHOUSES BY NAICS CODE

NAICS SIC Corresponding Index Entries

493110 4225 Bonded warehousing, general merchandise

493110 4225 General warehousing and storage

493110 AUX Private warehousing and storage, general merchandise

493110 4225 Public warehousing and storage (except self storage), general merchandise

493110 4226 Warehousing (including foreign trade zones), general merchandise

493110 4225 Warehousing and storage, general merchandise

There are a total of 4,415 of such facilities listed in the County Business

Pattern data. In the NES statistics, there are 4,700 reported for the aggregate

NAICS code of 4931. To estimate the number of warehousing facilities that

would be included in NAICS code 49311 in the NES statistics, we scaled the

aggregate number in the NES statistics by the ratio of the numbers reported

for code 49311 to the total of those reported under code 3931 in the County

Business Pattern. When the imputed NES numbers for code 49311 are added

to the reported County Business Pattern numbers for code 49311, the total

number of facilities in the NAICS code is 7,328 facilities. We adjust the total

number of warehouses by one half of the total number of facilities reported

for code 49311 by assuming that half of the total number of facilities included

in that code handle food items. The number of warehouse facilities is revised

upward to 6,089 from the 2,425 in the PRIA. The facilities-to-firm adjustment

factor used for the facilities listed in NAICS code 49311 is the average of that

used for the other two warehouse codes in the analysis.

(Comment 186) One comment requests clarification as to whether all

members of the International Bottled Water Association were included in the

number of facilities covered by the regulation.

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(Response) The NAICS code 3121 used in the PRIA includes all beverage

manufacturers and specifically includes bottled water manufacturers. All other

bottled water suppliers are included in the various NAICS codes used to count

wholesalers and retailers, and other food suppliers.

Finally, the changes to the costs and benefits of the final rule due to the

expanded coverage to include persons that export food for consumption

outside of the United States are estimated to be small. We assume that the

export of food and feed occurs at the manufacturing and wholesaling levels,

with retailers unlikely to engage in export. The U.S. Census Bureau’s 1997

Economic Census (Ref.17) indicates that approximately 4 percent of wholesale

trade in all grocery and related products (NAICS code 4224) was from export

sales. We assume that the same percent also applies to exports in the

manufacturing sector and also to the numbers of facilities in those sectors. An

estimate of 4 percent likely overstates the true incremental cost of covering

exported food and feed since most, if not all of the establishments engaged

in export are also likely to be engaged in domestic commerce and consequently

would not incur additional learning and records redesign costs. Moreover,

firms that export and also engage in domestic commerce are unlikely to incur

additional maintenance costs because it is unlikely that they would follow two

sets of recordkeeping practices. Consequently, only firms that are exclusively

exporters will incur incremental recordkeeping costs as a result of expanded

coverage. We assume that half of all wholesale and manufacturing

establishments estimated to engage in export, or 2,736 facilities, are exclusively

exporters and will incur recordkeeping costs as a result of expanded coverage

to include export of food and feed.

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The incremental benefits from expanding the coverage to include exported

food and feed are from the possibility that some of these shipments may be

diverted for domestic consumption, and their coverage may enhance traceback

investigations should they be necessary. The food safety (but not food security)

benefits from expanded coverage are likely to be negligible since the likelihood

of diversion is small, and the likelihood that a diverted shipment is

accidentally contaminated is also small. However, the food security benefits,

while not quantifiable, include classified scenarios that could include

diversion of food and feed. Further, FDA is concerned that exempting foods

intended for export from the recordkeeping regulations could lead to such

foods being targeted for tampering by terrorists and reintroduction into

domestic commerce as they would prove more intractable to tracing

investigations. Including the revisions described previously, we estimate that

a total of 707,672 facilities will be covered by this final rule. This represents

a reduction of 96,642 facilities compared with the number estimated in the

analysis of the proposed rule.

2. High Cost of Tracking by Lot Code

(Comment 187) Many comments state that lot codes are not currently used

in tracking products at the distributor and retailer levels, and that requiring

lot codes to be recorded by these entities would represent a large change in

business practice. One comment states that only 10 percent of food distributors

currently use lot numbers to track their food products. One comment states

that its facility tested the proposed requirement to establish records of lot

numbers in its daily operations and concluded that there would be an 80

percent loss in productivity as a result of the requirement. Another comment

states that labor costs for unloading a truck at a distributor would increase

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by a factor of 15 under an exhaustive check of shipper and lot code

information. The comment further states that a conservative estimate of the

unloading costs would be a threefold increase in current costs if a less

exhaustive spot check of the lot codes is required.

Other comments illustrate the dramatic change in current business

practices that would result from requiring lot codes to be included in records.

However, several comments indicate that although the technology to maintain

lot codes in bar code format does not currently exist, the industry is moving

in that direction and such a requirement might be feasible in 5 to 7 years.

(Response) In estimating the costs of the rule, FDA assumed that all

required information provided for in the regulation represented only small

deviations from current business practice. The comments received strongly

suggest that the cost estimates for maintaining records on lot codes for

distributors and retailers were substantially understated. The results reported

by one comment of an experiment that tested the requirement in their daily

operations indicated an 80 percent loss in productivity. Other estimates of the

increase in labor costs that would result from this requirement ranged from

three-fold to fifteen-fold. FDA revises the estimates of the costs to maintain

records on lot codes by assuming an 80 percent loss in productivity for retailers

and distributors from compliance with this provision. For other policy options

included in this analysis as well as in the final rule, the requirement to

establish and maintain records containing lot codes is relaxed to be consistent

with current feasibility.

3. Records Retention Costs

(Comment 188) Several comments address the costs of records retention.

Several comments suggest that records are often stored off site or at corporate

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headquarters, with a nonzero cost for retrieval. Another comment recommends

that we review our estimate of records retention costs of zero. The comment

states that firms that handle products not covered by the juice HACCP

regulation (part 120) may not have a records retention strategy and may have

to implement a new strategy for records retention and recovery. Several

comments express uncertainty with regard to the appropriate records retention

time of either 1 year or 2 years for the products that they handle. These

comments suggest definitions of ‘‘perishable’’ that would be more consistent

with the terminology used in the trade, which is different from the definition

in the proposed rule. Recommended records retention times ranged from a low

of 6 months for perishable foods, up to 2 years for other foods.

(Response) In the PRIA, we used information from preliminary outreach

to tentatively conclude that requirements for records retention of 1 year for

perishable products, and 2 years for all other foods were consistent with

current industry norms. The respondents to the outreach were not necessarily

subject to the recordkeeping requirement of the juice HACCP rule, and we

assume that the understanding of the term ‘‘perishables’’ by the respondents

to that outreach was based on the conventional use of the term, rather than

the definition of the term used in the PRIA.

In response to comments, the record retention requirements for

nontransporters in the final rule now provide: (1) 6 months for food for which

a significant risk or spoilage or significant loss of value occurs within 60 days

under normal shipping and storage conditions for that food; (2) 1 year for food

for which a significant risk of spoilage or significant loss of value occurs within

61 days to 6 months under normal shipping and storage conditions for that

food; and (3) 2 years for food for which a significant risk of spoilage or

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significant loss of value occurs greater than 6 months under normal shipping

and storage conditions for that food.

(Comment 189) One comment suggests that the estimates of zero storage

costs from records retention are too low. The comment estimates that offsite

storage and recovery costs range between $2.50 and $3.50 per cubic foot per

year.

(Response) The costs for records storage and retrieval are not zero, but the

additional storage costs likely to be incurred by covered entities as a result

of this regulation are assumed to be zero. We assume that the private benefits

from retaining records for the 1 and 2 years time frames required by this rule

exceed the private costs of doing so. The range of comments to the proposal

suggests that this assumption is reasonable. The private benefits of retaining

records include enhancing a firm’s ability to do the following: (1) file claims

for shortages in quantities or qualities of products received, (2) respond to

claims for shortages in quantities or qualities of products shipped, (3) sue

suppliers for damages resulting from products received, and (4) respond to

suits filed by downstream users for damages resulting from products shipped.

FDA also believes that most firms retain these records for at least two years

for income tax purposes. Therefore, FDA is not persuaded by the comment

that most firms do not currently retain these records.

Evidence gathered from interviews with FDA traceback investigation

personnel indicate that current records retention practices in the food industry

have not been a major obstacle to successful traceback investigations. In

addition, comments suggest that records retention requirements should be

linked to the shelf life of the product (which is presumably the current

practice), and suggest retention times of 6 months to 2 years, depending on

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the shelf lives of the products. FDA interprets this evidence to indicate that

even in the absence of records retention requirements, the private incentives

to retain records would result in records retention times in excess of those

required in the regulation.

(Comment 190) One comment draws comparisons of the proposed records

retention burden on small and large trucking firms. The comment contains a

calculation of the number of records that would be required to be retained

by a typical owner and operator of a single truck. The comment states that

a 2 year retention requirement would obligate an owner and operator of a

single truck to have on hand approximately 598 sets of load documents at any

given time. If the average set of documents contained 20 pages, then this

person would be required to retain approximately 11,960 pages at any given

time. The comment suggests that this amount of documentation could be easily

kept inside the truck in a side box and later transferred to an office corner

or file cabinet at the owner’s convenience. By assuming the number of

documents to be retained by a firm is commensurate with the number of trucks

owned by the firm, the comment argues that the proposed retention

requirement would require large firms to retain an unreasonable amount of

paperwork requiring substantially more storage space.

(Response) FDA notes that we computed the retention costs of the

proposed rule on a per-facility basis and that we assumed that costs did not

differ significantly from those of current business practices. The example

documented in the comment illustrates the small amount of storage space that

is required per facility. In the PRIA, FDA assumed that all firms keep most

of the proposed records so that larger firms with a larger quantity of records

may find it necessary to retain off-site records storage. In the final rule, FDA

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has revised the recordkeeping retention and other requirements for transporters

to be consistent with current requirements for interstate transportation.

Consequently, the retention requirements from this final rule should impose

no extra burden on these facilities.

(Comment 191) One comment from an association of wholesalers states

that its members typically retain invoices and shipping records for

approximately 6 months and will find it difficult to find the storage space to

retain records under the proposed requirements. The comment states that a

2-year retention requirement would constitute a dramatic change in

distributors’ operations and lead to a substantial increase in data storage costs.

(Response) FDA does not agree that the retention requirements from this

final rule will impose a large burden on food businesses. Only a small fraction

of information is required to be added to existing records. Furthermore, based

on preliminary research, a survey of dietary supplement manufacturers, and

our interpretation of most of the comments to the proposed rule, the retention

requirements in this final rule do not differ substantially from the industry

norm. We believe that any change in practice from wholesalers that generates

costs is mostly included in the estimated redesign and other set-up costs.

4. Records Access Costs

(Comment 192) One comment states that a 4 and 8 hour records access

cost is an additional cost, because it requires retrieval on the weekends, which

may require companies to renegotiate storage contracts to allow for weekend

access.

(Response) FDA researched typical records storage contracts and found

that at least one company’s standard records retention contract explicitly

provides that ‘‘unscheduled or emergency delivery of records’’ was to be

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charged on a ‘‘per event’’ basis (Ref. 26). FDA assumes this to be the norm

in the industry. For both the proposed and final rules, FDA does not estimate

the probability of a records access request, and weekend access is assumed

to be charged on a per-event basis, which is considered a cost of performing

a records access request. Because the records access costs are estimated to be

the private costs of planning for a records access request, rather than for

performing a records access request, the estimates for planning for a records

access request in the analysis of the final rule do not change.

(Comment 193) Many comments assert that the cost estimates for requiring

4 and 8 hour records access were too low or inappropriate. Comments support

this assertion by citing factors ranging from the additional staffing

requirements necessary to respond to a records request at such short notice,

to the burden of a records access request being dependent on the number of

records, and to the length of time covered by the records requested. Some

comments state that a 48-hour records access requirement would be reasonable,

and some comments state that 24 hours would be reasonable.

(Response) FDA acknowledges the difficulties faced by firms complying

with the 4 and 8-hour records access requirements. This final rule requires

providing access to records as soon as possible, but no later than 24 hours

after an FDA request. The costs for 4 and 8 hours and 24 hours are analyzed

as policy options later in this document. In the PRIA, we estimated the records

access costs as the costs for planning for a records access request. FDA

assumed that the 4-and 8-hour response time required would compel business

practices to change as firms developed preemptive emergency plans, while a

24-hour response requirement would not compel firms to modify their current

business practices. Interviews with FDA traceback personnel suggest that firms

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are able to comply with a 24-hour records access request. Many comments

support the notion that a 24-hour response time is not an unreasonable

requirement given current business practices. Consequently, FDA maintains

the assumption that a 24-hour records access requirement is reasonable under

current business practices and that a 4 and 8 hour records access requirement

would require additional planning for a records request.

Relaxing the records access requirement from 4 and 8 hours to 24 hours

leads to an estimated cost savings relative to the PRIA. The access planning

cost estimate assumed that 6 hours of administrative labor per firm (lowered

to 3 hours per convenience store firm) would be a one-time requirement for

each firm. FDA estimated that new businesses would also have to incur records

access costs. As a result of relaxing the records access request time to 24 hours,

these costs will no longer be incurred.

5. Additional Records Maintenance and Redesign Costs

The cost estimates assume that the information a covered entity must keep

is specified, but that the form or type of system in which those records are

maintained is not specified; we expect that firms will collect the additional

information not currently included in their existing records. Furthermore, FDA

assumes that firms will choose to comply with any new requirements in the

manner most economically feasible for them, including modifying shipping or

purchase records, such as bills of lading, invoices, or purchase orders.

(Comment 194) Several comments question the format for presenting the

additional required information and whether existing records could satisfy the

requirements. These comments cite specific types of transactions to illustrate

the difficulties in maintaining the required information on one form. In

addition, several comments state that the required information is typically

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available. One comment states that it is already standard business practice to

maintain all required information on bills of lading in the trucking industry.

Several comments state that FDA should maintain flexibility in the information

required, as well as the type of forms maintained.

(Response) Neither the proposed nor final rule specifies the form or format

in which records are to be established and maintained. There are no

restrictions on the kinds of forms maintained. Commercial invoices, bills of

lading, packing lists, and other forms commonly used when executing business

transactions can all be used to record the information required by the

regulation. We assume that most of the required information is already

maintained on forms ordinarily used in conducting business. Persons subject

to this final rule can choose to record the required information in one record

or to use existing and newly created supplemental records to capture the

required information.

(Comment 195) One comment requests clarification that ‘‘transportation

record’’ includes the various documents that may be developed by a company

and that it is not necessary to include all of this information in one shipping

document. Furthermore, the comment asks us to clarify that existing records

can be used to satisfy the requirements, even if they are not in the same

location within the manufacturing facility (i.e., all required information is

there, but not in the same location).

Others comment that the proposed regulation is not practical or

reasonable, and fails to consider the business practices currently in place for

food protection.

(Response) FDA believes that most of the information required by this

regulation is currently collected as a matter of normal business practices and

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that any changes to current business practices as a result of this final rule are

small. The revised language in the final rule removing the requirement to

record lot codes for distributor and retail facilities increases the agency’s belief

that changes to existing recordkeeping practices will be small.

(Comment 196) One comment states that the need for both manufacturers

and third party warehouse or wholesalers to keep the records is redundant.

(Response) Manufacturers and third party warehouses are both important

links in the supply chain and are required to keep records under the provisions

of this regulation. It allows FDA to determine whether what was sent at each

stage is what was received, and if not, to be able to locate the unaccountedfor

food. In a traceback investigation, it is critical that FDA be able to locate

and remove from commerce any adulterated food that presents a threat of

serious adverse health consequences or death to humans or animals.

(Comment 197) Several comments suggest that the information required

by the proposed regulation is excessive and that it would require significant

changes in business practices to collect and maintain the required information.

One comment suggests that requiring records of names, addresses, and

telephone numbers of each supplier for each transaction is excessive. A

comment suggests that its firm has no way to capture all of the proposed data

elements through current sources of transaction documentation.

(Response) FDA assumes, and comments agree, that most of the

information required by this regulation is already collected and maintained

through currently used transaction documents. The final rule requires lot codes

or other identifiers only of persons who manufacture, process, or pack food,

and only to the extent this information exists. The final rule also does not

require that a responsible individual be identified for the immediate previous

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source and immediate subsequent recipient for each transaction, as was

required by the proposed rule. Accordingly, FDA does not modify its

assumptions underlying the estimate of the costs of establishing and

maintaining records.

6. Estimates of Additional Records Maintenance Costs Too Low

In the PRIA, FDA assumed that the burden of maintaining and collecting

additional information would be shared among more than one facility.

(Comment 198) Comments state that FDA’s estimates of recordkeeping

burden obtained from the juice HACCP rule are inappropriate. The comments

state that using the juice HACCP model substantially underestimates time

requirements because most other types of firms would require more resources

to achieve the proficiency required under the HACCP rule.

(Response) The juice HACCP cost estimates that we used to estimate costs

in the PRIA were published before the juice HACCP rule took effect. The cost

estimates for that rule were for firms that were not yet in compliance. FDA

continues to believe that those cost estimates are an appropriate reference for

this final rule, because they represent a precedent for cost estimates of

activities similar to those required in this regulation.

(Comment 199) According to numerous discussions with those who are

subject to HACCP regulations, the time and money estimates of the costs FDA

provided in the seafood HACCP rule were about 1/10 the actual values. This

represents a big underestimate of the true costs of the regulation.

(Response) The costs estimated in the PRIA use cost estimates of the juice

HACCP rule as a reference, not those of the seafood HACCP regulation. FDA

has also received information that costs for compliance with the seafood

HACCP rule were underestimated. FDA developed the estimates for the juice

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HACCP rule much later than those for the seafood HACCP rule. In addition,

the burden for the additional records maintenance required in this final rule

is considerably less than that required by the juice HACCP rule, particularly

because FDA has relaxed the requirement for maintaining lot code information

in the final rule and removed the requirement to record and maintain contact

information for each transaction.

(Comment 200) Some comments state that FDA failed to account for the

effect of higher transaction costs (as a result of the regulation) on reducing

arbitrage opportunities. Food arbitrage is a line item in most food distributors’

and retailers’ financial statements. The comments assert that this final rule will

result in fewer arbitrage opportunities, because the cost of a transaction will

rise, which will cause a substantial reduction in profits, encourage layoffs, and

raise consumer prices.

(Response) FDA agrees that the recordkeeping provisions in this regulation

may increase the costs of transactions, thereby decreasing the total number of

transactions. FDA believes, however, that transactions will be only slightly

costlier and the effect on consumer prices and arbitrage opportunities will be

small.

(Comment 201) One comment urges FDA to clarify and confirm that it

would not consider records identifying producers of coffee cherry for traceback

purposes as information that would be considered to be ‘‘information

reasonably available.’’ The comment states that it would be prohibitively costly

to link the identities of individual coffee cherry growers to any processed food

item, because the cherries from many growers are typically mixed upon

delivery to a processing facility.

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(Response) Both the proposed and final rules require incoming ingredients

to be linked specifically to outgoing food products only if that information is

reasonably available (as discussed previously). What is reasonably available

is determined on a case-by-case basis and depends on the operating practices

of a specific facility. FDA does not intend the rule to require covered entities

to reconfigure their operations. If cherries from many growers are typically

mixed (i.e., commingled), then full information linking ingredient source to

final product may not be reasonably available. If, however, the cherries are

in separate bins based on supplier or easily can be separated and identified,

then full information linking source to final product may be reasonably

available. In the PRIA, FDA acknowledged the prohibitive cost of a policy

option requiring producers to be able to link specific ingredients to specific

food products (option 13 in the proposal). That option was ultimately rejected,

in part, because of the high cost of identifying the producers of traditionally

commingled raw commodities. Instead, both the proposed and final rules

required linkage only when the linkage is reasonably available.

7. Labor Cost Estimates

(Comment 202) Several comments suggest that the wage rate used by FDA

in the PRIA of $25.10 is too low. One comment suggests that an hourly wage

of $33 would be more appropriate for the analysis, because it would reflect

the need for higher-level personnel involvement due to complexities in the

proposed rule. Another comment suggests that the $25.10 wage is reasonable,

but that the hour estimates are too low.

(Response) FDA disagrees with the suggestion to increase the wage rate

used in the analysis because the implied annual wage and overhead cost of

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more than $52,000 seems more than reasonable, as suggested in another

comment.

(Comment 203) One comment argues that there is no evidence that the

wage of $25.10 used in the analysis has been doubled to account for overhead

in any of the calculations.

(Response) The hourly wage of an administrative worker reported by the

Bureau of Labor Statistics of about $12.55 was doubled in the computations

to account for overhead costs. FDA acknowledges that this was not clearly

stated in the PRIA.

8. Learning Costs

(Comment 204) Some comments state that FDA’s estimate of 3 hours for

learning costs is low. The comments state that access to the Internet and lack

of fluency in English are not the only costs. The comments maintain that

learning cost estimates did not include the time for an FDA explanatory video

and did not include adequate time for evaluating the information in the rule.

(Response) Although the comment states that 3 hours is too low an

estimate, the comment did not indicate how the learning cost estimates as a

whole, or any of the component cost estimates, can be improved. FDA

explicitly incorporates the costs of searching, learning, and comprehending the

rule in the PRIA. Learning cost estimates are composed of costs for searching

for a copy of the requirements, and reading and understanding them. Because

of the approximate nature of the calculation, FDA rounds up to the nearest

half hour to 3 1/2 hours for the time required for reading and comprehending

the requirements of this final rule for all English reading users. Although the

cost of viewing the explanatory video was not explicitly included in the PRIA,

such a viewing was assumed to reduce the burden from other searching and

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learning activities. Consequently, in the analysis of the final rule, FDA

maintains the learning costs estimates used in the PRIA.

9. Specific Sector Cost Estimates

a. Transportation and warehouse sector. (Comment 205) At least one

comment states that trucking companies already maintain the required records

to comply with another Federal regulation and therefore additional Federal

requirements would be duplicative.

(Response) FDA has included several options in this final rule for

transporters to comply with their obligations to establish and maintain records

under this final rule. One option is for transporters to keep some of the records

currently required by the FMCSA regulations as of the date of publication of

this final rule. The FMCSA regulations already require interstate transporters

to establish and maintain transportation records, and we assume that interstate

transporters who already comply with the FMCSA recordkeeping requirements

will choose to comply with this final rule by maintaining such records.

However, the FMCSA regulations cover only interstate common carriers, while

this regulation covers all persons who transport food, including intrastate

carriers. Moreover, domestic air carriers, and interstate transporters of lowvalue

packages may not be required to comply with FMCSA regulations.

Consequently, as a result of this final rule, intrastate carriers, intrastate

shipments by interstate carriers, domestic air cargo carriers, and transporters

of low-value packages may incur recordkeeping costs, in addition to learning

costs, as a result of this final rule.

To estimate the costs incurred by intrastate carriers, domestic air cargo

carriers, and transporters of low value packages, we first estimate the number

of facilities that engage in only intrastate food transportation. Then, we adjust

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this number to account for domestic air cargo carriers of food shipments and

carriers of low-value food packages. Additional records maintenance costs

incurred by interstate carriers of intrastate shipments are estimated to be zero

since it is unlikely that a transportation establishment would use two sets of

recordkeeping practices.

To determine the number of intrastate carriers subject to this final rule

but not subject to FMCSA requirements, we take a weighted average of the

ratios of local to total general freight trucking in the CBP data under NAICS

code 4841, and the local to total specialized freight trucking in the County

Business Pattern data under NAICS code 4842. Weights are applied to reflect

the importance of local specialized and local general freight in all local

trucking to estimate the overall number of intrastate carriers. This computation

estimates that 50 percent of all freight carrying trucks are intrastate carriers.

Consequently, we assume that 50 percent of all transportation facilities are not

already subject to recordkeeping requirements under FMCSA, and will incur

the full records redesign and additional records maintenance costs of this

regulation.

The total number of domestic air cargo carriers of food packages is

estimated from NAICS code 481112 in the CBP and NES data which was used

for estimating the total number of transporters in the PRIA. Since not all of

the carriers reported under NAICS code 481112 transport food items, we used

a factor of 50 percent to scale data from the CBP and the NES to estimate the

number of air cargo carriers that have a significant portion of their business

transporting food items. The resulting estimate of the number of air cargo

carrier facilities that transport food items is approximately 1,825 or 0.078

percent of the total number of transporters. These facilities will incur records

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redesign costs and additional records maintenance costs, in addition to

learning costs as a result of this final rule.

The number of carriers of low-value food items is estimated using the

number of couriers under NAICS code number 49211, which was not included

in the PRIA. According to the U.S. Census Bureau, this NAICS includes

establishments primarily engaged in providing air, surface, or combined

courier delivery services. From the CBP and NES statistics there are

approximately 141,931 establishments engaged in courier services. Since this

includes courier services that use both air and surface transportation, we

reduce this number by 50 percent, under the assumption that only

establishments engaged in surface courier services are likely to carry food

items, resulting in an estimate of 70,965 surface courier facilities.

Most surface courier services may carry food items as an incidental part

of their business and will incur learning costs as a result of this rule. However,

only a small fraction will carry food items as a significant part of their business

and will incur additional records maintenance and records redesign costs. We

estimate that 10 percent of surface couriers services will have more than an

incidental portion of their business transporting food items and will incur

records redesign and additional maintenance costs in addition to learning

costs. This is consistent with the fraction of restaurants that report retail sales

as a secondary activity of their establishment (Ref. 29). The resulting estimated

number of surface transporters of low-value packages of food items that would

incur additional records maintenance and records redesign costs is 7,097

facilities.

(Comment 206) Several comments suggest that transportation carriers have

only a limited knowledge of the contents of the packages that they carry and

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should not be held liable for much of the information. These comments suggest

that transporters have detailed information on sources and recipients of the

products that they carry but do not have the capacity to track other details

of the contents of the packages, such as lot codes and other details. For

example, one comment states that air carriers typically rely on the shippers

for information, and shipments may not be identified as containing food.

Others comment that because carriers lack knowledge of the contents of

packages, the default records retention times for all shipments will be the

longer required time of 2 years, even if the contents are perishable products.

The comments state that this 2-year default retention time will only add to

the records retention burden already faced by many trucking firms.

(Response) FDA acknowledges that, currently, the transporter may have

limited knowledge of the contents of the packages that it carries and that an

undue records retention burden would result if the default would be the longer

retention period. FDA notes, however, that under this final rule transporters

must know that they are transporting food and be able to record a description

of that food. Nonetheless, FDA has relaxed the records retention requirement

for transporters from the proposed rule to this final rule. Transporters, or

nontransporters retaining records on behalf of a transporter, are required to

retain records for 6 months for any food having a significant risk of spoilage,

loss of value, or loss of palatability within 60 days after the date the food is

received or released and 1 year for any food having a significant risk of

spoilage, loss of value, or loss of palatability only after a minimum of 60 days

after the date the food is received or released. FDA also has codified in this

final rule an option for transporters to comply with recordkeeping

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requirements of this final rule by keeping records already required by the

existing bill of lading requirements applicable to interstate transporters.

(Comment 207) One comment expresses concern that differing knowledge

of the contents of food packages between transporters and nontransporters

would require standards of information exchange to be created to coordinate

the contents of records maintained by the two types of entities. The comment

suggests that without such standards, the coordination costs may be high,

because certain records maintained by nontransporters would need to be

exchanged with transporters for them to have the full knowledge of the

contents and extent of the packaging. Failure to create these standards would

result in elevated costs for transporters.

(Response) FDA acknowledges the limited knowledge that transporters

currently may have about the contents of the packages that they carry. FDA

has included less detailed information requirements in the final rule to

respond to these comments; however, FDA believes the information it is

requiring is necessary to allow the FDA to conduct a tracing investigation

efficiently and effectively. In addition, FDA included an option whereby

transporters can fulfill their recordkeeping requirements by keeping records

already required for interstate transporters. Furthermore, the final rule provides

an option allowing transporters to enter into a contractual arrangement with

the non-transporter immediate previous source located in the United States

or with the non-transporter immediate subsequent recipient located in the

United States; any contractual arrangements would redistribute the burden of

establishing and maintaining transportation records between transporters and

non-transporters but would not change the total recordkeeping costs since the

same number of records would be established and maintained under all

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negotiated arrangements. FDA assumes that current business practices are the

low-cost arrangement for the establishment and maintenance of records and

does not revise its estimate of recordkeeping costs to account for higher

coordination costs between transporters and nontransporters.

(Comment 208) Some comments state that FDA’s estimated cost per facility

in the public warehousing sector is likely to be incorrect because of the

apparent assumption that costs incurred would be similar for both a public

warehouse and a wholesaler. The comments argue that, because wholesalers

own a product, they are more knowledgeable about its contents and packaging

than are warehouse facilities. The comment notes that a warehouse is a third

party provider of warehousing, storage, and other value added services; does

not have direct knowledge of where a product originates; and may not have

full knowledge of the contents and packaging of a product, or of the product’s

next destination. Another comment states that the information asked for in the

proposal is reasonable, but that this information will be difficult, costly, or

impossible to obtain for public warehouse facilities.

(Response) FDA acknowledges that warehouse facilities and wholesalers

perform different functions. FDA has accounted for the differences in its cost

estimates. The NAICS definition of the wholesale trade includes, ‘‘* * *

selling merchandise, generally without transformation* * * to other

business* * *.’’ The definition also characterizes wholesalers as normally

operating from a warehouse or office (Ref. 27). In contrast, the NAICS defines

the warehousing and storage sector as providing facilities to store goods but

not sell the goods that they store. In addition, warehouse facilities may also

provide logistical services for the goods that they store (Ref. 27).

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Although the warehouse and wholesaler functions are clearly different,

FDA assumes that both kinds of facilities would have records giving an

immediate previous source and an immediate subsequent recipient of the

product. Because warehouse facilities do not take ownership of the products

that they handle, they may not have specific information about the products

and their packaging.

In the course of their day-to-day business dealings, warehouses may not

be privy to a description of the type of food or details of its packaging sufficient

to satisfy this regulation. To acquire this knowledge and maintain the required

records, warehouses may incur costs in addition to those that would be

incurred by the owners of the product. FDA assumes that as part of their

normal business practices, warehouse facilities may be required to maintain

a limited amount of information on the immediate previous source and

immediate subsequent recipient of a comparable magnitude to that of the

owners of the products. However, the detailed information on the product and

its packaging required by the regulation may be more costly to obtain for

warehouse personnel than for the owners of the product. For some products,

warehouse facilities are assumed to have the same required knowledge of the

required information on the stored product and its packaging as that of the

owner of the product. For other products, the warehouse personnel’s

knowledge of the required information on the stored product and its packaging

is less than that of the owner. We estimate that, for half of all food products

stored, warehouse personnel have the same amount of the required knowledge

of the food and its packaging as the owner of the product, and that the

additional records maintenance costs would be comparable to those incurred

by the product owners. For products for which warehouses currently lack the

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required knowledge, we assume that the additional records maintenance costs

for warehouse facilities would be approximately 50 percent higher than those

for owners of the products. Much of the extra cost may involve contracting

with product owners to provide the required information.

b. Interstate conveyances and catering services sector. (Comment 209)

Several comments suggest that the costs to the interstate conveyance catering

industry were greatly underestimated and that this sector should be excluded

from the regulation. One comment states that for airline caterers, each flight

typically includes hundreds of individual foods from scores of different

sources and suppliers. The comment further states that this industry is further

complicated by the large number of special meal requests by individual

passengers on each flight.

(Response) In the PRIA, we assumed that persons subject to this final rule

may be required to add a limited amount of new information to existing

transactions records, such as bills of lading, commercial invoices, and other

shipping documents. We did not model the costs of compliance for each sector

in the food economy, and assumed that the private incentives to maintain

most, if not all, of the required information were sufficient. Examples of private

incentives to maintain the required records are provided in our response to

comment 189. Moreover, we do not require that the information be in any

particular form or format, which further reduces the potential costs of

compliance.

c. Pet foods sector. (Comment 210) Some comments suggest that FDA

eliminate requirements for pet food because the risk of exposure through that

sector is small. Other comments acknowledge potential targets and impacts

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from terrorist attacks through the pet food sector and encourage FDA to require

all in the pet food sector to be subject to the final rule.

(Response) In the proposed rule, pet food not subject to the BSE rule was

excluded from the requirement to establish and maintain records. In this final

rule, all animal feed entities, including all pet food entities, are subject to all

requirements of the rule, but have a records retention requirement of 1 year.

There are approximately 19,600 facilities that were excluded in the proposed

rule and that have been included in this final rule. In the PRIA, rather then

estimate the cost savings from excluding these facilities from complying with

the regulation, we noted that the costs were overestimated because pet food

facilities were included in the estimates. In the final rule, pet food entities

are subject to the regulation and are included in the cost estimates.

d. Food contact substances and the packaging sector. (Comment 211) FDA

received many comments that FDA underestimated the number of facilities

covered by the definition of substances and components of substances that

contact food. One comment states that FDA does not include the ‘‘upstream’’

manufacturers that make ingredients and components that go into food

packaging who would be required to comply with the recordkeeping provisions

of this regulation. The comment further states that there is no logical

conclusion to this chain. Some other comments assert that FDA did not

account for warehouses that hold articles that can migrate to food from food

packaging, or other articles that contact food.

Another comment states that FDA’s count of the number of domestic

facilities is overly inclusive if FDA’s intention is to include only finished

packaging and that the Operational and Administrative System for Import

Support (OASIS) database used for the count of foreign facilities does not

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include suppliers of food contact articles. Other comments indicate that FDA

understated the number of facilities covered by the regulation by not

identifying transporters of food contact materials, and that the 20 NAICS codes

do not cover all food packaging manufacturers and distributors. Several

comments state that all packaging firms handle both outer packaging and food

contact substances, and for all practical purposes, will have to track all

products they produce, because they may not know if a shipment is destined

for food or nonfood use. One comment states that FDA’s count of foreign

facilities from OASIS did not include all imported food contact substances.

(Response) The final rule does not require persons who manufacture,

process, pack, transport, distribute, import, receive, or hold packaging (the

outer packaging of food that bears the label and does not contact the food)

to establish or maintain records. However, these persons are subject to the

records access requirements with respect to any existing records if they also

engage in another regulated activity with respect to the food in, or to be placed

in, such packaging. Persons who place food directly in contact with its finished

container are subject to all of the requirements of subpart J as to the finished

container that directly contacts that food. Moreover, all other persons who

manufacture, process, pack, transport, distribute, receive, hold, or import the

finished container that directly contacts the food are excluded from the

establishment and maintenance requirements with regard to the finished

container, and are only subject to the records access provisions for existing

records under §§ 1.361 and 1.363.

In the final rule, records access costs are estimated to be zero and we

assume that the only costs incurred by persons who manufacture, process,

pack, transport, distribute, receive, hold, or import the finished container that

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directly contacts the food are learning costs. Because the economic burden on

these facilities in the final rule has been substantially reduced from that

estimated in the PRIA, we assume that the impact on costs of any possible

underestimation of their numbers will be very small.

e. Foreign facilities and related impacts. (Comment 212) There were many

comments that state that the expansion of requirements to foreign facilities

would have a large impact on international trade by making imports more

expensive. Some comments state that costs for compliance by developing

countries were underestimated in the PRIA because their labor and technology

are so different from those that prevail in developed countries.

(Response) In the final rule, all foreign persons are excluded from all

requirements in this rule, except for foreign persons who transport food in the

United States. Because all foreign persons who transport food in the United

States are currently subject to FMCSA regulations as interstate transporters,

and can meet the requirements of transporters in subpart J of this final rule

by keeping records already required by FMCSA, the costs of compliance for

these facilities, including the costs for the records access requirement, are

assumed to be zero.

(Comment 213) One comment questions the implied assumption in the

PRIA that foreign transporters share the cost burden with other foreign

facilities when foreign transporters are not covered by the rule.

(Response) Foreign persons who transport food in the United States are

covered by this final rule. The revised costs of compliance by these facilities

to establish and maintain records are assumed to be zero because they will

be in compliance with this final rule if they keep the records currently required

by FMCSA for interstate transporters.

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10. Compliance Dates

Several comments suggest changes in the compliance dates. In the design

of the regulation, the compliance dates are used primarily to address regulatory

flexibility considerations. Consequently, these comments are treated in the

regulatory flexibility section of the final analysis.

G. Summary of the Costs and Benefits of the Final Rule and Policy Options

Considered

The revisions to the cost estimates based on comments to the proposed

rule and on changes in records requirements between the proposed and final

rule result in estimated costs of approximately $1.41 billion expressed in

present value terms, using a 7-percent discount rate. Using a discount rate of

3 percent, the estimated costs of the final rule expressed in present value terms

are approximately $1.94 billion. Costs for learning, records redesign, and

planning for records access requests are one-time costs incurred in the first

2 years following publication of the final rule. Additional records maintenance

costs and records retention costs are incurred each year following publication

of the final rule, beginning in the second year for large and small firms and

in the third year for very small firms. Learning costs and records access

planning costs for new entrants are also incurred each year following

publication of the final rule beginning after the second year. The details of

the assumptions used to estimate the costs are provided in the PRIA. The

estimated total cost is computed by summing the costs estimated for learning,

records redesign, additional records maintenance, records retention, and

planning for a records access request. The annual and total costs of the final

rule are reported in table 15 of this document.

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TABLE 15.—ESTIMATED ANNUAL AND TOTAL RECORDKEEPING COSTS1

21 CFR Section Costs (in dollars)

1.337, 1.345, and 1.352 (learning) $85,082,000

1.337, 1.345, and 1.352 (records redesign) $205,239,000

1.337, 1.345, and 1.352 (additional records maintenance) $114,701,000

1.337, 1.345, and 1.352 (learning for new firms) $8,508,000

Discounted present value of total costs2 $1,406,356,000

1 The annual costs are reported in undiscounted terms. Records access planning costs and records retention costs are estimated to be zero and are not reported

here.

2 The reported discounted present value of total costs assumes a 7-percent discount rate and a 20-year time horizon over which annual costs are summed.

The final rule will help reduce the numbers of people who become ill

during a foodborne outbreak by reducing the time required for preventive

action. Furthermore, the final rule will reduce the recurrence of outbreaks that

may have been prevented had nonexistent or poor records quality not resulted

in prematurely terminating the initial traceback investigation. In addition to

relaxing elements of the requirement for records to contain lot code

information, the reduction in benefits from the final rule compared to the

proposal results from excluding foreign facilities except those that transport

food in the United States, relaxing recordkeeping requirements for food contact

substance facilities, relaxing recordkeeping requirements for very small retail

facilities, adopting retention requirements based on the NIST food shelf life

definitions, and relaxing the records access requirement from 4 and 8 hours

to as soon as possible, not to exceed 24 hours.

The estimated costs and benefits of many policy options considered in this

section summarize the details of the analyses based on the comments FDA

received and are reported in the following tables. The costs for the options

are reported in present value terms for both 7 percent-and 3-percent discount

rates. We summed the discounted annual costs over a 20 year horizon to obtain

the estimate of the total costs. A 20-year horizon for measuring the costs from

the regulation is reasonable, given uncertainty in the regulatory environment

and technological change. The reduction in benefits relative to the proposal

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from each modification is based on the impact that each option would likely

have on traceback times and the rates of traceback completions. Again, the

benefits are based solely on food safety concerns (i.e., typical traceback

scenarios with which FDA has been involved) and do not take into account

food security concerns.

In table 16 of this document we compare the costs of the options

considered to the baseline option of the proposed rule, with the caveat that

the provision requiring all records to contain lot code information, which was

included in the proposed rule, is no longer in the baseline. All other provisions

included in the proposed rule are in the baseline for this analysis.

All options consider relaxing one provision, or excluding one sector from

the recordkeeping requirements. In that way, a comparison of the cost of a

policy option with the cost of the baseline yields the marginal cost savings

from either relaxing a provision in the baseline, or reducing the coverage by

one sector relative to the baseline. The columns containing the absolute

amount and percentage cost savings show the savings relative to the baseline.

In the final rule reported in table 18 of this document, the provisions requiring

lot code information, 4- and 8-hour records access, and short compliance dates

are all relaxed to yield cost savings relative to the baseline. Additional cost

savings result from excluding the following: (1) Foreign persons, except for

foreign persons who transport food in the United States; (2) persons who

manufacture, process, pack, transport, distribute, receive, hold, or import food

contact substances except the finished container that directly contacts the food;

and (3) persons who manufacture, process, pack, transport, distribute, receive,

hold, or import the finished containers that directly contacts food except for

those who place food directly in contact with its finished container.

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The option to relax the requirements for all records to contain lot code

information when feasible saves more costs relative to the baseline than any

other option. The cost savings from relaxing the lot code information

requirement is approximately $13 billion in present value terms with a 7

percent discount rate, and $18 billion with a 3 percent discount rate. Based

on detailed information in the comments, requiring lot code information to

be contained in all records by retailers and distributors would result in

approximately an 80 percent loss in productivity for distributors and retailers.

Excluding many foreign persons and relaxing the 4- and 8-hour records

access requirement also result in significant cost savings. By excluding all

foreign persons except those who transport food in the United States,

approximately 225,000 facilities would not have to establish and maintain

records relative to the baseline. This exclusion results in a cost savings of

approximately $770 million, or 19 percent, relative to the baseline in present

value terms when a 7-percent discount rate is used, and a savings of $1 billion

when a 3 percent discount rate is used. A 24-hour records access requirement

results in a cost savings of approximately $260 million relative to the baseline

with a 7-percent discount rate, and $318 million with a 3-percent discount

rate.

Extending the compliance dates and broadening the scope of foods subject

to the limited 1-year records retention period relative to the baseline are all

provisions in the final rule. Cost savings from extending the compliance dates

by 6 months relative to the baseline result from reductions in inventory losses

and discounts in the costs realized when incurred 6 additional months into

the future. These cost savings are approximately $271 million relative to the

baseline with a 7-percent discount rate, and $163 million with a 3 percent

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discount rate. Adopting retention requirements based on NIST definitions

based on shelf life is not assumed to increase costs, but will reduce the benefits

by a negligible amount.

Throughout the analysis, we have estimated costs based on the number

of facilities, and assume that this number, whenever used, approximately

reflects the number of persons covered by the regulation. The revised number

of facilities covered by the final rule is estimated to be 707,672 (including

persons who manufacture, process, pack, transport, distribute, receive, hold,

or import food, and foreign based transporters that transport food in the United

States). Learning costs are assumed to be incurred by all facilities and persons

2 years following enactment of this final rule and are computed by multiplying

the number of facilities by the cost of learning per facility. Based on details

outlined in the proposed rule, learning costs are computed using a $25.10 wage

rate and 4.5 hours spent learning for Internet users (approximately 71 percent,

and 5.5 hours spent learning for non-Internet users). The total learning costs

are computed to be $85,082,000.

Records redesign costs are assumed to be incurred by approximately

101,153 large and small firms 2 years following issuance of this final rule and

by 222,316 very small firms after 3 years following issuance of this final rule.

Persons who manufacture, process, pack, transport, distribute, receive, hold,

or import the finished container that contacts food, and foreign based

transporters that transport food in the United States are assumed not to incur

records redesign costs. In this analysis, FDA assumed that all sizes of firms

will bear the $1,365 per-firm records redesign cost estimate that was used in

the proposal as the most likely records redesign cost for small and very small

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firms. The redesign costs are $53,508,000 after the second year and

$151,731,000 after the third year following issuance of this regulation.

FDA assumes the additional records maintenance costs to be incurred by

110,081 large and small facilities 2 years following issuance of this final rule

and by 379,493 facilities after 3 years and for all subsequent years following

issuance of the final rule. Persons who manufacture, process, pack, transport,

distribute, receive, hold, or import the finished container that contacts food

and foreign based transporters that transport food in the United States are

assumed to not incur additional records maintenance costs. FDA assumes the

34,634 convenience store facilities will spend 2.5 hours per year and that

persons who directly market food are excluded from the rule. All other

facilities (344,859) will spend 13 hours per year on additional records

maintenance at an hourly cost of $25.10. The undiscounted total additional

records maintenance costs 2 years following enactment of the rule are

$70,745,000. After 3 years, and for each subsequent year, the undiscounted

additional records maintenance costs are $114,701,000. The annual costs for

records access planning and for records retention for all persons are assumed

to be zero in the final rule.

The following table includes the estimated reduction in benefits relative

to the proposal from policy options that would exclude select sectors from

recordkeeping requirements, or that would relax certain provisions, which are

considered in detail earlier in this analysis. The benefits from each policy

option are ranked by size, so that policy options that would result in large

reductions in benefits relative to the proposal are ranked highest, where a

ranking of one represents the largest reduction in benefits relative to the

proposal.

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The reduction in benefits from relaxing the requirement for all persons

to establish and maintain records containing lot numbers is very high. With

lot codes contained on all records, the duration of a traceback investigation

for many products would likely be between 1 and 14 days (estimated current

times for many packaged products that contain all lot code information on the

package). Relaxing the lot code requirement may increase the traceback times

of these products to between 6 to 8 weeks (estimated current times for many

fresh products not accompanied by lot code information). Relaxing the

requirement for all records to contain lot code information leads to the largest

reduction in benefits relative to the baseline.

The reduction in benefits from excluding all foreign persons except those

who transport food in the United States is considerable because the large

number of excluded entities increases the likelihood of hampering traceback

investigations. Moreover, the risk of contamination (unintentional) is generally

higher for many products earlier in the supply chain. In addition, enforcement

costs for foreign persons would likely be prohibitively high—decreasing the

likelihood of obtaining records required for a traceback even if these persons

were covered. When compared to the eight other individual options considered

for the final rule, the large number of excluded foreign persons ranks third

highest of the reductions in benefits relative to the baseline considered. This

reduction in benefits, however, is mitigated in one respect: The risk of not

being able to complete traceback investigations due to this exclusion is

considered low because most of these foreign entities occupy positions early

in the supply chain.

The reduction in benefits from relaxing the recordkeeping requirements

for persons who manufacture, process, pack, transport, distribute, import,

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receive, or hold food contact substances other than the finished container that

directly contacts the food, and who manufacture or process the finished

container that directly contacts the food, as estimated by the number of

applicable facilities, is small. Although relaxing requirements for these persons

may expose a ‘‘soft target’’ for intentional contamination, the probability of

foodborne illness from unintentionally contaminated food contact substance

and finished container material is low. Furthermore, the likelihood of needing

records from food contact substance and finished container facilities during

traceback investigations is also low. When compared to the other issues

considered for the final rule, relaxing the requirements for these persons ranks

only seventh in the reductions in benefits relative to the baseline.

The reduction in benefits from relaxing the requirement to access records

within 24 hours from 4- and 8-hour requirement would be substantial. We

estimate that relaxing the records access requirement would increase the

amount of time for any preventive action to be taken during a traceback

investigation by about 5 days relative to the baseline, if all persons subject

to an access request took the full 24 hours to respond. The loss of time relative

to the baseline would limit the preventive benefits for 15 percent to 18 percent

of outbreaks. Relaxing the record access requirement from 4 and 8 hours, to

within 24 hours ranks second in reductions in benefits relative to the baseline.

The reduced benefits from extending the compliance period by 6 months

for each person subject to the final rule are a twofold increase in the number

of outbreak victims relative to the baseline in the first year only. Baseline

benefits reduce the impact of 15 percent to 18 percent of outbreaks and

eliminate the problem of prematurely terminated investigations because of

poor records quality (i.e., about 10 percent of the total number of traceback

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investigations estimated from FDA outbreak investigation information).

Extending the compliance dates by 6 months ranks sixth in the reductions in

benefits relative to the baseline.

We estimate that allowing transporters to comply with this final rule by

complying with existing requirements (e.g., records already required by

FMCSA) will have a negligible impact on the benefits relative to that from the

more comprehensive requirements of the proposal. Option 7 in table 16 of this

document incorporates a 24-hour access provision, 6, 12, and 24 month

retention requirements, extension of the compliance dates, and adjusted

recordkeeping requirements for transporters based on existing requirements.

In table 18 of this document, the costs and benefits of the final rule are

compared with those from the adjusted comprehensive coverage of option 7

in table 16 of this document.

TABLE 16.—COSTS AND REDUCTIONS IN FOOD SAFETY BENEFITS FOR CHANGES BASED ON COMMENTS

Policy Option (in Terms of the

Baseline) Cost (7% Discount) Cost (3% Discount)

Reduction in

Benefits Relative

to the

Baseline

Baseline1: Proposed rule except requirement

for all records to contain lot codes is relaxed.

$4.0 billion $5.27 billion

(1) Baseline except existing interstate transporter

requirements are sufficient.

$3.78 billion $4.97 billion No reduction2 1

(2) Baseline except retention of 6, 12, and 24

months per NIST standards

$4.0 billion $5.27 billion Negligible reduction 2

(3) Baseline except food contact entities are excluded.

3

$3.92 billion $5.16 billion Exclude 37,000 facilities near

the top of supply chain.

Low risk of contamination

and low risk of loss of the

paper trail.

3

(4) Baseline except compliance dates are extended

by 6 months.

$3.73 billion $5.10 billion An estimated one-time, twofold

increase in the number

of victims compared with

the baseline in the first

year only.

4

(5) Baseline except foreign facilities are excluded.

$3.23 billion $4.26 billion Exclude 225,000 facilities

near the beginning of the

supply chain. Very high

cost of enforcement and

access.

5

(6) Baseline except relax records access from 4

and 8 hours, to 24 hours.

$3.74 billion $4.95 billion Adds a maximum of about 5

days to the time for preventive

action during an

outbreak.

6

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TABLE 16.—COSTS AND REDUCTIONS IN FOOD SAFETY BENEFITS FOR CHANGES BASED ON COMMENTS—Continued

Policy Option (in Terms of the

Baseline) Cost (7% Discount) Cost (3% Discount)

Reduction in

Benefits Relative

to the

Baseline

(7) Adjusted comprehensive coverage $2.59 billion $3.57 billion Incorporates all policy options

and adjusted numbers of

facilities

1 Note that option 1 is used as the baseline in the descriptions of all other options. The variation of the proposed rule with the relaxed lot code requirements is used

as the baseline in this table because the high cost of requiring lot codes on all records ($16.58 billion) is overwhelming. While the reduction in benefits from relaxing

the lot code requirements is also large, we thought that the inclusion of that option in this table would confuse the presentation and add little practical value to the policy

analysis.

2 Because this chart only reflects food safety, it does not include classified food security scenarios which envision intrastate shipments being targeted for tampering.

3 This option overstates the cost reduction from provisions in the final rule that exclude food contact substance entities since it assumes that they will not have to

incur learning, records redesign, and additional records maintenance costs. In the final rule these entities will incur learning costs since they will still be subject to access

requirements for records that they keep during the course of normal business activity.

We constructed the policy options reported in the following tables to

provide a range of net benefit and cost effectiveness measures for alternative

coverage options. The records access, retention, and compliance date

provisions, as well as the requirements for transporters for all options reported

in the following tables, are the same as those reported for option 7 in the

previous table. In addition, coverage for the option entitled ‘‘all entities’’ is

the same as that for option 7 in the previous table. Persons handling the

finished container that contacts food are excluded from all of the following

coverage options for the policy reasons stated previously. However, while

persons handling the finished container that contacts food other than those

who place food directly in contact with the finished container, are not required

to establish and maintain records in the final rule, they are required to provide

access to FDA to existing records if the conditions for access are satisfied. This

requirement is implicit in all of the options with different coverage reported

in the following tables.

TABLE 17.—COVERAGE OF DIFFERENT POLICY OPTIONS

Grocery Outlets Importers and

Wholesalers Manufacturers Mixed-Type Facilities

Warehouses Transporters

Option

Adjusted Comprehensive

All All All All All All

A All

B All

C All All

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TABLE 17.—COVERAGE OF DIFFERENT POLICY OPTIONS—Continued

Grocery Outlets Importers and

Wholesalers Manufacturers Mixed-Type Facilities

Warehouses Transporters

D All All All

E All All All All

F All All All All All

G (final rule) Exclude very small All All All All All

H Exclude very small Exclude very small Exclude very small Exclude very small Exclude very small Exclude very small

I Exclude very small All All All All Only interstate

Note: Very small firms are defined as those with fewer than 10 full-time equivalent employees.

In the following table, costs, food safety benefits, and cost effectiveness

measures are reported for each of the coverage options described in the above

table, and the final rule. Costs are reported in terms of annualized costs and

incremental costs using a 7-percent discount rate over a 20-year horizon.

Benefits are reported in terms of the annual number of food safety illnesses

averted (reported and unreported), and the incremental number of illnesses

averted. The estimates of the numbers of averted illnesses should be

interpreted as minimum values because they relate to only the food safety

benefits; bioterrorism considerations are not incorporated into the estimates.

Cost effectiveness measures are in terms of the incremental costs per averted

illness, and the average cost per averted illness.

The incremental cost per averted illness is used to measure the relative

cost effectiveness of an option when compared with successively more

stringent requirements. It is computed by dividing the incremental costs from

the option by the incremental benefits. Since option H averts a larger number

of illnesses at lower cost then options A through F, option H dominates the

other options and they can be eliminated from further consideration in an

incremental cost effectiveness analysis. Thus, the cells for computing the

incremental costs per averted illness for those options are left blank in table

18 of this document. Similarly, through the principle of weak (or extended)

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dominance, option I can be eliminated from the incremental cost effectiveness

analysis. (For a full discussion of extended dominance in cost-effectiveness

analysis, see Gold, M.L., J.E. Siegel, L.B. Russell, and M.C. Weinstein, ‘‘ Cost

Effectiveness in Health and Medicine: The Report of the Panel on Cost-

Effectiveness in Health and Medicine, Oxford University Press,’’ New York,

p. 286, 1996). Consequently, only options H, the final rule, and the adjusted

comprehensive coverage are used to measure the incremental cost

effectiveness. We assume that bioterrorism considerations would not alter the

relative order of the number of illnesses averted across all options.

The average costs per averted illness reported in table 18 of this document

are calculated by dividing the annualized costs by the total number of illnesses

averted for each option. The average costs per averted illness is the costeffectiveness

of each option relative to the baseline. For the final rule, the

average cost-effectiveness expressed in costs per illness prevented is $110,000

discounted at 7 percent and $108,000 discounted at 3 percent.

TABLE 18.—COSTS, FOOD SAFETY BENEFITS, AND COST EFFECTIVENESS OF ALTERNATIVE COVERAGE OPTIONS

Costs Benefits Cost Effectiveness

Annualized Costs Incremental Cost Illnesses averted Incremental Benefit Incremental Cost

per Averted Illness

Average Cost per

Averted Illness

Option A $40,975,852 245 $167,248

Option C $56,753,102 316 $179,598

Option D $67,712,296 355 $190,739

Option E $69,902,094 359 $194,713

Option B $135,636,340 572 $237,126

Option F $119,792,995 621 $192,903

Option H $30,610,378 $30,610,378 1,067 1,067 $28,688 $28,688

Option I $106,138,020 1,072 $99,009

Final Rule $132,750,092 $102,139,714 1,204 137 $745,545 $110,258

Adjusted Comprehensive

$244,134,086 $111,383,994 1,282 78 $1,428,000 $190,432

The distribution of the number of illnesses averted due to faster traceback

investigations and more successfully completed traceback investigations for

each policy option are also reported in the following tables. Of the 800 annual

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food safety illnesses averted due to improved recordkeeping practices, about

600 can be