[Federal Register Volume 85, Number 149 (Monday, August 3, 2020)]
[Notices]
[Pages 46659-46662]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-16846]


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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 2021

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) 2021 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 (FD&C Act), as amended by the FDA Food Safety 
Modernization Act (FSMA). We are also announcing the fee rate for 
certification bodies that are applying to be directly accredited by 
FDA.

DATES: This fee is effective October 1, 2020.

FOR FURTHER INFORMATION CONTACT: Donald Prater, Office of Food Policy 
and Response, Food and Drug Administration, 10903 New Hampshire Ave., 
Bldg. 1, Rm. 3202, Silver Spring, MD 20993, 301-348-3007.

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 2021 third-party certification program user fee rate 
announced in this notice is effective on October 1, 2020, and will 
remain in effect through September 30, 2021.

II. Estimating the Average Cost of a Supported Direct FDA Work Hour for 
FY 2021

    FDA must estimate its costs for each activity in order to establish 
fee rates for FY 2021. 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 2021

    Full-time Equivalent (FTE) reflects the total number of regular 
straight-time hours--not including overtime or holiday hours--worked by 
employees, divided by the number of compensable hours applicable to 
each fiscal year. Annual leave, sick leave, compensatory time off, and 
other approved leave categories are considered ``hours worked'' for 
purposes of defining FTE employment.
    In general, the starting point for estimating the full cost per 
direct work hour is to estimate the cost of an FTE or paid staff year. 
Calculating an Agency-wide total cost per FTE requires three primary 
cost elements: payroll, non-payroll, and rent.

[[Page 46660]]

    We have used an average of past year cost elements to predict the 
FY 2021 cost. The FY 2021 FDA-wide average cost for payroll (salaries 
and benefits) is $164,103; non-payroll--including equipment, supplies, 
information technology, general and administrative overhead--is 
$94,685; and rent, including cost allocation analysis and adjustments 
for other rent and rent-related costs, is $25,386 per paid staff year, 
excluding travel costs.
    Summing the average cost of an FTE for payroll, non-payroll, and 
rent, brings the FY 2021 average fully supported cost to $284,174 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 2021 prior to including travel costs as applicable for the 
activity.
    To calculate an hourly rate, FDA must divide the FY 2021 average 
fully supported cost of $ 284,174 per FTE by the average number of 
supported direct FDA work hours in FY 2019--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 2019
------------------------------------------------------------------------
 
------------------------------------------------------------------------
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 2021 ($284,174) 
by the total number of supported direct work hours available for 
assignment in FY 2019 (1,160) results in an average fully supported 
cost of $245 (rounded to the nearest dollar), excluding travel costs, 
per supported direct work hour in FY 2021.

B. Adjusting FY 2019 Travel Costs for Inflation to Estimate FY 2021 
Travel Costs

    To adjust the hourly rate for FY 2021, FDA must estimate the cost 
of inflation in each year for FY 2020 and FY 2021. 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 2020 inflation rate to be 2.3964 percent; this rate 
was published in the FY 2020 PDUFA user fee rates notice in the Federal 
Register (August 2, 2019, 84 FR 37882). Utilizing the method set forth 
in section 736(c)(1) of the FD&C Act, FDA has calculated an inflation 
rate of 2.3964 percent for FY 2020 and 1.3493 percent for FY 2021, and 
FDA intends to use this inflation rate to make inflation adjustments 
for FY 2021; the derivation of this rate will be published in the 
Federal Register in the FY 2021 notice for the PDUFA user fee rates. 
The compounded inflation rate for FYs 2020 and 2021, therefore, is 
1.037780 (or 3.7780 percent) (calculated as 1 plus 2.3964 percent times 
1 plus 1.3493 percent).
    The average fully supported cost per supported direct FDA work 
hour, excluding travel costs, of $245 already takes into account 
inflation as the calculation above is based on FY 2021 predicted costs. 
FDA will use this base unit fee in determining the hourly fee rate for 
third-party certification program fees for FY 2021 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 2019, the Office of Regulatory Affairs spent a total of 
$3,506,000 on 463 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 $7,572 per foreign 
inspection trip. These trips averaged 3 weeks (or 120 paid hours) per 
trip. Dividing $7,572 per trip by 120 hours per trip results in a total 
and an additional cost of $63 (rounded to the nearest dollar) per paid 
hour spent for foreign inspection travel costs in FY 2019. To adjust 
$63 for inflationary increases in FY 2020 and FY 2021, FDA must 
multiply it by the same inflation factor mentioned previously in this 
document (1.037780 or 3.7780 percent), which results in an estimated 
cost of $65 (rounded to the nearest dollar) per paid hour in addition 
to $245 for a total of $310 per paid hour ($245 plus $65) for each 
direct hour of work requiring foreign inspection travel. FDA will use 
this rate in charging fees in FY 2021 when travel is required for the 
third-party certification program.

                 Table 2--FSMA Fee Schedule for FY 2021
------------------------------------------------------------------------
                                                           Fee rates for
                      Fee category                            FY 2021
------------------------------------------------------------------------
Hourly rate without travel..............................            $245
Hourly rate if travel is required.......................             310
------------------------------------------------------------------------

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 FY 2021, the only fees that could 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, the annual fee for certification 
bodies accredited by a recognized accreditation body, and the initial 
application fee for a certification body seeking direct accreditation 
from FDA. Table 3 provides an overview of the fees for FY 2021.

Table 3--FSMA Third-Party Certification Program User Fee Schedule for FY
                                  2021
------------------------------------------------------------------------
                                                           Fee rates for
                      Fee category                            FY 2021
------------------------------------------------------------------------
Initial Application Fee for Accreditation Body Seeking           $42,320
 Recognition............................................
Annual Fee for Recognized Accreditation Body............           1,966
Annual Fee for Accredited Certification Body............           2,458
Initial Application Fee for a Certification Body Seeking          42,320
 Direct Accreditation from FDA..........................
------------------------------------------------------------------------

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 would take FDA to perform relevant 
activities. These estimates represent FDA's current thinking, and as 
the program evolves, FDA will continue to reconsider the estimated 
hours. Based on data we have acquired since starting the program, we 
estimate that it would take, on average, 80 person-hours to review an 
accreditation body's

[[Page 46661]]

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 32 
person-hours to prepare a written report documenting the onsite 
assessment.
    FDA employees review applications and prepare reports from their 
worksites, so we use the fully supported FTE hourly rate excluding 
travel, $245/hour, to calculate the portion of the user fee 
attributable to those activities: $245/hour x (80 hours (application 
review) + 32 hours (written report)) = $27,440. FDA employees will 
likely travel to foreign countries for the onsite performance 
evaluations because most accreditation bodies are anticipated to be 
located in foreign countries. For this portion of the fee we use the 
fully supported FTE hourly rate for work requiring travel, $310/hour, 
to calculate the portion of the user fee attributable to those 
activities: $310/hour x 48 hours (i.e., two fully supported FTEs x ((2 
travel days x 8 hours) + (1 day onsite x 8 hours))) = $14,880. 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 $27,440 + $14,880 = $42,320. Therefore, the 
application fee for accreditation bodies applying for recognition in FY 
2021 will be $42,320.

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), 22 hours for FDA to conduct records review, 8 hours to prepare 
a report detailing the records review and onsite performance 
evaluation, and 8 hours of onsite performance evaluation. 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 $7,350 ($245/hour x (22 hours (records 
review) + 8 hours (written report))) plus $2,480 ($310/hour x 8 hours 
(on-site evaluation)), which is $9,830. Annualizing this amount over 5 
years would lead to an annual fee for recognized accreditation bodies 
of $1,966 for FY 2021.

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 $7,350 
($245/hour x (22 hours (records review) + 8 hours (written report))) 
plus $2,480 ($310/hour x 8 hours (on-site evaluation)), which is 
$9,830. Annualizing this amount over 4 years would lead to an annual 
fee for accredited certification bodies of $2,458 for FY 2021.

D. Initial Application Fee for Certification Bodies Seeking Direct 
Accreditation from FDA in the Third-Party Certification Program Under 
Section 808(c)(8) of the FD&C Act

    Section 1.705(a)(3) establishes an application fee for 
certification bodies applying for direct accreditation from FDA that 
represents the estimated average cost of the work FDA performs in 
reviewing and evaluating initial applications for direct accreditation 
of certification bodies.
    The 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. 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, 80 person-hours to review a 
certification 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 32 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, $245/hour, to calculate the portion of the user fee 
attributable to those activities: $245/hour x (80 hours (application 
review) + 32 hours (written report)) = $27,440. FDA employees will 
likely travel to foreign countries for the onsite performance 
evaluations because most certification bodies are anticipated to be 
located in foreign countries. For this portion of the fee we use the 
fully supported FTE hourly rate for work requiring travel, $310/hour, 
to calculate the portion of the user fee attributable to those 
activities: $310/hour x 48 hours (i.e., two fully supported FTEs x ((2 
travel days x 8 hours) + (1 day onsite x 8 hours))) = $14,880. The 
estimated average cost of the work FDA performs in total for reviewing 
an initial application for direct accreditation of a certification body 
based on these figures would be $27,440 + $14,880 = $42,320. Therefore, 
the application fee for certification bodies applying for direct 
accreditation from FDA in FY 2021 will be $42,320.

IV. Estimated Fees for Accreditation Bodies and Certification Bodies in 
Other Fee Categories for FY 2021

    Section 1.705(a) also establishes application fees for recognized 
accreditation bodies submitting renewal applications and certification 
bodies applying for renewal of direct accreditation. Section 1.705(b) 
also establishes annual fees for certification bodies directly 
accredited by FDA.
    Although we will not be collecting these other fees in FY 2021, for 
transparency and planning purposes, we have provided an estimate of 
what these fees would be for FY 2021 based on the fully supported FTE 
hourly rates for FY 2021 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.

[[Page 46662]]



  Table 4--Estimated Fee Rates for Other Fee Categories Under the FSMA
                    Third-Party Certification Program
------------------------------------------------------------------------
                                                           Estimated fee
                      Fee category                         rates for FY
                                                               2021
------------------------------------------------------------------------
Renewal application fee for recognized accreditation             $25,195
 body...................................................
Renewal application fee for directly accredited                   25,195
 certification body.....................................
Annual fee for certification body directly accredited by          20,240
 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 receipt date. The 
payment must be made in U.S. currency from a U.S. bank by one of the 
following methods: Wire transfer, electronically, check, bank draft, or 
U.S. postal money order made payable to the Food and Drug 
Administration. The preferred payment method is online using an 
electronic check (Automated Clearing House (ACH), also known as eCheck) 
or credit card (Discover, VISA, MasterCard, American Express). Secure 
electronic payments can be submitted using the User Fees Payment Portal 
at https://userfees.fda.gov/pay. (Note: Only full payments are 
accepted. No partial payments can be made online.) Once you have found 
your invoice, select ``Pay Now'' to be redirected to Pay.gov. 
Electronic payment options are based on the balance due. Payment by 
credit card is available only for balances less than $25,000. If the 
balance exceeds this amount, only the ACH option is available. Payments 
must be made using U.S. bank accounts as well as U.S. credit cards. 
When paying by check, bank draft, or U.S. postal money order, please 
include the invoice number. Also write the FDA post office box number 
(P.O. Box 979108) on the enclosed check, bank draft, or money order. 
Mail the payment including the invoice number on the check stub to: 
Food and Drug Administration, P.O. Box 979108, St. Louis, MO 63197-
9000. When paying by wire transfer, it is required that the invoice 
number is included; without the invoice number the payment may not be 
applied. The originating financial institution may charge a wire 
transfer fee. If the financial institution charges a wire transfer fee, 
it is required to add that amount to the payment to ensure that the 
invoice is paid in full. For international wire transfers, please 
inquire with the financial institutions prior to submitting the 
payment. Use the following account information when sending a wire 
transfer: U.S. Department of the Treasury, TREAS NYC, 33 Liberty St., 
New York, NY 10045, Account Name: Food and Drug Administration, Account 
No.: 75060099, Routing No.: 021030004, Swift No.: FRNYUS33.
    To send a check by a courier such as Federal Express, the courier 
must deliver the check to: U.S. Bank, Attn: Government Lockbox 979108, 
1005 Convention Plaza, St. Louis, MO 63101. (Note: This address is for 
courier delivery only. If you have any questions concerning courier 
delivery, contact U.S. Bank at 314-418-4013. This phone number is only 
for questions about courier delivery.) The tax identification number of 
FDA is 53-0196965. (Note: Invoice copies do not need to be submitted to 
FDA with the payments.)

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

    The consequences of not paying these fees are outlined in 21 CFR 
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 fee within 90 days of the due date, we will withdraw its 
accreditation.

    Dated: July 29, 2020.
Lauren K. Roth,
Associate Commissioner for Policy.
[FR Doc. 2020-16846 Filed 7-30-20; 11:15 am]
BILLING CODE 4164-01-P


