[Federal Register Volume 85, Number 149 (Monday, August 3, 2020)]
[Notices]
[Pages 46669-46672]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-16838]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

[Docket No. FDA-2018-N-2775]


Food Safety Modernization Act Domestic and Foreign Facility 
Reinspection, Recall, and Importer Reinspection Fee Rates 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 fee rates for certain domestic and foreign 
facility reinspections, failures to comply with a recall order, and 
importer reinspections that are authorized by the Federal Food, Drug, 
and Cosmetic Act (FD&C Act), as amended by the FDA Food Safety 
Modernization Act (FSMA). These fees are effective on October 1, 2020, 
and will remain in effect through September 30, 2021.

FOR FURTHER INFORMATION CONTACT: Tierra Ramsey, Office of Management, 
Office of Regulatory Affairs, Food and Drug Administration, 12420 
Parklawn Dr., Rockville, MD, 240-460-6951, 
oraomdfobudgetformbranch@fda.hhs.gov.

SUPPLEMENTARY INFORMATION:

I. Background

    Section 107 of FSMA (Pub. L. 111-353) added section 743 to the FD&C 
Act (21 U.S.C. 379j-31) to provide FDA with the authority to assess and 
collect fees from, in part: (1) the responsible party for each domestic 
facility and the U.S. agent for each foreign facility subject to a 
reinspection, to cover reinspection-related costs; (2) the responsible 
party for a domestic facility and an importer who does not comply with 
a recall order, to cover food \1\ recall activities associated with 
such order; and (3) each importer subject to a reinspection to cover 
reinspection-related costs (sections 743(a)(1)(A), (B), and (D) of the 
FD&C Act). Section 743 of the FD&C Act directs FDA to establish fees 
for each of these activities based on an estimate of 100 percent of the 
costs of each activity for each year (sections 743(b)(2)(A)(i), (ii), 
and (iv)), and these fees must be made available solely to pay for the 
costs of each activity for which the fee was incurred (section 
743(b)(3)). These fees are effective on October 1, 2020, and will 
remain in effect through September 30, 2021. Section 743(b)(2)(B)(iii) 
of the FD&C Act directs FDA to develop a proposed set of guidelines in 
consideration of the burden of fee amounts on small businesses. As a 
first step in developing these guidelines, FDA invited public comment 
on the potential impact of the fees authorized by section 743 of the 
FD&C Act on small businesses (76 FR 45818, August 1, 2011). The comment 
period for this request ended November 30, 2011. As stated in FDA's 
September 2011 ``Guidance for Industry: Implementation of the Fee 
Provisions of Section 107 of the FDA Food Safety Modernization Act,'' 
(https://www.fda.gov/regulatory-information/search-fda-guidance-documents/guidance-industry-implementation-fee-provisions-section-107-fda-food-safety-modernization-act), because FDA recognizes that for 
small businesses the full cost recovery of FDA reinspection or recall 
oversight could impose severe economic hardship, FDA intends to 
consider reducing certain fees for those firms. FDA does not intend to 
issue invoices for reinspection or recall order fees until FDA 
publishes a guidance document outlining the process through which firms 
may request a reduction in fees.
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    \1\ The term ``food'' for purposes of this document has the same 
meaning as such term in section 201(f) of the FD&C Act (21 U.S.C. 
321(f)).
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    In addition, as stated in the September 2011 guidance, FDA is in 
the process of considering various issues associated with the 
assessment and collection of importer reinspection fees. The fee rates 
set forth in this notice will be used to determine any importer 
reinspection fees assessed in FY 2021.

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

    FDA is required to estimate 100 percent of 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,

[[Page 46670]]

utility, information technology (IT), 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, nonpayroll, and rent.
    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; nonpayroll--including equipment, supplies, 
IT, 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, nonpayroll, 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 reinspection and recall order fees 
for FY 2021 prior to including domestic or foreign 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
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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
  23 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 Assignments    1,160
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    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 inspection 
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 (84 FR 37882, August 2, 2019). 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 these inflation rates 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 
reinspection and recall order fees for FY 2021 prior to including 
domestic or foreign travel costs as applicable for the activity. In FY 
2019, FDA's Office of Regulatory Affairs (ORA) spent a total of 
$5,569,000 for domestic regulatory inspection travel costs and General 
Services Administration Vehicle costs related to FDA's Center for Food 
Safety and Applied Nutrition (CFSAN) and Center for Veterinary Medicine 
(CVM) field activities programs. The total ORA domestic travel costs 
spent is then divided by the 8,540 CFSAN and CVM domestic inspections, 
which averages a total of $652 per inspection. These inspections 
average 39.35 hours per inspection. Dividing $652 per inspection by 
39.35 hours per inspection results in a total and an additional cost of 
$17 (rounded to the nearest dollar) per hour spent for domestic 
inspection travel costs in FY 2019. To adjust for the $17 per hour 
additional domestic cost inflation increases for FY 2020 and FY 2021, 
FDA must multiply the FY 2020 PDUFA inflation rate adjustor (1.023964) 
times the FY 2021 PDUFA inflation rate adjustor (1.013493) times the 
$17 additional domestic cost which results in an estimated cost of $18 
(rounded to the nearest dollar) per paid hour in addition to $245 for a 
total of $263 per paid hour ($245 plus $18) for each direct hour of 
work requiring domestic inspection travel. FDA will use these rates in 
charging fees in FY 2021 when domestic travel is required.
    In FY 2019, ORA spent a total of $3,506,000 on 463 foreign 
inspection trips related to FDA's CFSAN and CVM 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 factors mentioned previously in this document 
(1.023964 and 1.013493), 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 these rates in 
charging fees in FY 2021 when foreign travel is required.

                 Table 2--FSMA Fee Schedule for FY 2021
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                                                           Fee rates for
                      Fee category                            FY 2021
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Hourly rate if domestic travel is required..............            $263
Hourly rate if foreign travel is required...............            $310
------------------------------------------------------------------------

III. Fees for Reinspections of Domestic or Foreign Facilities Under 
Section 743(a)(1)(A)

A. What will cause this fee to be assessed?

    The fee will be assessed for a reinspection conducted under section 
704 of the FD&C Act (21 U.S.C. 374) to determine whether corrective 
actions have been implemented and are effective and compliance has been 
achieved to the Secretary of Health and Human Services' (the Secretary) 
(and, by delegation, FDA's) satisfaction at a

[[Page 46671]]

facility that manufactures, processes, packs, or holds food for 
consumption necessitated as a result of a previous inspection (also 
conducted under section 704 of the FD&C Act) of this facility, which 
had a final classification of Official Action Indicated (OAI) conducted 
by or on behalf of FDA, when FDA determined the non-compliance was 
materially related to food safety requirements of the FD&C Act. FDA 
considers such non-compliance to include non-compliance with a 
statutory or regulatory requirement under section 402 of the FD&C Act 
(21 U.S.C. 342) and section 403(w) of the FD&C Act (21 U.S.C. 343(w)). 
However, FDA does not consider non-compliance that is materially 
related to a food safety requirement to include circumstances where the 
non-compliance is of a technical nature and not food safety related 
(e.g., failure to comply with a food standard or incorrect font size on 
a food label). Determining when non-compliance, other than under 
sections 402 and 403(w) of the FD&C Act, is materially related to a 
food safety requirement of the FD&C Act may depend on the facts of a 
particular situation. FDA intends to issue guidance to provide 
additional information about the circumstances under which FDA would 
consider non-compliance to be materially related to a food safety 
requirement of the FD&C Act.
    Under section 743(a)(1)(A) of the FD&C Act, FDA is directed to 
assess and collect fees from ``the responsible party for each domestic 
facility (as defined in section 415(b) (21 U.S.C. 350d(b))) and the 
United States agent for each foreign facility subject to a 
reinspection'' to cover reinspection-related costs.
    Section 743(a)(2)(A)(i) of the FD&C Act defines the term 
``reinspection'' with respect to domestic facilities as ``1 or more 
inspections conducted under section 704 subsequent to an inspection 
conducted under such provision which identified non-compliance 
materially related to a food safety requirement of th[e] Act, 
specifically to determine whether compliance has been achieved to the 
Secretary's satisfaction.''
    The FD&C Act does not contain a definition of ``reinspection'' 
specific to foreign facilities. In order to give meaning to the 
language in section 743(a)(1)(A) of the FD&C Act to collect fees from 
the U.S. agent of a foreign facility subject to a reinspection, the 
Agency is using the following definition of ``reinspection'' for 
purposes of assessing and collecting fees under section 743(a)(1)(A) of 
the FD&C Act, with respect to a foreign facility: ``1 or more 
inspections conducted by officers or employees duly designated by the 
Secretary subsequent to such an inspection which identified non-
compliance materially related to a food safety requirement of the FD&C 
Act, specifically to determine whether compliance has been achieved to 
the Secretary's (and, by delegation, FDA's) satisfaction.''
    This definition allows FDA to fulfill the mandate to assess and 
collect fees from the U.S. agent of a foreign facility in the event 
that an inspection reveals non-compliance materially related to a food 
safety requirement of the FD&C Act, causing one or more subsequent 
inspections to determine whether compliance has been achieved to the 
Secretary's (and, by delegation, FDA's) satisfaction. By requiring the 
initial inspection to be conducted by officers or employees duly 
designated by the Secretary, the definition ensures that a foreign 
facility would be subject to fees only in the event that FDA, or an 
entity designated to act on its behalf, has made the requisite 
identification at an initial inspection of non-compliance materially 
related to a food safety requirement of the FD&C Act. The definition of 
``reinspection-related costs'' in section 743(a)(2)(B) of the FD&C Act 
relates to both a domestic facility reinspection and a foreign facility 
reinspection, as described in section 743(a)(1)(A).

B. Who will be responsible for paying this fee?

    The FD&C Act states that this fee is to be paid by the responsible 
party for each domestic facility (as defined in section 415(b) of the 
FD&C Act) and by the U.S. agent for each foreign facility (section 
743(a)(1)(A) of the FD&C Act). This is the party to whom FDA will send 
the invoice for any fees that are assessed under this section.

C. How much will this fee be?

    The fee is based on the number of direct hours spent on such 
reinspections, including time spent conducting the physical 
surveillance and/or compliance reinspection at the facility, or 
whatever components of such an inspection are deemed necessary, making 
preparations and arrangements for the reinspection, traveling to and 
from the facility, preparing any reports, analyzing any samples or 
examining any labels if required, and performing other activities as 
part of the OAI reinspection until the facility is again determined to 
be in compliance. The direct hours spent on each such reinspection will 
be billed at the appropriate hourly rate shown in table 2 of this 
document.

IV. Fees for Non-Compliance With a Recall Order Under Section 
743(a)(1)(B)

A. What will cause this fee to be assessed?

    The fee will be assessed for not complying with a recall order 
under section 423(d) (21 U.S.C. 350l(d)) or section 412(f) of the FD&C 
Act (21 U.S.C. 350a(f)) to cover food recall activities associated with 
such order performed by the Secretary (and by delegation, FDA) (section 
743(a)(1)(B) of the FD&C Act). Non-compliance may include the 
following: (1) not initiating a recall as ordered by FDA; (2) not 
conducting the recall in the manner specified by FDA in the recall 
order; or (3) not providing FDA with requested information regarding 
the recall, as ordered by FDA.

B. Who will be responsible for paying this fee?

    Section 743(a)(1)(B) of the FD&C Act states that the fee is to be 
paid by the responsible party for a domestic facility (as defined in 
section 415(b) of the FD&C Act) and an importer who does not comply 
with a recall order under section 423 or under section 412(f) of the 
FD&C Act. In other words, the party paying the fee would be the party 
that received the recall order.

C. How much will this fee be?

    The fee is based on the number of direct hours spent on taking 
action in response to the firm's failure to comply with a recall order. 
Types of activities could include conducting recall audit checks, 
reviewing periodic status reports, analyzing the status reports and the 
results of the audit checks, conducting inspections, traveling to and 
from locations, and monitoring product disposition. The direct hours 
spent on each such recall will be billed at the appropriate hourly rate 
shown in table 2 of this document.

V. How must the fees be paid?

    An invoice will be sent to the responsible party for paying the fee 
after FDA completes the work on which the invoice is based. Payment 
must be made within 90 days of the invoice date in U.S. currency by 
check, bank draft, or U.S. postal money order payable to the order of 
the Food and Drug Administration. Detailed payment information will be 
included with the invoice when it is issued.
    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

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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 in the check stub. Also write FDA's 
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 these fees?

    Under section 743(e)(2) of the FD&C Act, any fee that is not paid 
within 30 days after it is due shall be treated as a claim of the U.S. 
Government subject to provisions of subchapter II of chapter 37 of 
title 31, United States Code.

    Dated: July 29, 2020.
Lauren K. Roth,
Associate Commissioner for Policy.
[FR Doc. 2020-16838 Filed 7-30-20; 11:15 am]
BILLING CODE 4164-01-P


