
[Federal Register Volume 76, Number 222 (Thursday, November 17, 2011)]
[Rules and Regulations]
[Pages 71248-71255]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-29701]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

21 CFR Part 501

[Docket No. FDA-2009-N-0025]


Animal Food Labeling; Declaration of Certifiable Color Additives

AGENCY: Food and Drug Administration, HHS.

ACTION: Final rule.

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SUMMARY: The Food and Drug Administration (FDA) is amending its 
regulations regarding the declaration of certified color additives on 
the labels of animal food including animal feeds and pet foods. FDA is 
issuing a final regulation in response to the Nutrition Labeling and 
Education Act of 1990 (the 1990 amendments), which amended the Federal 
Food, Drug, and Cosmetic Act (the FD&C Act) by requiring, among other 
things, the listing on food labels of the common or usual names of all 
color additives required to be certified by FDA. An additional purpose 
of this final rule is to make these regulations consistent with the 
regulations regarding the declaration of certified color additives on 
the labels of human food. The final rule also suggests appropriate 
terminology for the declaration of certification-exempt color additives 
on the labels of animal food.

DATES: This rule is effective November 18, 2013.

FOR FURTHER INFORMATION CONTACT: John P. Machado, Center for Veterinary 
Medicine (HFV-228), Food and Drug Administration, 7519 Standish Pl., 
Rockville, MD 20855, (240) 453-6854, john.machado@fda.hhs.gov.

SUPPLEMENTARY INFORMATION: 

[[Page 71249]]

I. Background

    The 1990 amendments amended section 403(i) of the FD&C Act to 
require that certified color additives used in or on a food be declared 
by their common or usual names. Because section 201(f) of the FD&C Act 
(21 U.S.C. 321(f)) defines ``food'' as any article used for food or 
drink for man or other animals, the changes made to section 403(i) by 
the 1990 amendments apply to both human and animal foods. In response 
to this statutory amendment, FDA revised its human food labeling 
regulations by adding paragraph (k) to Sec.  101.22 (21 CFR 101.22). 
The proposed and final rules for these regulations were published in 
the Federal Register on June 21, 1991 (56 FR 28592) and January 6, 1993 
(58 FR 2850), respectively.
    On November 23, 2009, FDA issued a proposed rule (74 FR 61068) 
(proposed rule) which proposed a regulation for animal food labels 
similar to the one made in Sec.  101.22 for human food labels. 
Specifically, the proposed rule adds paragraph (k) to the animal food 
labeling regulations at Sec.  501.22 (21 CFR 501.22). This paragraph 
explains how certified color additives used in animal foods must be 
declared in the ingredient list, and sets out the various ways that 
manufacturers may collectively declare certification-exempt color 
additives in the ingredient list. Proposed Sec.  501.22(k)(1) states 
that a color additive or the lake of a color additive subject to 
certification under section 721(c) of the FD&C Act (21 U.S.C. 379(c)) 
shall be declared by the common or usual name of the color additive as 
listed in the applicable regulation in part 74 (21 CFR part 74) or part 
82 (21 CFR part 82), except that it is not necessary to include the 
``FD&C'' prefix or the term ``No.'' in the declaration. However, the 
term ``Lake'' shall be included in the declaration for the lake of a 
certified color additive (e.g., Blue 1 Lake).
    Proposed Sec.  501.22(k)(2) states that manufacturers may 
parenthetically declare an appropriate alternative name of the 
certified color additive following its common or usual name as 
specified in part 74 or part 82. The new provision also provides a 
number of options for collectively declaring the presence in food of 
the certification-exempt color additives that are listed in part 73 (21 
CFR part 73). Color additives not subject to certification may be 
declared as ``Artificial Color,'' ``Artificial Color Added,'' or 
``Color Added'' (or by an equally informative term that makes clear 
that a color additive has been used in the food). Alternatively, such 
color additives may be declared as ``Colored with --------'' or ``----
---- color,'' the blank to be filled with the name of the color 
additive listed in the applicable regulation in part 73.

II. Comments

    FDA received 14 comments, all from consumers who overwhelmingly 
supported the proposed rule. These comments approved of the declaration 
of certified colors in animal food as an aid to consumers in avoiding 
food allergies and other adverse reactions potentially caused by added 
colorings. Consumers value this additional information on the label in 
order to make informed choices about what their animals consume. There 
were only two comments that opposed the proposal and one comment that 
suggested additional requirements be adopted.
    (Comment 1) One comment described the proposed rule as 
``frivolous'' and stated that if the color additive was approved by FDA 
for inclusion in an animal food, the specific name of the color 
additive would not need to be declared. The commenter stated that 
without added colors the animal food would not be appealing. The 
comment concluded that adding information on certified colors would not 
benefit consumers.
    The 1990 amendments required the declaration of certified colors on 
food labels and that requirement applies to animal food as well as 
human food. FDA is seeking to bring the declaration of certified colors 
on labels of animal food in line with the labeling of human foods. 
Twelve of the comments indicated that consumers strongly support these 
proposed requirements and believe that such information on the label 
would be valuable to them and would enable them to make informed 
decisions of their pet food choices, thus demonstrating that this rule 
is not frivolous and serves to provide desired information to 
consumers.
    (Comment 2) One comment expressed disapproval of the proposed rule 
claiming that the costs of the rule outweigh the benefits. The comment 
stated, ``In difficult economic times, it seems unwise to impose 
unknown costs on small businesses without concrete benefits to 
consumers.'' Instead, the comment proposed exempting small businesses 
employing fewer than 20 employees from the labeling requirements of 
Sec.  501.22(k)(1) and (k)(2), provided they state on the label 
``artificial color added.'' The comment also stated that the rule did 
not have ``concrete benefits.''
    In passing the 1990 amendments, Congress anticipated that 
declaration of certified colors, and nutrition labeling provisions in 
general, would impose some substantial compliance costs for large and 
small businesses (58 FR 2070; January 6, 1993). In the Regulatory 
Flexibility Analysis of the proposed rule (74 FR 61068 at 61069) we 
considered the economic impact on small businesses, as well as large 
firms, and tentatively concluded that at every establishment size, the 
expected cost of compliance would likely be significantly less than 1 
percent of revenues for each label requiring new labeling. We have, 
therefore, determined that the compliance costs of this final rule are 
unlikely to have a significant economic impact on a substantial number 
of small entities and that compliance costs are, in general, 
reasonable.
    Furthermore, this comment's suggestion that businesses with less 
than 20 employees be exempted from proposed Sec.  501.22(k)(1) and 
(k)(2) if the phrase ``Artificial Color Added'' is added to the label 
fails to negate the compliances costs associated with this final rule. 
FDA maintains that it is the total process of changing the label 
(including administrative, graphic, prepress, and engraving activities 
as well as label inventory loss), and not the actual wording change on 
the label, that imposes the vast majority of the compliance costs of 
the rule. The requested exemption would still require those that 
qualify to make label changes and would only minimally reduce the 
number of words on the label. Additionally, the requested exemption 
would likely require that FDA create reporting requirements to allow 
small businesses to qualify for the exemption based on the number of 
employees. Thus, the requested exemption would not be expected to 
meaningfully reduce compliance costs. Due to these reasons, FDA has 
decided not to include this exemption in the final rule.
    Moreover, FDA is decreasing the impact of such compliance costs by 
adopting a 2-year effective date to allow for depletion of animal food 
label inventories, and thus, FDA has done everything possible to both 
satisfy the statutory mandate and reduce the impact on affected 
businesses.
    The consumers that commented on the proposed rule overwhelmingly 
indicated their support of the rule, and their willingness to incur 
additional costs in order to have the benefit of more information being 
declared on the label. One comment in support of the rule stated, 
``Many pet food manufacturers are already compliant with these new 
regulations because the FDA had provided informal education to 
manufacturers in the 1990s, in anticipation of the impending changes

[[Page 71250]]

under [the 1990 amendments].'' Therefore, FDA finds that from the 
comments received, the public generally perceives that there is a 
benefit to the proposed rule as adopted.
    (Comment 3) One comment that supported the proposed rule suggested 
that FDA go farther and require that certification-exempt colors, such 
as cochineal or carmine, be declared on animal food labels. The comment 
cited concerns regarding the potential for allergic reactions or 
illness caused by these color additives.
    Congress mandated the declaration of certified colors in the 1990 
amendments. Certification-exempt colors were not part of the 
Congressional initiative. However, CVM will work in concert with the 
Center for Food Safety and Applied Nutrition in evaluating whether 
additional authority in this area is needed.
    As stated previously, other comments received generally supported 
the proposed rule for a variety of reasons, including the importance of 
informing consumers about the food they feed their pets. Therefore, as 
the comments in opposition to the proposed rule did not provide 
sufficient evidence to cause FDA to alter its provisions, FDA did not 
amend the provisions of the proposed rule in response to comments and 
is making no changes to the final regulation.

III. Analysis of Impacts

    FDA has examined the impacts of the final rule under Executive 
Order 12866, Executive Order 13563, the Regulatory Flexibility Act (5 
U.S.C. 601-612), and the Unfunded Mandates Reform Act of 1995 (Pub. L. 
104-4). Executive Orders 12866 and 13563 direct 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). The agency believes that this final rule is not a significant 
regulatory action under Executive Order 12866.
    The Regulatory Flexibility Act requires agencies to analyze 
regulatory options that would minimize any significant impact of a rule 
on small entities. As discussed more fully in section IV of this 
document, we have prepared a final regulatory flexibility analysis. 
This analysis indicates that at every establishment size, the expected 
one-time cost of compliance would likely be significantly less than 1 
percent of average annual revenues for each label requiring new 
labeling. We have, therefore, determined that the compliance costs of 
the final rule are unlikely to have a significant economic impact on a 
substantial number of small entities.
    Section 202(a) of the Unfunded Mandates Reform Act of 1995 requires 
that agencies prepare a written statement, which includes an assessment 
of anticipated costs and benefits, before finalizing ``any rule that 
includes any Federal mandate that may result in the expenditure by 
State, local, and tribal governments, in the aggregate, or by the 
private sector, of $100,000,000 or more (adjusted annually for 
inflation) in any one year.'' The current threshold after adjustment 
for inflation is $136 million, using the most current (2010) Implicit 
Price Deflator for the Gross Domestic Product. FDA does not expect this 
final rule to result in any 1-year expenditure that would meet or 
exceed this amount.

A. Purpose of Rule

    The purpose of this rule is to implement the 1990 Amendments, which 
required that all food labels list the common or usual names of all 
color additives that are required to be certified by FDA. FDA published 
the proposed rule in the November 23, 2009, Federal Register proposing 
a regulation that would require that the common or usual name of all 
color additives that are required to be certified by FDA be listed on 
the label of animal foods. Additionally, the proposed rule suggested 
how color additives not certified by FDA should be declared on the 
ingredient list of animal foods. This regulation would amend FDA's 
animal food regulations to include certain requirements of the 1990 
Amendments, as was previously done with the human food regulations. 
Because FDA was directed to establish regulations by the 1990 
Amendments, the agency lacked a great deal of flexibility in the 
development of the proposed rule.

B. Comments to the Proposed Rule

    FDA received 14 comments to the proposed rule. Most supported the 
proposed rule, but one comment, which disapproved of the rule, stated 
that the costs of the rule outweigh the benefits. FDA does not agree 
with the implication of this comment that the rule is not justified and 
should not be finalized. Although, for the proposed rule and this final 
rule, FDA does not have information to quantify and monetize the 
benefits of the rule, FDA has provided a 2-year effective date in an 
attempt to reduce the compliance costs of the final rule. As discussed 
previously, this comment also suggested that businesses with less than 
20 employees be exempted from proposed Sec.  501.22(k)(1) and (k)(2) if 
the phrase ``Artificial Color Added'' is added to the label. Because 
the requested exemption would still result in label changes for those 
that qualify for the exemption, it would only minimally reduce the 
number of words on the label, and would not be expected to meaningfully 
reduce compliance costs. Due to these reasons, FDA has decided not to 
include this exemption in the final rule.

C. Benefits

    As stated previously, no comments to the rule contained information 
or argument that persuaded FDA to amend the codified language of the 
rule. As such, FDA retains its initial benefits discussion and cost 
model for this final rule, incorporating updated cost factors where 
necessary to reflect current conditions. The principal benefit of this 
rule is that it would provide additional consumer information for 
purchasers of pet food and other animal food products to consider in 
making their buying decisions for those animal food products that are 
not currently labeled in accordance with the provisions of this final 
rule. The agency does not have any data with which to quantify the 
extent to which having this additional information would result in more 
informed buying decisions by consumers. The rule also would provide 
some voluntary options for all animal food manufacturers, including 
options for terminology they can use when declaring certification-
exempt color additives on their product labels.

D. Costs

    The final rule has an effective date that is 2 years from the date 
of publication. This time is intended to allow animal food 
manufacturers some time to deplete their current label inventories as 
they make the transition to the new label. We do not expect this final 
rule to require a major label redesign because it would likely only 
necessitate minor changes in wording on the ingredient list. Many 
animal food manufacturers are already declaring certified color 
additives in their labeling by their common or usual name.
    The rule would impose some review costs on those animal food 
manufacturers that use or intend to use certified color additives. 
Because the vast majority of animal food products that contain 
certified color additives are pet foods, we limit the costs to review 
labels for the use of certified color additives to pet food 
manufacturers. Each of these manufacturers would need

[[Page 71251]]

to review the labels of its pet food products to determine the current 
level of compliance with the final rule. Those manufacturers determined 
not to be in compliance with the final rule would incur additional 
costs under Sec.  501.22(k)(1) to change the wording of their labels.
    Animal feeds for a limited number of production animals, such as 
animal feeds for certain farm-raised fish and poultry, also contain 
color additives. However, we believe the color additives used in animal 
feeds for fish and poultry are generally certification-exempt, because 
such color additives can produce the desired colors in edible tissues 
of these animals more efficiently than certified color additives; 
currently, no certified color additive is approved to alter the color 
of the edible tissue of these animals. We did not receive any comments 
or data on these assumptions on the use of color additives in animal 
feeds for production animals in general, and in particular, on the use 
of certified color additives in fish and poultry feeds.
    Animal food manufacturers using certification-exempt color 
additives in their products would only incur additional relabeling 
costs under Sec.  501.22(k)(2) if they were to revise their labels to 
use one of the specific terminology options set forth in that 
provision. Although Sec.  501.22(k)(2) lists specific terms that 
manufacturers can use when declaring color additives that are exempt 
from certification (e.g., ``Artificial Color'' or ``Color Added''), the 
provision also would permit such color additives to be declared using 
other equally informative terms that make clear that a color additive 
has been used in the food. An informal survey of labels demonstrated 
that most manufacturers of animal food products containing 
certification-exempt color additives are already declaring the presence 
of these ingredients in a manner that complies with proposed Sec.  
501.22(k)(2).\1\ We are not aware of any private incentives that would 
lead these manufacturers to voluntarily change their labels solely for 
the purpose of adopting one of the terms identified in proposed Sec.  
501.22(k)(2), although it is conceivable that some may make such a 
change as part of a larger effort to change their labels for other 
reasons, such as to comply with Sec.  501.22(k)(1) or as part of 
scheduled labeling changes. Because use of the terminology specified in 
Sec.  501.22(k)(2) is optional and the presence of certification-exempt 
color additives can instead be declared in other equally informative 
ways, we do not expect Sec.  501.22(k)(2) to impose any new compliance 
costs on animal food manufacturers.
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    \1\ Informal survey of pet foods brands taken on April 20, 2007, 
at one grocery store and one drug store in Anne Arundel County, 
Maryland, by FDA personnel.
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E. Pet Food Labeling Costs

    We do not have data sources that can be used to precisely estimate 
the number of pet food products. For the purpose of this analysis we 
assume, based on an industry source, that there may be up to 15,000 
different brands of pet foods.\2\ Further, we lack extensive data on 
pet food labels to confidently estimate the number of such labels that 
are currently consistent with the provisions of the final rule. An 
informal survey of pet food products for dogs, cats, rabbits, and 
guinea pigs, however, found that only 13 of the 68 products surveyed 
had labels that listed color ingredients in a manner that might be 
determined not to be in compliance with the final rule. Only 1 of the 
13 products would definitely be considered out of compliance with the 
rule, and that was due to its failure to individually identify which of 
the identified certified color additives were the colors requiring 
certification and which were the lakes colors requiring certification.
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    \2\ Veterinary News Network, http://www.myvnn.com, accessed May 
21, 2007.
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    On many of the other 12 product labels, the phrase ``and other 
color(s)'' or similar language followed immediately after a list of FDC 
colors requiring certification. In these cases, we believe it is likely 
that the phrase is being used to designate colors that do not require 
certification. However, because we could not rule out the possibility 
that the phrase ``and other color(s)'' or a similar phrase was being 
used to declare colors requiring certification that, therefore, would 
need to be listed individually by their common or usual name, we 
included them in the group of pet food product labels that would 
possibly be out of compliance. Based on the previous reasoning, we 
project the midpoint of the 12 possible cases of noncompliance 
represent actual cases of noncompliance with the final rule. Therefore, 
we project an upper end of the estimated noncompliance range at 7 of 
the 68 cases in the sample (6 of the possibly noncompliant cases plus 
the one case that is almost certainly out of compliance), or about 10 
percent.
    Due to the uncertainty surrounding pet food products in other 
market niches, as well as those that are imported (all or almost all of 
those in the informal sample are products that were produced in the 
United States, although some ingredients may have been imported), it 
may be proper to account for these products by increasing the possible 
non-compliance level. However, because of the arguments mentioned 
previously concerning our likely over estimation of the upper range of 
our estimate in our informal survey, we have only increased our high-
end estimate of products that would not be in compliance with the 
proposed rule to 15 percent. Although only 1.5 percent of the sample 
would definitely be out of compliance, to account for some uncertainty 
we have increased the low end of our compliance range to 5 percent. We 
estimate current product labeling that would not be in compliance with 
the proposed rule to range from 750 to 2,250 products, or 5 to 15 
percent of the estimated 15,000 different brands of pet food products. 
We did not receive any comments or data on these assumptions on the 
number of existing pet food product labels that would need to be 
modified in this final rule.
    We have estimated a cost for the combined effort by pet food 
industry management to become familiar with the requirements of the 
rule, plus the effort to determine the compliance status of each of the 
approximately 15,000 products. We project that, on average, the 
compliance status of each product could be determined within 15 minutes 
by an industry compliance officer. In some instances, notably those 
involving companies with fewer products, the average may be longer, due 
to the additional time spent on general education and awareness of the 
rule's requirements being apportioned over fewer products. For those 
companies with tens or hundreds of product labels, however, the average 
time to review an individual pet food ingredient label could easily be 
less than our estimate of 15 minutes per label. In any case, at 15 
minutes per label, the one-time effort to review the 15,000 labels 
would amount to 3,750 hours. Using the median wage rate of $34.31 per 
hour for an industrial production manager (adding 35 percent to account 
for benefits results in a cost of $46.32 per hour), the cost of this 
label review would amount to about $174,000.\3\
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    \3\ U.S. Department of Labor, Bureau of Labor Statistics, 
Occupational Employment Statistics NAICS 311100--Animal Food 
Manufacturing (http:/www.bls.gov/oes/2009/May/naics4_311100.htm).
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    FDA's Labeling Cost Model presents low, medium, and high cost 
estimates for all aspects of the label manufacturing process, from the

[[Page 71252]]

administrative efforts through physical creation of the label, as well 
as an estimate for the loss of current label inventory.\4\ We do not 
have specific data on the frequency of scheduled label changes for the 
pet food industry, but believe it would be similar to the human food 
industry. The model also includes a field that attempts to show to what 
extent human food labeling changes can be coordinated with scheduled 
labeling changes based on the time period within which the additional 
changes must be made. The model suggests parameters that lead to cost 
estimates that fall exponentially with the time allowed for labeling 
changes. The default or suggested percentages in the human foods model 
for a 2-year effective date are 33 percent for private label products 
and 67 percent for brand name products. For pet foods, we believe the 
large majority of products are branded, implying that our estimate of 
all pet food labels that would have a scheduled label change within the 
2-year effective date should be closer to 67 percent than 33 percent 
(the Labeling Cost Model does not include data for products made by the 
pet food industry). Further, the general conclusion of a discussion 
with an industry association was that 1.5 to 2 years is a reasonable 
estimate for the life of a pet food label order, and for large 
manufacturers it is likely less than 1 year.\5\ Based on these insights 
and lacking any other data source, we estimate that 60 percent of the 
pet food ingredient labeling changes could be coordinated with 
scheduled labeling changes. We invited public comment and data on the 
extent to which pet food ingredient labeling changes can be coordinated 
with scheduled labeling changes in the proposed rule, but did not 
receive any comments addressing this request.
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    \4\ FDA Labeling Cost Model, Final Report, Revised January 2003, 
RTI International.
    \5\ Email communication between industry association and FDA 
personnel on March 8, 2007.
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    We ran the model with several different human food items as proxies 
for pet foods, including canned seafood, cereal, flour meal, and bagged 
snack food, assuming a 2-year effective date for the rule. The 
resulting total costs (which include label inventory loss) per 
stockkeeping unit (SKU) varied from low cost estimates for all but the 
canned seafood around $800, and with high cost estimates for canned 
seafood approaching $4,750. For the purpose of this analysis, we 
propose to use the median cost estimates from the cereal and canned 
seafood model results, or a range from about $1,250 per SKU to about 
$3,550 per SKU. For this final rule, FDA has adjusted these costs for 
inflation by about 4 percent to about $1,300 per SKU and $3,700 per 
SKU.
    We project that only 300 to 900 pet food SKUs would be required to 
undertake an earlier labeling change as a result of this rule. This 
represents the 40 percent of SKUs that would not be able to coordinate 
the label change required by this rule with regularly scheduled label 
changes multiplied by the 750 to 2,250 SKUs that are not expected to be 
in compliance with the rule. Based on the range of per SKU costs 
described previously, the additional one-time labeling costs (including 
inventory loss) would range from $390,000 to about $3.3 million. 
Discounting these costs until the end of the 2-year transition period 
(at a 7-percent discount rate) results in one-time costs of about 
$340,000 to $2.9 million (at a 3-percent rate, the one-time cost would 
range from $367,000 to $3.1 million).
    We estimate total pet food industry one-time costs (discounted at 7 
percent) to range from about $510,000 to $3.1 million, including both 
the effort to determine compliance with the final rule and the labeling 
costs for those SKUs that would remain out of compliance after 2 years 
from the date of publication of the final rule. We do not project any 
additional annual reporting costs.

F. Analysis of Alternatives

    Because section 403(i) of the FD&C Act as amended by the 1990 
amendments specifically requires certified color additives used in food 
to be declared by their common or usual names, we lacked the 
flexibility to consider other ways to declare certified color additives 
on the labels of animal food products. Based on the 2-year effective 
date included in this final rule, total discounted one-time compliance 
costs would range from about $510,000 to $3.1 million. As indicated 
earlier, the 2-year effective date is to allow for an orderly 
transition from current label inventory without a significant, 
additional cost to the animal food products industry. We invited 
comment on the 2-year effective date. Aside from one comment which 
suggested that manufacturers take advantage of the 2-year delay in 
effectiveness of this rule to come into compliance, we received no 
comments on our assumption that a 2-year effective date would allow for 
an orderly transition to the new labels.

IV. Regulatory Flexibility Analysis

    The Regulatory Flexibility Act requires agencies to prepare a 
regulatory flexibility analysis if a rule is expected to have a 
significant economic impact on a substantial number of small entities. 
Although we believe it is unlikely that significant economic impacts 
would occur, we cannot rule out the possibility completely because of 
uncertainty in the distribution of the affected products among 
establishments producing animal food products. The following 
constitutes the final regulatory flexibility analysis.
    One requirement of the Regulatory Flexibility Act is a succinct 
statement of any objectives of the rule. As stated previously in this 
analysis, the agency is amending the ingredient labeling regulations 
for animal feeds and pet foods to require that the common or usual name 
of all color additives that are required to be certified by FDA be 
listed on the label. This change codifies in FDA's animal food labeling 
regulations the requirements of the 1990 Amendments, as was previously 
done for the food product labels for humans.
    The Regulatory Flexibility Act also requires a description of the 
small entities that would be affected by the rule, and an estimate of 
the number of small entities to which the rule would apply. Although 
some 2007 Census data are available, they do not at this time include 
the level of detailed information that FDA used from the 2002 Census 
for this part of the analysis of the proposed rule. Accordingly, FDA 
relies on the 2002 Census data for the analysis of the final rule. When 
available, 2007 Census data are also included to show that the number 
of establishments and companies has not changed enough to meaningfully 
affect the conclusions of the analysis.
    Dog and cat food manufacturers are classified in the North American 
Industrial Classification System (NAICS) under industry code 311111--
Dog and Cat Food Manufacturing. Census data from 2002 in this category 
show that 175 companies with 242 establishments make dog and cat foods 
in the United States (198 companies and 264 establishments in 2007). 
NAICS industry code 311119 is identified as Other Animal Food 
Manufacturing. The 2002 Census data for this category reported a total 
of 1,042 companies with 1,567 establishments (982 companies and 1,489 
establishments in 2007). At least 629 of these establishments, however, 
prepared feeds for beef cattle, dairy cattle, swine, poultry (other 
than chickens and turkeys), and other minor production animal species. 
These establishments manufacture animal feed for production animals 
such as cattle and swine that ordinarily would not include any color 
additives in their products. This reduces the number of

[[Page 71253]]

establishments in industry code 311119 that are subject to Sec.  
501.22(k)(1) to 938.
    We have not reduced the number of establishments any further to 
account for the 350 establishments that manufacture feed or feed 
ingredients for chickens and turkeys, fish species, and other minor 
species, which are the types of products that we believe are more 
likely to contain a color additive to aid in their marketability. Based 
on our understanding that feed or feed ingredients for chickens and 
turkeys, fish, and some other minor species typically do not contain 
color additives requiring certification, we believe that manufacturers 
of these products would only be minimally affected by proposed Sec.  
501.22(k)(1), if at all. However, since we cannot rule out the 
possibility that they would, at some point in the future, use a color 
additive requiring certification, we do not exclude them from the total 
of 938 establishments.
    For the final rule, FDA includes the 1,303 non-employer 
establishments in NAICS 31111 (Animal Food Manufacturing) in 2008. 
Because many of these establishments may not manufacture products that 
would be affected by this rule, including all 1,303 establishments in 
the total results in an upper bound to the range of establishments. In 
total, this demonstrates that the number of establishments 
manufacturing dog, cat, and production animal foods that could be 
affected by Sec.  501.22(k)(1) may be as large as 2,483 establishments 
(242 + 938 + 1,303). However, because the estimate of total SKUs 
affected by the rule only ranges up to 2,250, the number of total 
establishments could not be more than 2,250, and is likely lower since 
some establishments may have more than one SKU affected by the rule.
    The Small Business Administration defines businesses in NAICS 
categories 311111 and 311119 as small entities if they employ less than 
500 employees. Census data show that only one establishment with NAICS 
code 311111 employs 500 or more employees, and that no establishments 
within NAICS code 311119 employ 500 or more employees. By definition, 
all the non-employer establishments have fewer than 500 employees. The 
existence of some multi-establishment companies in NAICS codes 311111 
and 311119 would likely increase the number of companies that would not 
meet the definition of a small entity because companies composed of 
more than one establishment are likely to have more employees. 
Nonetheless, we would expect that a large number of the upper bound of 
2,250 establishments that manufacture dog food, cat food, or other 
animal food that might contain a color additive requiring certification 
would meet the criteria to be considered small businesses.
    Census Data on industry shipments for dog and cat food 
manufacturers are not available for establishments with one to four 
employees in 2002. For those establishments with 5 to 9 employees, and 
those with 10 to 19 employees, the average annual value of shipments, 
adjusted for inflation, ranges from $4.06 to $5.01 million. For all 
establishments with 20 or more employees, it is much greater. If a 
manufacturer composed of only one establishment of five to nine 
employees had to undertake one product relabeling due to this rule, the 
one-time cost of this effort would represent only about 0.09 percent of 
average annual revenues. Those establishments with 10 to 19 employees 
could have 13 SKUs needing relabeling before their one-time costs equal 
1 percent of average annual revenues, while establishments with 20 or 
more employees could have more than 60 SKUs needing relabeling before 
their one-time costs equal 1 percent of average annual revenues.
    For those establishments with one to four employees that 
manufacture other animal foods, the average annual value of shipments 
is about $1.15 million. The average value of shipments for 
establishments in this industry with five or more employees is greater 
than $4.7 million. An average company composed of one establishment 
with one to four employees would expend 0.32 percent of its revenues 
for the cost of relabeling one SKU as a result of this rule. 
Establishments with 5 to 9 employees and those with 10 to 19 employees 
could have 13 and 29 SKUs requiring relabeling after 2 years, 
respectively, before their one-time costs would account for 1 percent 
of average annual revenues. All larger establishments could have 59 
SKUs requiring relabeling after 2 years before their one-time costs 
would account for 1 percent of average annual revenues.
    Although the data shows that the cost for relabeling one SKU would 
not likely represent a significant burden on a substantial number of 
small companies, we do not have data on either the number of affected 
animal food products manufactured by establishments or firms of any 
size, or the distribution of those animal food products that would not 
have met the requirements of the rule within 2 years of the publication 
of this final rule. That being the case, we must allow for the 
possibility, however unlikely, that the rule could have a significant 
impact on a substantial number of small firms.
    The Regulatory Flexibility Act requires agencies to analyze 
regulatory options that would minimize any significant impact of a rule 
on small entities. The previous analysis shows that at every 
establishment size, the expected one-time cost of compliance would be 
significantly less than 1 percent of average annual revenues for each 
SKU requiring new labeling. The estimated number of SKUs requiring new 
labeling makes it unlikely that their distribution among establishments 
would result in any establishment incurring compliance costs greater 
than 1 percent of revenues. The agency believes, therefore, that this 
final rule would be unlikely to have a significant economic impact on a 
substantial number of small entities.

V. Environmental Impact

    The agency has determined that establishment of this labeling 
requirement would not increase the existing levels of use or change the 
intended uses of color additives or their substitutes. Therefore, under 
21 CFR 25.30(k), this final rule is determined to be categorically 
excluded from the need to prepare an environmental assessment or an 
environmental impact statement.

VI. Federalism

    FDA has analyzed this final rule in accordance with the principles 
set forth in Executive Order 13132. Section 4(a) of the Executive order 
requires agencies to ``construe * * * a Federal statute to preempt 
State law only where the statute contains an express preemption 
provision or there is some other clear evidence that the Congress 
intended preemption of State law, or where the exercise of State law 
conflicts with the exercise of Federal authority under the Federal 
statute.'' Federal law includes an express preemption provision that 
preempts ``any requirement for the labeling of food of the type 
required by * * * [21 U.S.C. 343(i)(2)] * * * that is not identical to 
the requirement of such section * * *'' 21 U.S.C. 343-1(a)(2). This 
final rule creates requirements for declaring the presence of certified 
color additives on the labels of animal food, including animal feeds 
and pet foods under 21 U.S.C. 343(i)(2).

VII. Paperwork Reduction Act of 1995

    In the Federal Register of November 23, 2009 (74 FR 61068 at 
61072), FDA published a proposed rule and invited comments on, among 
other things, the proposed collection of information.
    In response to this Federal Register notice, FDA did not receive 
any comments regarding the information collection requirements 
contained in

[[Page 71254]]

this final rule. In response to OMB's request that the Agency describe 
how it has maximized the practical utility of this collection and 
minimized the burden, an explanation has been provided elsewhere in the 
preamble of this final rule (section III of this document).
    The information collection provisions of this final rule have been 
submitted to OMB for review. Prior to the effective date of this final 
rule, FDA will publish notice in the Federal Register, announcing OMB's 
decision to approve, modify, or disapprove the information collection 
provisions in this final rule. An agency may not conduct or sponsor, 
and a person is not required to respond to a collection of information, 
unless it displays a currently valid OMB control number.
    Title: Animal Food Labeling: Declaration of Certifiable Color 
Additives.
    Description: FDA is revising its regulations in response to the 
1990 amendments which amended the FD&C Act by requiring, among other 
things, the listing on food labels of the common and usual names of all 
color additives required to be certified by FDA. An additional purpose 
of this amendment is to make these regulations consistent with the 
regulations regarding the declaration of certified color additives on 
the labels of human food. The final rule also suggests appropriate 
terminology for the declaration of certification-exempt color additives 
on the labels of animal food. Thus, FDA estimates the burden for this 
collection of information as follows:

                                                     Table 1--Estimated Annual Reporting Burden \1\
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                             Average
                                                            Number of       Number of     Total annual     burden per                      Total capital
                     21 CFR Section                        respondents    responses per     responses     response  (in    Total hours         costs
                                                                           respondent                        hours)
--------------------------------------------------------------------------------------------------------------------------------------------------------
501.22(k)(1)...........................................           2,250            6.67          15,000            0.25          3,750    \2\ $3,100,000
501.22(k)(2)...........................................           2,250            0.2              450            0.25            112.5       1,500,000
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ There are no operating and maintenance costs associated with this collection of information.
\2\ Because the range was $510,000 to $3.1 million, FDA has chosen to show the higher figure here.

    The numbers for Sec.  501.22(k)(1) in table 1 of this document were 
taken from the Analysis of Impacts section of this document (section 
III of this document). The total number of establishments manufacturing 
dog, cat, and other non-production animal foods that could be subject 
to this final rule is estimated at 2,250. The annual frequency per 
response (6.67) is derived by dividing the 15,000 annual responses 
(i.e., labels) by the number of establishments (2,250). The total hours 
(3,750) is derived by multiplying the number of total annual responses 
(15,000) by 15 minutes (0.25 per response). Due to the proposed two 
year delay in the effective date of the final rule, the total capital 
costs range from $510,000 to $3.1 million, and operating and 
maintenance costs were estimated to be zero.
    Final Sec.  501.22(k)(2) states the appropriate terminology for the 
declaration of certification-exempt color additives on the ingredient 
list of labels of animal food. Although the suggested appropriate 
terminology for labels for declaration of colors exempt from 
certification is optional and offers some flexibility to a manufacturer 
in terms of how to declare such color additives on its ingredient 
label, it is possible that some may voluntarily adopt the language 
specified in Sec.  501.22(k)(2) when they are already relabeling their 
animal food products for other reasons such as for marketing purposes. 
The census data show up to 938 establishments produce animal feeds that 
may contain color additives exempt from certification. These additives 
may also be used at the 242 dog and cat food establishments in the 
United States, and any of the 1,303 non-employer establishments. We do 
not have data that can be used to estimate the number of product labels 
that will be voluntarily changed at the 2,250 establishments as a 
result of Sec.  501.22(k)(2).
    However, our analysis of the required changes for Sec.  
501.22(k)(1) estimated that about 6 percent of the products would 
require label changes after the 2-year effective date has passed (15 
percent of labels that are currently out of compliance with proposed 
Sec.  501.22(k)(1) times the 40 percent of those that would remain out 
of compliance after regular label changes occurring over 2 years). We 
assume that management would choose to make fewer voluntary label 
changes than required label changes. For our analysis, we assume that 
only one-half as much, or 3 years of these products, undergo voluntary 
label changes as in Sec.  501.22(k)(2). This would result in 0.2 label 
changes per establishment for Sec.  501.22(k)(2), or 450 label changes 
over the 2,250 establishments.
    The hours per response for label review to determine compliance 
with the rule and the appropriate language to put on the label is 
estimated at 0.25 hours, which compares to the time allotted for animal 
food labels containing certified colors. The annual cost of label 
review is the hourly wage of an industrial production manager ($44.24) 
times 0.25 hours per response times the number of labels.
    The upper-bound estimate of relabeling costs for the remaining 
labels (i.e., those reviewed for compliance with the proposed rule), is 
$3,350 per SKU. The total one-time cost of Sec.  501.22(k)(2) would, 
therefore, be the cost of label review plus the cost of changing 450 
labels as part of normal business practices, for an estimated total of 
approximately $1.5 million. The total hours spent, as shown in table 1 
of this document, are 112.5 (450 times 0.25).

List of Subjects in 21 CFR Part 501

    Animal foods, Labeling, Specific animal food labeling requirements.

    Therefore, under the Federal Food, Drug, and Cosmetic Act and under 
authority delegated to the Commissioner of Food and Drugs, 21 CFR part 
501 is amended as follows:

PART 501--ANIMAL FOOD LABELING

0
1. The authority citation for 21 CFR part 501 continues to read as 
follows:

    Authority: 15 U.S.C. 1453, 1454, 1455; 21 U.S.C. 321, 331, 342, 
343, 348, 371.


0
2. Section 501.22 is amended by adding paragraph (k) to read as 
follows:


Sec.  501.22  Animal foods; labeling of spices, flavorings, colorings, 
and chemical preservatives.

* * * * *
    (k) The label of an animal food to which any coloring has been 
added shall declare the coloring in the statement of ingredients in the 
manner specified in paragraphs (k)(1) and (k)(2) of this section.

[[Page 71255]]

    (1) A color additive or the lake of a color additive subject to 
certification under section 721(c) of the act shall be declared by the 
name of the color additive listed in the applicable regulation in part 
74 or part 82 of this chapter, except that it is not necessary to 
include the ``FD&C'' prefix or the term ``No.'' in the declaration, but 
the term ``Lake'' shall be included in the declaration of the lake of 
the certified color additive (e.g., Blue 1 Lake). Manufacturers may 
parenthetically declare an appropriate alternative name of the 
certified color additive following its common or usual name as 
specified in part 74 or part 82 of this chapter.
    (2) Color additives not subject to certification may be declared as 
``Artificial Color,'' ``Artificial Color Added,'' or ``Color Added'' 
(or by an equally informative term that makes clear that a color 
additive has been used in the food). Alternatively, such color 
additives may be declared as ``Colored with --------'' or ``-------- 
color,'' the blank to be filled with the name of the color additive 
listed in the applicable regulation in part 73 of this chapter.

    Dated: November 10, 2011.
Leslie Kux,
Acting Assistant Commissioner for Policy.
[FR Doc. 2011-29701 Filed 11-16-11; 8:45 am]
BILLING CODE 4160-01-P


