
[Federal Register Volume 82, Number 166 (Tuesday, August 29, 2017)]
[Notices]
[Pages 41035-41038]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-18222]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

[Docket No. FDA-2016-N-4119]


Food Safety Modernization Act Third-Party Certification Program 
User Fee Rate for Fiscal Year 2018

AGENCY: Food and Drug Administration, HHS.

ACTION: Notice.

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SUMMARY: The Food and Drug Administration (FDA) is announcing the 
fiscal year (FY) 2018 annual fee rate for recognized accreditation 
bodies and accredited certification bodies, and the fee rate for 
accreditation bodies applying to be recognized in the third-party 
certification program that is authorized by the Federal Food, Drug, and 
Cosmetic Act (the FD&C Act), as amended by the FDA Food Safety 
Modernization Act (FSMA).

FOR FURTHER INFORMATION CONTACT: Donald Prater, Office of Foods and 
Veterinary Medicine, Food and Drug Administration, 10903 New Hampshire 
Ave., Bldg. 1, Rm. 3234, Silver Spring, MD 20993, 301-348-3007.

DATES: This fee is effective October 1, 2017.

SUPPLEMENTARY INFORMATION:

I. Background

    Section 307 of FSMA, Accreditation of Third-Party Auditors, amended 
the FD&C Act to create a new provision, section 808, under the same 
name. Section 808 of the FD&C Act (21 U.S.C. 384d) directs FDA to 
establish a program for accreditation of third-party certification 
bodies \1\ conducting food safety audits and issuing food and facility 
certifications to eligible foreign entities (including registered 
foreign food facilities) that meet our applicable requirements. Under 
this provision, we established a system for FDA to recognize 
accreditation bodies to accredit certification bodies, except for 
limited circumstances in which we may directly accredit certification 
bodies to participate in the third-party certification program.
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    \1\ For the reasons explained in the third-party certification 
final rule (80 FR 74570 at 74578-74579, November 27, 2015), and for 
consistency with the implementing regulations for the third-party 
certification program in 21 CFR parts 1, 11, and 16, this notice 
uses the term ``third-party certification body'' rather than the 
term ``third-party auditor'' used in section 808(a)(3) of the FD&C 
Act.
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    Section 808(c)(8) of the FD&C Act directs FDA to establish a 
reimbursement (user fee) program by which we assess fees and require 
reimbursement for the work FDA performs to establish and administer the 
third-party certification program under section 808 of the FD&C Act. 
The user fee program for the third-party certification program was 
established by a final rule entitled ``Amendments to Accreditation of 
Third-Party Certification Bodies to Conduct Food Safety Audits and To 
Issue Certifications to Provide for the User Fee Program'' (81 FR 
90186, December 14, 2016).
    The FSMA FY 2018 third-party certification program user fee rate 
announced in this notice is effective on October 1, 2017, and will 
remain in effect through September 30, 2018.

II. Estimating the Average Cost of a Supported Direct FDA Work Hour for 
FY 2018

    In each year, the costs of salary (or personnel compensation) and 
benefits for FDA employees account for between 50 and 60 percent of the 
funds available to, and used by, FDA. Almost all of the remaining funds 
(operating funds) available to FDA are used to support FDA employees 
for paying rent, travel, utility, information technology, and other 
operating costs.

A. Estimating the Full Cost per Direct Work Hour in FY 2018

    Full-time Equivalent (FTE) reflects the total number of regular 
straight-time hours--not including overtime or holiday hours--worked by 
employees,

[[Page 41036]]

divided by the number of compensable hours applicable to each fiscal 
year. Annual leave, sick leave, compensatory time off, and other 
approved leave categories are considered ``hours worked'' for purposes 
of defining FTE employment.
    In general, the starting point for estimating the full cost per 
direct work hour is to estimate the cost of an FTE or paid staff year. 
Calculating an Agency-wide total cost per FTE requires three primary 
cost elements: Payroll, non-payroll, and rent.
    We have used an average of past year cost elements to predict the 
FY 2018 cost. The FY 2018 FDA-wide average cost for payroll (salaries 
and benefits) is $154,638; non-payroll--including equipment, supplies, 
IT, general and administrative overhead--is $89,224; and rent, 
including cost allocation analysis and adjustments for other rent and 
rent-related costs, is $23,922 per paid staff year, excluding travel 
costs.
    Summing the average cost of an FTE for payroll, non-payroll, and 
rent, brings the FY 2018 average fully supported cost to $267,783 per 
FTE, excluding travel costs. FDA will use this base unit fee in 
determining the hourly fee rate for third party certification user fees 
for FY 2018 prior to including travel costs as applicable for the 
activity.
    To calculate an hourly rate, FDA must divide the FY 2018 average 
fully supported cost of $267,783 per FTE by the average number of 
supported direct FDA work hours in FY 2016--the last FY for which data 
are available. See table 1.

Table 1--Supported Direct FDA Work Hours in a Paid Staff Year in FY 2016
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Total Number of Hours in a Paid Staff Year...................      2,080
Less:
    10 paid holidays.........................................        -80
    20 days of annual leave..................................       -160
    10 days of sick leave....................................        -80
    12.5 days of training....................................       -100
    26.5 days of general administration......................       -184
    26.5 days of travel......................................       -212
    2 hours of meetings per week.............................       -104
                                                              ----------
        Net Supported Direct FDA Work Hours Available for         =1,160
         Assignments.........................................
------------------------------------------------------------------------

    Dividing the average fully supported FTE cost in FY 2018 ($267,783) 
by the total number of supported direct work hours available for 
assignment in FY 2016 (1,160) results in an average fully supported 
cost of $231 (rounded to the nearest dollar), excluding travel costs, 
per supported direct work hour in FY 2018.

B. Adjusting FY 2016 Travel Costs for Inflation To Estimate FY 2018 
Travel Costs

    To adjust the hourly rate for FY 2018, FDA must estimate the cost 
of inflation in each year for FY 2017 and FY 2018. FDA uses the method 
prescribed for estimating inflationary costs under the Prescription 
Drug User Fee Act (PDUFA) provisions of the FD&C Act (section 736(c)(1) 
(21 U.S.C. 379h(c)(1)), the statutory method for inflation adjustment 
in the FD&C Act that FDA has used consistently. FDA previously 
determined the FY 2017 inflation rate to be 1.5468 percent; this rate 
was published in the FY2017 PDUFA user fee rates notice in the Federal 
Register. Utilizing the method set forth in section 736(c)(1) of the 
FD&C Act, FDA has calculated an inflation rate of 1.5468 percent for FY 
2017 and 1.6868 percent for FY 2018 and FDA intends to use this 
inflation rate to make inflation adjustments for FY 2018 for several of 
its user fee programs; the derivation of this rate will be published in 
the Federal Register in the FY 2018 notice for the PDUFA user fee 
rates. The compounded inflation rate for FYs 2017 and 2018, therefore, 
is 1.032597 (or 3.2597 percent) (1 plus 1.5468 percent times 1 plus 
1.6868 percent).
    The average fully supported cost per supported direct FDA work 
hour, excluding travel costs, of $231 already takes into account 
inflation as the calculation above is based on FY 2018 predicted costs. 
FDA will use this base unit fee in determining the hourly fee rate for 
third-party certification program fees for FY 2018 prior to including 
travel costs as applicable for the activity. For the purpose of 
estimating the fee, we are using the travel cost rate for foreign 
travel because we anticipate that the vast majority of onsite 
assessments made by FDA under this program will require foreign travel. 
In FY 2016, the Office of Regulatory Affairs spent a total of 
$2,166,592 on 344.31 foreign inspection trips related to FDA's Center 
for Food Safety and Applied Nutrition and Center for Veterinary 
Medicine field activities programs, which averaged a total of $6,293 
per foreign inspection trip. These trips averaged 3 weeks (or 120 paid 
hours) per trip. Dividing $6,293 per trip by 120 hours per trip results 
in a total and an additional cost of $52 (rounded to the nearest 
dollar) per paid hour spent for foreign inspection travel costs in FY 
2016. To adjust $52 for inflationary increases in FY 2017 and FY 2018, 
FDA must multiply it by the same inflation factor mentioned previously 
in this document (1.032597 or 3.2597 percent), which results in an 
estimated cost of $54 (rounded to the nearest dollar) per paid hour in 
addition to $231 for a total of $285 per paid hour ($231 plus $54) for 
each direct hour of work requiring foreign inspection travel. FDA will 
use these rates in charging fees in FY 2018 when travel is required for 
the third-party certification program.

                 Table 2--FSMA Fee Schedule for FY 2018
------------------------------------------------------------------------
                                                           Fee rates for
                      Fee category                            FY 2018
------------------------------------------------------------------------
Hourly rate without travel..............................            $231
Hourly rate if travel is required.......................             285
------------------------------------------------------------------------

III. Fees for Accreditation Bodies and Certification Bodies in the 
Third-Party Certification Program Under Section 808(c)(8) of the FD&C 
Act

    The third-party certification program assesses application fees and 
annual fees. In FY18, the only fees that will be collected by FDA under 
section 808(c)(8) of the FD&C Act are the initial application fee for 
accreditation bodies seeking recognition, the annual fee for recognized 
accreditation bodies, and the annual fee for certification bodies 
accredited by a recognized accreditation body. Table 3 provides an 
overview of the fees for FY 2018.

Table 3--FSMA Third-Party Certification Program User Fee Schedule for FY
                                  2018
------------------------------------------------------------------------
                                                           Fee rates for
                      Fee category                            FY 2018
------------------------------------------------------------------------
Initial Application Fee for Accreditation Body Seeking           $37,935
 Recognition............................................
Annual Fee for Recognized Accreditation Body............           1,752
Annual Fee for Accredited Certification Body............           2,190
------------------------------------------------------------------------

A. Application Fee for Accreditation Bodies Applying for Recognition in 
the Third-Party Certification Program Under Section 808(c)(8) of the 
FD&C Act

    Section 1.705(a)(1) (21 CFR 1.705(a)(1)) establishes an application 
fee for accreditation bodies applying for initial recognition that 
represents the estimated average cost of the work FDA performs in 
reviewing and evaluating initial applications for recognition of 
accreditation bodies.
    The fee is based on the fully supported FTE hourly rates and 
estimates of the number of hours it

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would take FDA to perform relevant activities. These estimates 
represent FDA's current thinking, and as the program evolves, FDA will 
reconsider the estimated hours. We estimate that it would take, on 
average, 60 person-hours to review an accreditation body's submitted 
application, 48 person-hours for an onsite performance evaluation of 
the applicant (including travel and other steps necessary for a fully 
supported FTE to complete an onsite assessment), and 45 person-hours to 
prepare a written report documenting the onsite assessment.
    FDA employees are likely to review applications and prepare reports 
from their worksites, so we use the fully supported FTE hourly rate 
excluding travel, $231/hour, to calculate the portion of the user fee 
attributable to those activities: $231/hour x (60 hours + 45 hours) = 
$24,255. FDA employees will likely travel to foreign countries for the 
onsite performance evaluations because most accreditation bodies are 
located in foreign countries. For this portion of the fee we use the 
fully supported FTE hourly rate for work requiring travel, $285/hour, 
to calculate the portion of the user fee attributable to those 
activities: $285/hour x 48 hours (i.e., 2 fully supported FTEs x (2 
travel days + 1 day onsite)) = $13,680. The estimated average cost of 
the work FDA performs in total for reviewing an initial application for 
recognition for an accreditation body based on these figures would be 
$24,255 + $13,680 = $37,935. Therefore the application fee for 
accreditation bodies applying for recognition in FY 2018 will be 
$37,935.

B. Annual Fee for Accreditation Bodies Participating in the Third-Party 
Certification Program Under Section 808(c)(8) of the FD&C Act

    To calculate the annual fee for each recognized accreditation body, 
FDA takes the estimated average cost of work FDA performs to monitor 
performance of a single recognized accreditation body and annualizes 
that over the average term of recognition. At this time we assume an 
average term of recognition of 5 years. We also assume that FDA will 
monitor 10 percent of recognized accreditation bodies onsite. As the 
program proceeds, we will adjust the term of recognition as 
appropriate. We estimate that for one performance evaluation of a 
recognized accreditation body, it would take, on average (taking into 
account that not all recognized accreditation bodies would be monitored 
onsite), 24 hours for FDA to conduct records review, 8 hours to prepare 
a report detailing the records review and onsite performance 
evaluation, and 4.8 hours of onsite performance evaluation (i.e., 10 
percent x 2 fully supported FTEs x (2 travel days + 2 day onsite)). 
Using the fully supported FTE hourly rates in table 2, the estimated 
average cost of the work FDA performs to monitor performance of a 
single recognized accreditation body would be $7,392 ($231/hour x (24 
hours + 8 hours)) plus $1,368 ($285/hour x 4.8 hours), which is $8,760. 
Annualizing this amount over 5 years would lead to an annual fee for 
recognized accreditation bodies of $1,752 for FY 2018.

C. Annual Fee for Certification Bodies Accredited by a Recognized 
Accreditation Body in the Third-Party Certification Program Under 
Section 808(c)(8) of the FD&C Act

    To calculate the annual fee for a certification body accredited by 
a recognized accreditation body, FDA takes the estimated average cost 
of work FDA performs to monitor performance of a single certification 
body accredited by a recognized accreditation body and annualizes that 
over the average term of accreditation. At this time we assume an 
average term of accreditation of 4 years. This fee is based on the 
fully supported FTE hourly rates and estimates of the number of hours 
it would take FDA to perform relevant activities. We estimate that FDA 
would conduct, on average, the same activities, for the same amount of 
time to monitor certification bodies accredited by a recognized 
accreditation body as we would to monitor an accreditation body 
recognized by FDA. Using the fully supported FTE hourly rates in table 
2, the estimated average cost of the work FDA performs to monitor 
performance of a single accredited certification body would be $7,392 
($231/hour x (24 hours + 8 hours)) plus $1,368 ($285/hour x 4.8 hours), 
which is $8,760. Annualizing this amount over 4 years would lead to an 
annual fee for accredited certification bodies of $2,190 for FY 2018.

IV. Estimated Fees for Accreditation Bodies and Certification Bodies in 
Other Fee Categories for FY 2018

    Section 1.705(a) also establishes application fees for recognized 
accreditation bodies submitting renewal applications, certification 
bodies applying for direct accreditation, and certification bodies 
applying for renewal of direct accreditation. Section 1.705(b) 
establishes annual fees for recognized accreditation bodies, 
certification bodies directly accredited by FDA, and certification 
bodies accredited by recognized accreditation bodies.
    Although we will not be collecting all of these other fees in FY 
2018, for transparency and planning purposes, we have provided an 
estimate of what these fees would be for FY 2018 based on the fully 
supported FTE hourly rates for FY 2018 and estimates of the number of 
hours it would take FDA to perform relevant activities as outlined in 
the Final Regulatory Impact Analysis for the Third-Party Certification 
Regulation. Table 4 provides an overview of the estimated fees for 
other fee categories.

  Table 4--Estimated Fee Rates for Other Fee Categories Under the FSMA
                    Third-Party Certification Program
------------------------------------------------------------------------
                                                           Estimated fee
                      Fee category                         rates for FY
                                                               2018
------------------------------------------------------------------------
Renewal application fee for recognized accreditation             $21,049
 body...................................................
Initial application fee for certification body seeking            37,935
 direct-accreditation from FDA..........................
Renewal application fee for directly-accredited                   28,755
 certification body.....................................
Annual fee for certification body directly-accredited by          21,072
 FDA....................................................
------------------------------------------------------------------------

V. How must the fee be paid?

    Accreditation bodies seeking initial recognition must submit the 
application fee with the application.
    For recognized accreditation bodies and accredited certification 
bodies, an invoice will be sent annually. Payment must be made within 
30 days of the invoice date. Detailed payment information will be 
included with the invoice when it is issued.

VI. What are the consequences of not paying this fee?

    The consequences of not paying these fees are outlined in Sec.  
1.725. If FDA does not receive an application fee with an application 
for recognition, the application will be considered incomplete and FDA 
will not review the application. If a recognized accreditation body 
fails to submit its annual user fee within 30 days of the due date, we 
will suspend its recognition. If the recognized accreditation body 
fails to submit its annual user fee within 90 days of the due date, we 
will revoke its recognition. If an accredited certification body fails 
to pay its annual fee within 30 days of the due date, we will suspend 
its accreditation. If the accredited certification body fails to pay 
its annual

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fee within 90 days of the due date, we will withdraw its accreditation.

    Dated: August 23, 2017.
Anna K. Abram,
Deputy Commissioner for Policy, Planning, Legislation, and Analysis.
[FR Doc. 2017-18222 Filed 8-28-17; 8:45 am]
 BILLING CODE 4164-01-P


