Rule: Food For Human Consumption and Cosmetics: Cattle Materials Prohibited Use Recordkeeping Requirements

Federal Register / Vol. 71, No.
196 / Wednesday, October 11, 2006 / Rules and Regulations 59653
The FAA has determined that this List of Subjects in 14 CFR Part 39 § 39.13 [Amended]
regulation is an emergency regulation ■ 2. The FAA amends § 39.13 by adding
that must be issued immediately to Air transportation, Aircraft, Aviation
the following new airworthiness
correct an unsafe condition in aircraft, safety, Safety.
directive (AD):
and that it is not a ‘‘significant Adoption of the Amendment 2006–20–51 Boeing: Amendment 39–14786.
regulatory action’’ under Executive Docket No. FAA–2006–26028;
Order 12866. It has been determined ■ Accordingly, under the authority Directorate Identifier 2006–NM–222–AD.
further that this action involves an delegated to me by the Administrator,
Effective Date
emergency regulation under DOT the FAA amends 14 CFR part 39 as
Regulatory Policies and Procedures (44 follows: (a) This AD becomes effective October 16,
2006, to all persons except those persons to
FR 11034, February 26, 1979). If this whom it was made immediately effective by
emergency regulation is later deemed PART 39—AIRWORTHINESS emergency AD 2006–20–51, issued on
significant under DOT Regulatory DIRECTIVES September 30, 2006, which contained the
Policies and Procedures, we will requirements of this amendment.
prepare a final regulatory evaluation ■ 1. The authority citation for part 39
continues to read as follows: Affected ADs
and place it in the AD Docket. See the
(b) None.
ADDRESSES section for a location to Authority: 49 U.S.C. 106(g), 40113, 44701.
examine the regulatory evaluation, if Applicability
filed. (c) This AD applies to airplanes in Table
1 of this AD certificated in any category.
TABLE 1.—APPLICABILITY
Powered by General
Boeing model Electric (GE) model
(1) 777–200LR series airplanes .............................................................................................................................................. GE90–110B engines.

(2) 777–300ER series airplanes .............................................................................................................................................. GE90–115B engines.
Unsafe Condition Alternative Methods of Compliance ACTION: Final rule.

(d) This AD results from a report of two (AMOCs)
occurrences of engine thrust rollback during (h)(1) The Manager, Seattle Aircraft SUMMARY: The Food and Drug
takeoff. The Federal Aviation Administration Certification Office (ACO), FAA, has the Administration (FDA) is requiring that
is issuing this AD to prevent dual-engine authority to approve AMOCs for this AD, if
requested in accordance with the procedures
manufacturers and processors of human
thrust rollback, which could result in the food and cosmetics that are
airplane failing to lift off before reaching the found in 14 CFR 39.19.
end of the runway or failing to clear obstacles (2) Before using any AMOC approved in manufactured from, processed with, or
below the takeoff flight path. accordance with § 39.19 on any airplane to otherwise contain, material from cattle
which the AMOC applies, notify the establish and maintain records
Compliance appropriate principal inspector in the FAA sufficient to demonstrate that the
(e) You are responsible for having the Flight Standards Certificate Holding District human food or cosmetic is not
actions required by this AD performed within Office.
manufactured from, processed with, or
the compliance times specified, unless the Issued in Renton, Washington, on October does not otherwise contain, prohibited
actions have already been done. 2, 2006.
cattle materials. These recordkeeping
Revision of the Airplane Flight Manual Kalene C. Yanamura, requirements provide documentation for
(AFM) Acting Manager, Transport Airplane the provisions in FDA’s interim final
Directorate, Aircraft Certification Service.
(f) Within 24 hours after the effective date rule entitled ‘‘Use of Materials Derived
of this AD, revise the Certificate Limitations [FR Doc. E6–16670 Filed 10–10–06; 8:45 am] From Cattle in Human Food and
Section of the AFM to include the following BILLING CODE 4910–13–P Cosmetics.’’ FDA is requiring
statement. This may be done by inserting a recordkeeping because manufacturers
copy of this AD into the AFM. and processors of human food and
‘‘Use of reduced thrust takeoff ratings DEPARTMENT OF HEALTH AND cosmetics need records to ensure that
determined by either the assumed HUMAN SERVICES their products do not contain prohibited
temperature method or the fixed de-rate
method or a combination of both, is
cattle materials, and records are
Food and Drug Administration
prohibited. Full-rated thrust must be used for necessary to help FDA ensure
takeoff.’’ compliance with the requirements of the
21 CFR Parts 189 and 700
interim final rule.
Note 1: When a statement identical to that [Docket No. 2004N–0257]
in paragraph (f) of this AD has been included DATES: This rule is effective on January
in the general revisions of the AFM, the RIN 0910–AF48 9, 2007.
general revisions may be inserted into the
AFM, and the copy of this AD may be Recordkeeping Requirements for FOR FURTHER INFORMATION CONTACT:
removed from the AFM. Human Food and Cosmetics Rebecca Buckner, Center for Food Safety
Manufactured From, Processed With, and Applied Nutrition (HFS–306), Food
rwilkins on PROD1PC63 with RULES
Special Flight Permit and Drug Administration, 5100 Paint

or Otherwise Containing, Material
(g) Special flight permits, as described in From Cattle Branch Pkwy., College Park, MD 20740,
Section 21.197 and Section 21.199 of the 301–436–1486.
Federal Aviation Regulations (14 CFR 21.197 AGENCY: Food and Drug Administration,
and 21.199), are not allowed. HHS. SUPPLEMENTARY INFORMATION:
VerDate Aug<31>2005 19:49 Oct 10, 2006 Jkt 211001 PO 00000 Frm 00005 Fmt 4700 Sfmt 4700 E:\FR\FM\11OCR1.SGM 11OCR1
59654 Federal Register / Vol. 71, No. 196 / Wednesday, October 11, 2006 / Rules and Regulations
I. Background process of the thoracic and lumbar issues that are covered in the IFR. We
On July 14, 2004, FDA proposed a vertebrae, and the wings of the sacrum), will be responding to those comments
rule entitled ‘‘Recordkeeping and dorsal root ganglia of cattle 30 when we finalize the IFR.
Requirements for Human Food and months and older, as well as the tonsils
II. Response to Comments
Cosmetics Manufactured From, and distal ileum of the small intestine
of all cattle. A. Who Has to Keep Records?
Processed With, or Otherwise
The U.S. Department of Agriculture (§§ 189.5(c)(1) and 700.27(c)(1) (21 CFR
Containing, Material From Cattle’’ (the
(USDA) also published an IFR (69 FR 189.5(c)(1) and 700.27(c)(1)))
proposed rule) (69 FR 42275) to require 1862, January 12, 2004) to prohibit
that manufacturers and processors of (Comment) We received several
certain cattle material from use in
human food and cosmetics that are comments stating that only the
human food. FDA’s IFR extended the
manufactured from, processed with, or manufacturer or processor of a finished
protection from BSE provided under
otherwise contain, material from cattle product should have to maintain the
USDA’s BSE IFR to FDA-regulated
establish and maintain records required records. Conversely, other
human food and cosmetics. On
sufficient to demonstrate the food or September 7, 2005, both FDA (70 FR comments suggested that only the
cosmetic is not manufactured from, 53063) and USDA (70 FR 53043) manufacturer or processor of an
processed with, or does not otherwise published amendments to their ingredient that directly incorporates
contain, prohibited cattle materials. The respective IFRs to allow the use of small cattle material from a slaughterhouse or
proposed rule was a companion intestine in human food and cosmetics a rendering establishment should have
rulemaking to FDA’s interim final rule provided the distal ileum has been to keep records. The comments
(IFR) entitled ‘‘Use of Materials Derived removed. This final rule on requesting that finished product
From Cattle in Human Food and recordkeeping will help ensure manufacturers keep records stated that
Cosmetics’’ (the IFR) (69 FR 42256). We compliance with the provisions of it was appropriate that the
believe that records sufficient to FDA’s IFR and, thereby, will serve as an recordkeeping responsibility should be
demonstrate the absence of prohibited additional safeguard to reduce human placed at the finished product stage
cattle materials in human food and exposure to the agent that causes BSE because, in some cases, an ingredient
cosmetics are critical for manufacturers, that may be present in human food and manufacturer would be making an
processors, and FDA to ensure cosmetics that are manufactured from, ingredient that may or may not be
compliance with the ban on prohibited processed with, or otherwise contain, incorporated into a food or cosmetic;
cattle materials. Therefore, we are material from cattle. therefore, the ban on the use of
finalizing the proposed rule to require FDA believes that these recordkeeping prohibited cattle materials should not
that manufacturers and processors of requirements are necessary for apply to the ingredient at the time of
human food and cosmetics that are manufacturers and processors to ensure production. The comments that stated
manufactured from, processed with, or that all cattle material they use is free the opposite view maintained that only
otherwise contain, material from cattle from prohibited cattle materials. the ingredient manufacturers who are
establish and maintain records Furthermore, these requirements are obtaining cattle material from
sufficient to demonstrate that human necessary for FDA to ensure compliance slaughterhouses or rendering
food and cosmetics are not with the provisions of the IFR. There is establishments know whether or not
manufactured from, processed with, or currently no validated premortem test to prohibited cattle materials were
do not otherwise contain, prohibited reliably detect the presence of the BSE incorporated into the ingredient, so it is
cattle materials. We also are finalizing agent or the presence of prohibited appropriate that the records be
the provision in the proposed rule that cattle material in human food and maintained by those who have firsthand
these records must be made available to cosmetics. Once cattle material such as knowledge of the source of the cattle
FDA for inspection and copying. FDA brain or spinal cord is separated from material.
notes that the requirement in the IFR the source animal, it may not be Comments also requested that
that existing records relevant to possible to determine the age of the rendering establishments and other
compliance be made available to FDA animal from which the material came similar establishments maintain
remains and has been incorporated into without records and, therefore, whether additional records because they handle
the final record provisions. the material is an SRM. In addition, prohibited cattle materials. These
In response to the December 2003 without records, it may not be possible records would include plans to prevent
finding of an adult cow—imported from to determine whether a product cross-contamination and cleaning and
Canada—that tested positive for bovine contains material from cattle that were disinfection records.
spongiform encephalopathy (BSE) in the not inspected and passed for human We also received several comments
State of Washington, FDA published the consumption. Also, a product might requesting that we clarify that
IFR requiring that specified risk contain MS beef without its presence manufacturers and processors of certain
materials (SRMs), small intestine of all being evident from the appearance of cattle-derived products (e.g., tallow
cattle, tissue from nonambulatory the product. derivatives and milk and milk products)
disabled cattle, tissue from cattle not FDA received 32 responses, each do not have to keep records because
inspected and passed for human containing one or more comments, from their products are exempt in the IFR.
consumption, and mechanically industry, consumers, and other (Response) We believe that
separated beef (MS beef) not be used for stakeholder groups in response to the manufacturers and processors of human
FDA-regulated human food and proposed rule. We have responded in food and cosmetics as well as
cosmetics.1 SRMs include the brain, this document to the comments that ingredients used to produce human food
skull, eyes, trigeminal ganglia, spinal were within the scope of this and cosmetics must maintain records.
cord, vertebral column (excluding the rulemaking. We received several To ensure that a finished human food or
vertebrae of the tail, the transverse comments that pertained to the cosmetic does not contain prohibited
prohibitions on the cattle materials cattle materials, it is necessary to ensure
1 In June 2005, USDA confirmed the second case themselves, as opposed to the that all of the ingredients are free of
of BSE in the United States in a cow born in Texas. recordkeeping requirements, and other prohibited cattle materials. This
Federal Register / Vol. 71, No. 196 / Wednesday, October 11, 2006 / Rules and Regulations 59655
requires information from ingredient the amount of insoluble impurities it record of a human food or cosmetic
suppliers as well as from the finished contains or the cattle material from manufactured from, processed with, or
product manufacturer. A buyer who which it is sourced. otherwise containing, cattle material
purchases cattle material from its must affirm that the human food or
B. What Type of Records Must
producer or manufacturer (e.g., from a cosmetic is manufactured from,
Manufacturers and Processors of
slaughter or rendering establishment) is processed with, or otherwise contains,
Human Food and Cosmetics Keep?
in a better position than subsequent cattle material and must affirm that the
(§§ 189.5(c)(1) and 700.27(c)(1))
purchasers further downstream in the human food or cosmetic was
distribution chain to ensure that the (Comment) We received several manufactured in accordance with the
purchased cattle material is free from comments related to the type of records applicable requirements. In addition, if
prohibited cattle material. that must be kept. Most stated that a a human food or cosmetic is
Manufacturers and processors who use requirement for lot-by-lot records for manufactured from, processed with, or
ingredients made of cattle material and human food and cosmetics was overly otherwise contains, cattle material, the
incorporate it into final products can burdensome relative to the risk posed by importer of record must, if requested,
only ensure that the final products are BSE. Many comments suggested that provide within 5 days records sufficient
free of prohibited cattle material if the maintenance of a continuing letter of to support the affirmation (i.e., to
upstream suppliers have done the same. guarantee, renewable annually, would demonstrate that the human food or
Therefore, we have concluded that be sufficient to ensure that cosmetic is not manufactured from,
manufacturers and processors of manufacturers and processors are not processed with, or does not otherwise
finished human food and cosmetic using prohibited cattle materials in their contain, prohibited cattle material). The
products, as well as the manufacturers products. importer of record must retain or have
and processors who supply ingredients Other comments stated that lot-by-lot access to the same records that domestic
(e.g., tallow or gelatin) for those finished records were necessary, particularly for manufacturers and processors must
products, must maintain records. imports. Some comments suggested that maintain to demonstrate compliance.
We are not specifying particular lot-by-lot records should be kept and We have made several changes to the
additional records that must be kept by should contain enough information to import provision in the proposed rule.
establishments that handle both allow downstream tracing of the First, we have clarified that the import
prohibited and nonprohibited cattle product and upstream tracing of provision is applicable to the importer
materials. We note that food products or ingredients. of record because the importer of record
establishments are subject to the current (Response) We are requiring in is responsible for compliance with
good manufacturing practice §§ 189.5(c)(1) and 700.27(c)(1) that import requirements. Second, we have
requirements in 21 CFR part 110 and manufacturers and processors of human added a requirement for the importer of
that the failure to take adequate food and cosmetics manufactured from, record to affirm that a human food or
measures to prevent cross- processed with, or that otherwise cosmetic is manufactured from,
contamination could result in contain, material from cattle maintain processed with, or otherwise contains,
unsanitary conditions whereby the food records sufficient to demonstrate that cattle material. FDA believes that the
may be rendered injurious to health the human food and cosmetics are not addition of this affirmation will
and, therefore, adulterated under manufactured from, processed with, or minimize the number of importers
section 402(a)(4) of the Federal Food, otherwise contain, prohibited cattle affirming compliance based on the
Drug, and Cosmetic Act (the Act) (21 material. We recommend that complete absence of cattle material and
U.S.C. 342(a)(4)). manufacturers and processors will help FDA focus its compliance
Comments asked that we clarify that accomplish this in part by maintaining efforts on products manufactured from,
manufacturers and processors of certain records, which they renew at least processed with, or otherwise containing,
cattle-derived products (e.g., tallow annually, from suppliers of cattle cattle material. We have also changed
derivatives and milk and milk products) materials and of products that are the time period for providing records
are exempt from the recordkeeping manufactured from, processed with, or from a ‘‘reasonable time’’ to 5 days. FDA
requirements because these products are otherwise contain, cattle material believes that providing a specific time
exempt from the provisions of the IFR. documenting that the products obtained period will eliminate ambiguity and
In the Federal Register of September 7, from the supplier do not contain thereby facilitate compliance. FDA
2005 (70 FR 53063), FDA published prohibited cattle materials. In addition, further believes that 5 days is a
amendments to the IFR. In that we recommend that manufacturers and reasonable amount of time for the
document, we also clarified that milk processors maintain a record of the importer of record to provide the
and milk products, hides and hide- source, type, volume, and date of receipt records while still allowing FDA
derived products, and tallow derivatives for the cattle material or product sufficient time to review the documents
are excluded from the definition of manufactured from, processed with, or to make an initial admissibility decision
prohibited cattle materials. We are not otherwise containing, cattle material. before the conditional release period for
requiring that records be kept for cattle We intend to publish guidance the product expires. If the importer of
materials that are specifically exempted describing in detail the types of records record fails to provide adequate records
from the definition of ‘‘prohibited cattle we recommend that manufacturers and within 5 days, the product will be
material’’ without restrictions, such as processors maintain to demonstrate subject to detention because it appears
milk and milk products, hides and hide- compliance with the ban on prohibited to be adulterated under section 801 of
derived products, and tallow cattle materials. the act (21 U.S.C. 381), and the owner
derivatives. Although §§ 189.5(a)(1) and Because we do not easily have access or consignee will be afforded notice and
700.27(a)(1) exclude tallow that to records maintained at foreign an opportunity for hearing in
contains no more than 0.15 percent establishments, we have included in accordance with section 801(a) of the
insoluble impurities from the definition this final rule a requirement, in act.
of prohibited cattle materials, tallow is §§ 189.5(c)(6) and 700.27(c)(6), that With regard to the comments that
not exempt from records requirements when filing entry with U.S. Customs stated that the records required should
because there are restrictions on either and Border Protection, the importer of allow tracing of the product in the event
of a recall, we agree that it is beneficial after the date they were created because inspection. A review of records is one
to have records that will allow for trace- variant Creutzfeldt-Jakob disease (vCJD) way that we can determine whether an
back or trace-forward activities. We has a long incubation period, and the establishment is complying with the ban
intend to recommend records in a records retention requirement should be on the use of prohibited cattle material.
guidance document that, in addition to commensurate with the potential for It is also important that we be able to
being essential to ensure compliance, outbreak of disease. Finally, several copy the required records. We may
will provide useful information in the comments requested that the records consider it necessary to copy records
event of trace-back or trace-forward retention requirement vary with the when, for example, our investigators
activities. We note that some expected shelf life of the human food or need assistance in reviewing a certain
manufacturers and processors of human cosmetic, but should be no longer than record from relevant experts in our
food may already be maintaining such 2 years. headquarters. If we are unable to copy
records as part of ordinary business (Response) We proposed in records, we would have to rely solely on
practices to comply with FDA’s §§ 189.5(c)(2) and 700.27(c)(2) that all our investigator’s notes and reports
recordkeeping requirements in required records be retained for 2 years when drawing conclusions. Finally,
‘‘Establishment and Maintenance of after the date the records were created. copying records will facilitate followup
Records Under the Public Health The comments received have not regulatory actions.
Security and Bioterrorism Preparedness persuaded us to change this
requirement. The recordkeeping E. When Do Manufacturers and
and Response Act of 2002’’ (the
requirement is intended to ensure Processors Have to Comply With the
Bioterrorism Act recordkeeping rule) (69
compliance with the ban on the use of Recordkeeping Requirements?
FR 71562, December 9, 2004).
prohibited cattle material. FDA will (Comment) We received several
C. Should There Be a Requirement That verify compliance during inspections of comments requesting that industry be
Records Be Certified? facilities that use cattle material directly given 90 days after publication of this
(Comment) Several comments or that use human food or cosmetics final rule to comply with the
suggested that any records required manufactured from, processed with, or recordkeeping requirements, rather than
should be certified by an appropriate that otherwise contain, cattle material. the proposed 30 days. The comments
government authority or that the We believe that a 2-year record retention requested the additional time because
required records be traceable to a record requirement is an appropriate length of they stated that 30 days was not long
certified by a government authority. time for achieving the goal of this enough to implement a new
Other comments requested that FDA rulemaking. A 2-year record retention recordkeeping protocol in their
accept the certification of records by requirement will create a compliance establishments.
foreign governments, if those authorities history for the establishment. (Response) As we stated in the
choose to certify compliance with our Furthermore, many of the products (e.g., proposed rule, the agency believes that
records requirements. One comment canned soups, gelatin, dietary recordkeeping and records access
suggested that records be certified for supplements, and cosmetics) that requirements are necessary
compliance through independent audit, include material from cattle have shelf immediately. However, because we
though not necessarily by a government, lives of several years. A 2-year record recognized that recordkeeping systems
and that FDA require documentation of retention period will enable FDA to could not be put in place immediately,
the certification. determine compliance of products on we did not include such provisions in
(Response) We do not agree that the market. the IFR but rather proposed them. The
records need to be certified by an We do not agree that the records requirements in this rule are no more
appropriate authority, governmental or retention time should vary with the than are necessary for manufacturers,
otherwise. We did not propose shelf life of the product as it does in the processors, and importers of record to
certification in the proposed rule Bioterrorism Act recordkeeping rule. It ensure their compliance with the rule,
because we did not believe it was is the goal of that rule to allow for trace- and we informed industry of the
necessary to ensure compliance with the back or trace-forward activities of food anticipated timeframe for
rule. In addition, we do not traditionally in an emergency; thus, shelf life of implementation in the proposed rule.
require certification for other FDA- products was the critical determinant of These recordkeeping requirements are
regulated human food and cosmetic the records retention period. In contrast, vital to ensuring compliance with the
products with records requirements our goal in this rulemaking is to ensure ban on the use of prohibited cattle
(e.g., seafood and juice hazard analysis compliance with the ban on the use of material, and we strongly encourage
critical control points (HACCP) records). prohibited cattle material. As stated industry to begin keeping them as soon
previously, the 2-year record retention as possible. However, in light of these
D. How Long Must the Records Be Kept? requirement will enable creation of a
(§§ 189.5(c)(2) and 700.27(c)(2)) comments we have decided to make
compliance history for establishments these recordkeeping requirements
(Comment) We received several over an extended period of time. become effective 90 days after the
comments regarding the length of time Finally, we do not agree that the long publication of this final rule in the
that records must be retained. Several incubation period of vCJD necessitates Federal Register.
comments stated that the required that records be retained for 40 years.
records should be maintained for 1 year This rulemaking is not intended to F. Legal Authority
after the date they were created to be create a consumption or use history for (Comment) We received a comment
consistent with USDA’s IFR. One individuals. Because vCJD has a long that maintained that FDA has no
comment suggested that the required incubation period, potentially decades, authority to require manufacturers to
records be maintained for 3 years after it would be impractical to try to match disclose company records to inspectors.
the date they were created to cover the disease development with previous (Response) We disagree with this
potential shelf life of the products and consumption or use of a specific comment because the agency has
any potential need to trace back commodity. authority under the act both to require
products. Another comment suggested It will be necessary for inspectors to maintenance of records and to compel
that records be retained for 40 years review and copy records during an official access to such records for the
efficient enforcement of the act. The Rather, the approach extends to certain of the act’s provisions relating to
act’s statutory scheme, taken as a whole, consideration of the act as a whole and adulteration, prohibited acts, injunction,
including provisions related to the need to accomplish its purposes: and seizure. Viewing the act in its
adulteration, prohibited acts, injunction, Whether the regulation is justified thus entirety, the court found no basis to
and seizure, makes clear that FDA has depends, not only, as petitioners appear to distinguish between FDA’s roles in
authority to issue a regulation requiring suggest, on whether Congress refused to preventing and in remedying commerce
recordkeeping and access to the records include a specific section of the Act in adulterated foods (id. at 693). The
authorizing such inspections, although this
that are kept. Viewing the act in its court concluded that FDA’s intention to
factor is to be sure a highly relevant one, but
entirety, the United States Court of also on whether the statutory scheme as a prevent the introduction of adulterated
Appeals for the District of Columbia whole justified promulgation of the foods into commerce and to hasten their
Circuit has found that the agency has regulation. This will depend not merely on removal from circulation once there
authority to require records the inquiry into statutory purpose, but ‘‘reflect the objective of the Act and
notwithstanding the act’s lack of concurrently on an understanding of what carry out its mandate’’ (id. at 694). The
express, general authority for records. types of enforcement problems are regulation upheld in National
(National Confectioners Ass’n v. encountered by the FDA, the need for various Confectioners required the creation and
Califano, 569 F.2d 690 (DC Cir. 1978)). sorts of supervision in order to effectuate the retention of records by candy makers of
goals of the Act, and the safeguards devised the initial distribution of candy.
The Supreme Court has recognized that
to protect legitimate trade secrets.
FDA has authority that ‘‘is implicit in Although FDA’s access to the records
the regulatory scheme, not spelled out Id. at 163–64 (internal citation omitted). was not explicitly addressed, the DC
in haec verba’’ in the statute In National Confectioners Ass’n v. Circuit implicitly recognized that FDA
(Weinberger v. Bentex Pharmaceuticals, Califano (569 F.2d 690 (DC Cir. 1978)), had the authority to access those
Inc., 412 U.S. 645, 653 (1973)). Indeed, the United States Court of Appeals for records: In particular, the court stated
‘‘it is a fundamental principle of the District of Columbia Circuit cited that ‘‘[r]egulations that require source
administrative law that the powers of an Toilet Goods in upholding an FDA codes and distribution records may be
administrative agency are not limited to regulation, issued under the authority of based legitimately on the need to
those expressly granted by the statutes, sections 701(a) and 402(a)(4) of the act,3 expedite seizure when voluntary recalls
but include, also, all of the powers that requiring recordkeeping by candy are refused’’ (id. at 695). The only way
may fairly be implied therefrom. * * * manufacturers (id. at 691). The for records to expedite seizure is if FDA
In the construction of a grant of powers, Association challenged FDA’s has access to them.
it is a general principle of law that recordkeeping requirement on several The comment questioning FDA’s
where the end is required the grounds, including that it exceeded authority to inspect records cites the
appropriate means are given and that FDA’s statutory authority. The DC Bioterrorism Act’s specific grant of
every grant of power carries with it the Circuit rejected the Association’s authority to FDA to access certain
use of necessary and lawful means for analysis of FDA’s statutory authority as records as ‘‘proof that neither FDA nor
its effective execution’’ (Morrow v. ‘‘unreasonably cramped’’ and Congress believes that the agency has
Clayton, 326 F.2d 35, 44 (10th Cir. considered enforcement practicalities as general statutory power to require
1963)). suggested by the Supreme Court in records inspection for food.’’ FDA’s
In Toilet Goods Ass’n, Inc. v. Gardner Toilet Goods: belief in its statutory power to inspect
(387 U.S. 158 (1967)), cosmetic There is no persuasive evidence that food records is evident in the records
manufacturers and distributors Congress intended to immunize food requirements it has previously issued,
challenged an FDA regulation, issued manufacturers from * * * record-keeping. such as regulations that provide FDA
under authority of the Color Additive Therefore, in assessing the validity of with access to records for fish and
regulations promulgated under section 701(a) fishery products (21 CFR 123.9(c)) and
Amendments of 1960 and section 701(a)
for the efficient enforcement of the Act, we
of the act (21 U.S.C. 371(a)),2 records for juice (21 CFR 120.12(e)).
must consider ‘‘whether the statutory scheme
authorizing FDA to stop certifying the as a whole justified promulgation of the Further, the Bioterrorism Act provides
color additives of any person who had regulation.’’ Toilet Goods Ass’n v. Gardner, in section 306 (21 U.S.C. 414),
refused to provide FDA with access to 387 U.S. 158, 163 (1967). The consideration Maintenance and Inspection of Records,
its manufacturing facilities, processes, concerns ‘‘not merely an inquiry into that ‘‘[t]his section shall not be
and formulae. The cosmetic statutory purpose’’ but also practicalities, construed * * * to limit the authority of
manufacturers and distributors argued such as ‘‘an understanding of what types of the Secretary to inspect records or to
that the regulation exceeded FDA’s enforcement problems are encountered by require establishment and maintenance
the FDA (and) the need for various sorts of of records under any other provision of
statutory authority and maintained that
supervision in order to effectuate the goals of
FDA had long sought Congressional this Act.’’ In addition, Congress
the Act.’’ Id. at 163–64. The Act is not
authorization for the access required by concerned with purification of the stream of indicated its understanding of FDA’s
the regulation but had been denied that commerce in the abstract. The problem is a records authority in the legislative
power, except for prescription drugs (id. practical one of consumer protection, not history of the Bioterrorism Act. The
at 162). In finding that the controversy dialectics. United States v. Urbuteit, 335 U.S. Conference Committee responsible for
was not ripe for review, the Supreme 355, 357–58 (1948). the Bioterrorism Act acknowledged
Court set forth an approach to Id. at 613 (footnote omitted). FDA’s recordkeeping authority
determining FDA’s rulemaking independent of the Bioterrorism Act in
In National Confectioners, the DC
authority under section 701(a) that a joint explanatory statement:
Circuit considered the act’s statutory
extends beyond consideration of scheme as a whole, specifically citing The Managers did not adopt a Senate
whether a specific section of the act proposal to authorize the Secretary to require
includes a particular requirement. the maintenance and retention of other
3 Section 402(a)(4) states that a food shall be
deemed adulterated ‘‘if it has been prepared, records for inspection relating to food safety,
2 Section 701(a) provides that ‘‘[t]he authority to packed, or held under insanitary conditions because the Secretary has authority under
promulgate regulations for the efficient enforcement whereby it may have become contaminated with section 701(a) of the [Act] to issue regulations
of this Act, except as otherwise provided in this filth, or whereby it may have been rendered for the ‘‘efficient enforcement of this Act’’
section, is hereby vested in the Secretary.’’ injurious to health.’’ and this authority, in combination with other
provisions (such as section 402), gives the disabled, and whether tallow in a that scientific studies have
Secretary the authority to require appropriate human food or cosmetic contains less demonstrated are highly likely to
record keeping in food safety regulations. than 0.15 percent insoluble impurities. contain the BSE agent in cattle infected
H.R. Conf. Rep. No. 107–481, at 135 Under the IFR, failure of a with the disease, FDA’s recordkeeping
(2002). manufacture or processor to operate in rule ‘‘reflect[s] the objective of the
compliance with the ban on prohibited [Federal Food, Drug, and Cosmetic] Act
The comment questioning FDA’s
cattle materials renders a food or and carr[ies] out its mandate’’ (National
authority to inspect food records further
cosmetic adulterated as a matter of law. Confectioners, 569 F.2d at 694).
argues that ‘‘if Congress had intended
The introduction or delivery for
FDA to have broad records inspection III. Summary of Requirements
introduction into interstate commerce of
authority, section 703, [Records of The recordkeeping provisions of this
an adulterated food or cosmetic is a
Interstate Shipment], would have been rule apply to food and cosmetics
prohibited act under section 301(a) of
completely superfluous and covered by the IFR, including food
the act (21 U.S.C. 331(a)), and the
meaningless.’’ As FDA recognized in a additives, dietary supplements, and
adulteration of any food or cosmetic in
previous rulemaking, the National interstate commerce violates section dietary ingredients.
Confectioners court concluded that ‘‘the 301(b) of the act (21 U.S.C. 331(b)). As discussed in section II of this
narrow scope of section 703 of the act Thus, in order for us to determine document, we have modified the
is not a limitation on the right of the whether a human food or cosmetic is codified section based on comments we
agency to require recordkeeping and adulterated and whether a manufacturer received on the proposed rule. In this
have access to records that are outside or processor has committed a prohibited final rule, in §§ 189.5(c)(1) and
the scope of section 703 of the act, so act, we must have access to the 700.27(c)(1), we are requiring that
long as [1] the recordkeeping manufacturer or processor’s records. manufacturers and processors of human
requirement is limited, [2] clearly assists Third, the burden of the food and cosmetics that are
the efficient enforcement of the act, and recordkeeping requirement in this rule manufactured from, processed with, or
[3] the burden of recordkeeping is not is not unreasonably onerous. The only otherwise contain, material from cattle
unreasonably onerous’’ (60 FR 65096 at records that must be retained are those establish and maintain records
65100 (citing National Confectioners, sufficient to demonstrate that a human sufficient to demonstrate that the
569 F.2d at 693 n.9)). food or cosmetic is not manufactured human food or cosmetic is not
The recordkeeping requirement in from, processed with, or does not manufactured from, processed with, or
this rule satisfies the three criteria in otherwise contain, prohibited cattle does not otherwise contain, prohibited
National Confectioners for the agency to materials. First and foremost, FDA cattle materials. We intend to publish
require records and have access to believes that it is only requiring records guidance that will describe in detail the
records. First, the requirement is limited that a manufacturer or processor itself records we recommend that
to only manufacturers and processors of would need to keep to ensure its manufacturers and processors maintain
human food and cosmetics that are compliance with the rule. Just as there to demonstrate compliance with the ban
manufactured from, processed with, or is no way for FDA to determine whether on the use of prohibited cattle materials.
otherwise contain, material from cattle a product contains prohibited cattle In §§ 189.5(c)(2) and 700.27(c)(2), we
and to importers of record of human material because there is currently no specify the period of time (2 years) that
food and cosmetics that are test to detect such material, there is no records must be retained. In
manufactured from, processed with, or way for a manufacturer or processor to §§ 189.5(c)(3) and 700.27(c)(3), we
otherwise contain, material from cattle. know without records. For example, require that records be maintained at the
FDA has excluded all of the other without records, a manufacturer or manufacturing or processing
persons who may be involved in the processor of human food or cosmetics establishment or at a reasonably
distribution of human food or cosmetics manufactured from, processed with, or accessible location. Sections 189.5(c)(4)
before they reach consumers but who do otherwise containing, cattle material and 700.27(c)(4) provide that
not manufacture or process the food. cannot determine whether cattle maintenance of electronic records is
Second, the recordkeeping material that may be specified risk acceptable and that electronic records
requirement not only clearly assists the material (e.g., brain or spinal cord) came are considered to be reasonably
efficient enforcement of the act, but is from an animal that was less than 30 accessible if they are accessible from an
critical to its enforcement because it is months old, whether the source animal onsite location. Sections 189.5(c)(5) and
vital to determining compliance with for cattle material was inspected and 700.27(c)(5) provide that records
the ban on prohibited cattle material. passed, whether the source animal for required by these sections and existing
There is currently no test to detect cattle material was nonambulatory records relevant to compliance with
reliably the presence of prohibited cattle disabled, and whether tallow in a these sections must be available to FDA
material in human food and cosmetics. human food or cosmetic contains less for inspection and copying.
If FDA cannot require and access than 0.15 percent insoluble impurities. Because we do not easily have access
records demonstrating compliance, FDA Further, the rule does not dictate to records maintained at foreign
may not be able to determine whether specific records but allows for covered establishments, we are requiring in
a human food or cosmetic contains manufacturers and processors to comply §§ 189.5(c)(6) and 700.27(c)(6),
cattle material that is prohibited. For in the way that is least burdensome for respectively, that when filing entry with
example, without records, FDA may not them while demonstrating compliance. U.S. Customs and Border Protection, the
be able to determine whether cattle Also, many of the records that covered importer of record of a human food or
material that may be specified risk manufacturers and processors of human cosmetic manufactured from, processed
material (e.g., brain or spinal cord) came food may choose to retain are similar to with, or otherwise containing, cattle
from an animal that was less than 30 those that are required by FDA’s material must affirm that the human
months old, whether the source animal Bioterrorism Act recordkeeping rule. food or cosmetic is manufactured from,
for cattle material was inspected and Finally, by allowing for efficient processed with, or otherwise contains,
passed, whether the source animal for enforcement of the requirements that cattle material and must affirm that the
cattle material was nonambulatory minimize human exposure to materials human food or cosmetic was
manufactured in accordance with this assessment of anticipated costs and rule manufacturers and processors
rule. In addition, if a human food or benefits, before proposing ‘‘any rule that might not establish and maintain
cosmetic is manufactured from, includes any Federal mandate that may records to ensure that cattle material
processed with, or otherwise contains, result in the expenditure by State, local, does not contain prohibited cattle
cattle material, then the importer of and tribal governments, in the aggregate, materials, it may not be possible to
record must, if requested, provide or by the private sector, of $100,000,000 determine whether cattle material that
within 5 days records sufficient to or more (adjusted annually for inflation) may be specified risk material (e.g.,
demonstrate that the human food or in any one year.’’ The current threshold brain or spinal cord) came from an
cosmetic is not manufactured from, after adjustment for inflation is $122 animal that was less than 30 months
processed with, or does not otherwise million, using the most current (2005) old, it may not be possible to determine
contain, prohibited cattle material. Implicit Price Deflator for the Gross whether the source animal for cattle
Sections 189.5(c)(7) and 700.27(c)(7) Domestic Product (Ref 1). FDA does not material was inspected and passed, and
provide that records established or expect this final rule to result in any 1- a product might contain MS beef
maintained to satisfy the requirements year expenditure that would meet or without its presence being evident.
of this subpart that meet the definition exceed this amount.
The Small Business Regulatory 2. Final Rule Coverage
of electronic records in part 11 (21 CFR
part 11) in § 11.3(b)(6) are exempt from Enforcement Fairness Act of 1996 This final rule will require
the requirements of part 11. Records (Public Law No. 104–121) defines a recordkeeping to ensure and document
that satisfy the requirements of this major rule for the purpose of compliance with the provisions of the
rulemaking, but that are also required congressional review as having caused IFR (on use of materials from cattle) that
under other applicable statutory or being likely to cause one or more of prohibit the use of ‘‘prohibited cattle
provisions or regulations, remain the following: An annual effect on the materials.’’ This final rule will require
subject to part 11. economy of $100 million or more; a that manufacturers and processors of
major increase in costs or prices; human foods and cosmetics that are
IV. Regulatory Impact Analysis significant adverse effects on manufactured from, processed with, or
A. Benefit-Cost Analysis competition, employment, productivity, otherwise contain, cattle materials
or innovation; or significant adverse maintain records indicating that
FDA has examined the economic effects on the ability of U.S.-based prohibited cattle materials have not
implications of this final rule as enterprises to compete with foreign- been used in the manufacture or
required by Executive Order 12866. based enterprises in domestic or export processing of a human food or cosmetic,
Executive Order 12866 directs agencies markets. In accordance with the Small and make such records available to FDA
to assess all costs and benefits of Business Regulatory Enforcement for inspection and copying. Because we
available regulatory alternatives and, Fairness Act, OMB has determined that do not easily have access to records
when regulation is necessary, to select this final rule will not be a major rule maintained at foreign establishments,
regulatory approaches that maximize for the purpose of congressional review. we have included in this final rule a
net benefits (including potential requirement that, when filing entry with
economic, environmental, public health 1. Need for Regulation U.S. Customs and Border Protection,
and safety, and other advantages; As explained in this document, importers of human food and cosmetics
distributive impacts; and equity). USDA’s amended BSE IFR requires that manufactured from, processed with, or
Executive Order 12866 classifies a rule SRMs, tissue from nonambulatory otherwise containing, cattle material
as significant if it meets any one of a disabled cattle, material from cattle not must affirm that the food or cosmetic
number of specified conditions, inspected and passed for human was manufactured from, processed with,
including the following conditions: consumption, and MS beef not be used or otherwise contains, cattle material
Having an annual effect on the economy for human food. SRMs include the and must affirm that the food or
of $100 million, adversely affecting a brain, skull, eyes, trigeminal ganglia, cosmetic was manufactured in
sector of the economy in a material way, spinal cord, vertebral column accordance with this rule. In addition,
adversely affecting competition, or (excluding the vertebrae of the tail, the if a human food or cosmetic is
adversely affecting jobs. A regulation is transverse process of the thoracic and manufactured from, processed with, or
also considered a significant regulatory lumbar vertebrae, and the wings of the otherwise contains, cattle material, then
action if it raises novel legal or policy sacrum), and dorsal root ganglia of cattle the importer of record must, if
issues. FDA has determined that this 30 months and older, as well as the requested, provide within 5 days
final rule is a significant regulatory tonsils and distal ileum of the small records sufficient to demonstrate that
action because it raises novel policy intestine of all cattle. USDA’s BSE IFR the human food or cosmetic is not
issues; however, we have determined requires that all of the prohibited manufactured from, processed with, or
that this final rule is not an materials be destroyed or sent to does not otherwise contain, prohibited
economically significant regulatory inedible rendering. This final rule cattle material.
action. implements recordkeeping for the
The Regulatory Flexibility Act provisions of the IFR on use of materials 3. Comments Received on the Proposed
requires agencies to analyze regulatory from cattle and responds to the same Rule
options that would minimize any public health concerns. This final rule (Comment) We received several
significant impact of a rule on small will not affect the incidence of BSE in comments that stated that FDA
entities. FDA finds that this final rule cattle, which is addressed in other FDA underestimated the economic impact of
will have a significant economic impact regulations. This final rule will serve as the proposed rule by omitting entire
on a substantial number of small an additional safeguard to reduce industries that would be subject to the
entities. human exposure to the agent that causes rule. According to the comments, FDA
Section 202(a) of the Unfunded BSE that may be present in cattle- had only estimated the costs of the rule
Mandates Reform Act of 1995 requires derived products from domestic and to end-users of cattle material and had
that agencies prepare a written imported sources. Without the not considered the costs of the rule to
statement, which includes an recordkeeping requirements in this final those persons that produce intermediate
cattle-derived products. Specifically, regulated human food and cosmetics cattle-derived ingredients include
manufacturers of collagen casings, manufactured from, processed with, or bovine serum albumin, cholesterol and
intestinal casings, flavoring extracts, otherwise containing, cattle material to cholesterol compounds, fibronectin,
and gelatin are not appropriately maintain records demonstrating that sphingolipids, spleen extract, tallow,
accounted for in the proposed rule prohibited cattle materials are not used gelatin, and keratin and keratin
analysis. in their products. This final rule will compounds. From FDA’s dietary
(Response for gelatin) In the case of require that the manufacturer or supplement database (Ref. 4), we are
gelatin, FDA did estimate the impact of processor retain records for 2 years from able to tell that there are about 131 U.S.-
the proposed rule on food the date they were created. Records based dietary supplement brand names
manufacturers of intermediate products must be kept at the manufacturing or that use cattle material as ingredients in
that are from cattle-derived gelatin. processing establishment or another their products. We assume that each
Depending on the product, FDA had reasonably accessible location. brand name represents a facility that
information on cattle-derived materials Manufacturers and processors must produces multiple dietary supplement
manufactured by intermediate provide FDA with access to the required products containing cattle-derived
producers (e.g., input suppliers to records and other records relevant to ingredients.
cosmetics manufacturers) or information compliance for inspection and copying. Recordkeeping costs to domestic
on end products that contained cattle a. Costs of final rule to domestic facilities. USDA’s BSE rule requires that
materials (e.g., foods). Whether our facilities. FDA used establishment data those establishments that slaughter
information was on intermediate from the FDA Small Business Model cattle or that process the carcasses or
manufacturers or end products, we (which includes information on all parts of carcasses of cattle maintain
estimated the impact of the rule on both establishments in a manufacturing daily records sufficient to document the
the upstream and downstream facilities. sector regardless of size) (Ref. 2) to implementation and monitoring of
FDA did not include estimates of bovine determine the number of food procedures for removal, segregation, and
gelatin use in cosmetics in the analysis manufacturers and processors that will disposition of SRMs. USDA’s BSE
of the proposed rule. We have included need to comply with the proposed requirements will reduce, but likely not
these estimates in the final analysis. recordkeeping requirements. The model eliminate, the startup costs of
(Response for small intestine) FDA contains information on the number of recordkeeping required by this final
did not estimate any costs, other than establishments in certain food rule. We do not expect the USDA rule
recordkeeping, for the requirement that producing sectors, but does not have to completely eliminate start-up costs to
the distal ileum be removed from the information on specific ingredients used recordkeeping for this rule because the
small intestine because costs other than by the food establishments in making beef products under USDA’s
recordkeeping are linked to the products. Data from the model indicates jurisdiction differ from the food
prohibition in FDA’s IFR. that 181 establishments produce products under FDA’s jurisdiction. To
(Response for flavoring extracts) In spreads, 127 establishments produce the extent that manufacturers of
the case of flavoring extracts, flavoring extracts, 40 establishments products containing cattle-derived
manufacturers and the buyers of produce canned soups and stews, 625 materials produce a variety of food
flavoring extracts for use in food establishments produce nonchocolate products, some of which are under
products were accounted for in the candy, 88 establishments produce USDA jurisdiction and some of which
proposed rule. We assessed yogurt, and 451 establishments produce are under FDA jurisdiction, the
recordkeeping costs for the 32 facilities ice cream. FDA cannot verify that all of following estimates of recordkeeping
(out of 127 facilities) that we estimated these establishments actually use cattle costs (for foods only) are likely an over
were likely to manufacture flavoring materials that fall under the jurisdiction estimate.
extracts using cattle-derived materials of this final rule; many may not. It is Recordkeeping costs include one-time
and for the buyers of these flavoring likely that some of the 132 costs and recurring costs. One-time
extracts. FDA assumed three scenarios establishments that produce fats and costs include the costs of designing
for sensitivity analyses: (1) oils currently use tallow or tallow records and training personnel in the
Recordkeeping costs are borne entirely derivatives,4 so FDA assumes that maintenance of the records. The
by the flavoring extract manufacturers records will be required to be kept by recurring costs are the costs of ensuring
as the input supplier, (2) recordkeeping only 75 percent of the facilities (99 of that the records adequately document
costs are borne entirely by the 132) in this establishment group. We that the shipment of cattle materials to
manufacturers of products that use assume that only 25 percent of the an FDA-regulated facility is free of
flavoring extracts as an ingredient in establishments from the remaining prohibited cattle materials. The costs of
their products, and (3) recordkeeping production sectors listed previously retaining records and planning for an
costs are shared between the two types actually produce food that is FDA request for records access are
of firms. manufactured from, processed with, or assumed to be negligible. Current
(Response for collagen) FDA did not otherwise contains, material from cattle business practices already dictate that
estimate the impacts of our proposed and are therefore required to keep records are kept for at least 1 year for
rule on collagen manufacturers or records. We include only 25 percent of tax purposes and product liability
collagen casing manufacturers. This rule the establishments in our estimates purposes. FDA has found that records
does not require recordkeeping for hide- because most of the manufacturers are usually kept much longer for
derived collagen. Therefore we do not likely do not use cattle-derived internal business purposes; therefore, in
include the costs of recordkeeping to materials in their products. most cases the marginal private benefits
manufacturers who use hide-derived FDA research shows that 42 to facilities from retaining records for a
collagen. We do include costs for some establishments with U.S. addresses second year are apparently greater than
collagen use in cosmetic manufacturing. supply cattle-derived ingredients that the private marginal costs, so they keep
are used in cosmetics (Ref. 3). These most records. Because records retention
4. Costs and Benefits of the Final Rule is already standard practice in many
This final rule will require 4 Tallow derivatives are exempt from cases, we assume that the additional
manufacturers and processors of FDA- recordkeeping. retention costs associated with this final
rule are approximately zero. The rule We use the FDA Labeling Cost Model Unlike for the analysis of the
provides no specific time period for to estimate the one-time records design Bioterrorism Act recordkeeping rule (69
providing records, except for importers costs per facility of $1,190 per stock FR 71562, December 9, 2004), we do not
of record, who are given 5 days. In keeping unit (SKU) (Ref. 5). It is likely have direct information on all the
research conducted for FDA’s that facilities using cattle-derived facilities covered; we do not have data
Bioterrorism Act recordkeeping rule (69 ingredients, whether the ingredients are on all the intermediate cattle material
FR 71562, December 9, 2004), FDA for human food or cosmetics, will take suppliers or finished product
found that record request costs are not advantage of their economies of scope manufacturers that make use of cattle-
a significant burden under that rule’s and produce more than one product derived material for human food and
requirement to submit records to FDA with these ingredients. It is probable
cosmetics under FDA jurisdiction.
within 24 hours of a request. Therefore, that each establishment has several
Using information on the number of
we assume the cost to provide records SKUs associated with products
containing cattle-derived ingredients human food manufacturers and
to FDA under the requirements of this cosmetic ingredient suppliers that may
final rule is approximately zero. that will now require recordkeeping. To
account for additional products and use cattle-derived ingredients subject to
We assume that the one-time training SKUs we take the record design costs this final rule, we can account for the
burden incurred for each facility is per facility times 1.5 for a total design total shared records costs by assuming
approximately one-third of an hour. cost per facility of $1,785 ($1,095 in that each food manufacturer or
This time includes both the training labor costs and $690 in capital costs). processor in table 1 of this document
required for personnel to learn how to We multiplied the cost per product procures ingredients from one upstream
verify that the appropriate records have per SKU by 1.5 to account for the input supplier for particular cattle-
been received or created, and the additional records design required for derived ingredients. Even if multiple
training required for personnel to learn the additional SKUs. The record design input suppliers are used by the
how to file and maintain those records. cost for the first affected product or SKU manufacturing facility, or an input
As part of current business practices, will be more expensive than the supplier is used by multiple
personnel are familiar with marginal cost of adding records for manufacturing facilities, the marginal
recordkeeping. Therefore, the additional SKUs. This marginal cost of record setup costs would decrease for
requirement to maintain additional record design for additional SKUs could additional suppliers or additional
records will be learned quickly. This be negligible, or it could come close to
training burden estimated for manufacturers. Once a facility has
doubling the costs. We therefore pick
recordkeeping in this final rule is designed the required records, it is less
1.5, the midpoint of 1 and 2, to be the
consistent with the recordkeeping costly to generate records for additional
cost multiplier.
training burden in the analysis for the Consistent with the analysis input suppliers or additional end
Bioterrorism Act recordkeeping rule and conducted for the Bioterrorism Act product manufacturers. Table 1 of this
the records maintenance burden in the recordkeeping rule, this record design document shows estimated set-up costs
analysis of the juice hazard analysis cost is assumed to be shared between for U.S. facilities. Dietary supplement
critical control points (HACCP) rule (66 two facilities—the upstream facility and facilities listed represent end product
FR 6137–6202). Consistent with the the downstream facility—as both will manufacturers of dietary supplements
analysis conducted for the Bioterrorism need to be involved in record that contain cattle-derived material;
Act recordkeeping rule, FDA assumes production that meets the needs of both cosmetics facilities are represented by
an hourly cost of an administrative the supplier and customer for the intermediate cattle-derived ingredients
worker, $25.10 per hour, which product containing cattle-derived used in cosmetics products from
includes overhead costs. material. domestic cosmetic input suppliers.
TABLE 1.—FIRST-YEAR RECORDS COSTS FOR DOMESTIC FACILITIES
Number of Costs per
Costs per
facilities facility for
facility for Total setup
Type of product using cattle material estimated to training (1⁄3
designing hour × $25.10 costs
use cattle records
materials per hour)
Canned soups and stews ................................................................................ 10 $1,785 $8.37 $17,934

Fats and oils .................................................................................................... 99 1,785 8.37 177,544
Flavoring extracts ............................................................................................ 32 1,785 8.37 57,388
Spreads ............................................................................................................ 45 1,785 8.37 80,702
Candy ............................................................................................................... 156 1,785 8.37 279,766
Yogurt .............................................................................................................. 22 1,785 8.37 39,454
Ice cream ......................................................................................................... 113 1,785 8.37 202,651
Small intestine-derived casings ....................................................................... 47 1,785 8.37 84,288
Dietary supplements ........................................................................................ 131 1,785 8.37 234,931
Cosmetics ........................................................................................................ 42 1,785 8.37 75,322
Color additives ................................................................................................. 0 1,785 8.37 ........................
Total .......................................................................................................... 697 1,785 8.37 1,249,978
Startup Costs Annualized over 10 years (7%) .................................................................................................................................... 177,969

The recurring recordkeeping cost is processor. Because this recordkeeping Bioterrorism Act recordkeeping rule, we
the cost of ensuring that appropriate requirement is less complex than the assume that the average annual rate of
records document the absence of recordkeeping requirements under the turnover is 10 percent. We therefore
prohibited cattle materials in human Bioterrorism Act and affects fewer estimate the annual one-time costs for
food and cosmetics. The framework for ingredients, we estimate the average new domestic firms entering the
estimating the amount of time required burden per facility to be about one-half industry to be 10 percent of the one-
for FDA-regulated facilities to ensure of the burden estimated for the time costs of existing domestic firms
adequate records for each shipment of Bioterrorism Act recordkeeping rule: 15 estimated in table 1 of this document.
materials is based on the regulatory minutes per week, or 13 hours per year.
impact analysis of the Bioterrorism Act FDA assumes that this recordkeeping Table 2 of this document shows the
recordkeeping rule (69 FR 71562, burden will be shared between two recurring recordkeeping costs that
December 9, 2004). In that analysis we entities (i.e., the ingredient supplier and would be incurred by food and
estimated that 30 minutes per week the manufacturer of finished products cosmetics input suppliers and
would be needed to ensure that records containing cattle-derived ingredients). manufacturers to comply with this final
on each shipment to and from a facility For facilities using records that are rule. As stated earlier, information on
contain adequate information regarding renewable annually, the time pattern of food producing facilities in table 2
the contents of the package, the the burden may be different from the represents U.S. facilities; dietary
transporter, supplier, and receiver. assumed 15 minutes per week. We are, supplement facilities listed represent
The recordkeeping requirements of however, unable to quantify by how end product manufacturers of dietary
this final rule will cover only a small much time, if any, the annual burden supplements that contain cattle-derived
fraction of all ingredients used in food will fall for those facilities using that material and cosmetics facilities are
and cosmetic manufacturing and only option. represented by intermediate cattle-
require that records of cattle-derived In addition to the recurring costs to derived ingredients used in cosmetics
ingredient origin from the input domestic firms in the industry, as new products from domestic cosmetic input
supplier be verified and maintained by firms enter the industry they will bear suppliers.
the food or cosmetic manufacturer and one-time costs. As in the analysis of the
TABLE 2.—RECURRING ANNUAL RECORDS COSTS FOR DOMESTIC FACILITIES

Annual costs
per facility of
ensuring that
appropriate
Number of records ac- Total recurring
Type of product (from raw or rendered material that needs accompanying documentation) facilities company each annual costs
shipment
received
(13 hours ×
$25.10/hour)
Canned soups and stews ............................................................................................................ 10 $326.30 $3,263

Fats and oils ................................................................................................................................ 99 326.30 32,304
Flavoring extracts ........................................................................................................................ 32 326.30 10,442
Spreads ........................................................................................................................................ 45 326.30 14,684
Candy ........................................................................................................................................... 156 326.30 50,903
Yogurt .......................................................................................................................................... 22 326.30 7,179
Ice Cream .................................................................................................................................... 113 326.30 36,872
Small intestine-derived casings ................................................................................................... 47 326.30 15,336
Dietary supplements .................................................................................................................... 131 326.30 42,745
Cosmetics .................................................................................................................................... 42 326.30 13,705
Color additives ............................................................................................................................. 0 ........................ ........................
Total recurring costs for existing firms ........................................................................................ 697 326.30 227,430
One-time costs for new firms .............................................................................................................................................................. 124,998

Total annual costs ............................................................................................................................................................................... 352,428
Total costs of recordkeeping for domestic firms (annualized startup costs (7%) + annual costs) ..................................................... 530,397
Total costs of recordkeeping for domestic firms (annualized startup costs (3%) + annual costs) ..................................................... 498,964
b. Costs of final rule to importers. This accordance with this rule. If a human processed with, or otherwise contain,
final rule requires that, when filing food or cosmetic is manufactured from, cattle material and are manufactured in
entry with U.S. Customs and Border processed with, or otherwise contains, accordance with the rule will be made
Protection, importers of record of cattle material, then the importer of by the importer of record to FDA
human food and cosmetics that are record must, if requested, provide through the Agency’s Operational and
manufactured from, processed with, or within 5 days records sufficient to Administrative System for Import
otherwise contain, cattle material must demonstrate that the human food or Support (OASIS). Table 3, using OASIS
affirm that the food or cosmetic was cosmetic is not manufactured from, data from fiscal year 2004, shows
manufactured from, processed with, or processed with, or does not otherwise 2,195,000 entry lines of food and
otherwise contains, cattle material and contain, prohibited cattle material. cosmetics for the product codes that
must affirm that the human food or The affirmation that foods or FDA expects may contain products with
cosmetic was manufactured in cosmetics are manufactured from, cattle materials entered the U.S.; 0 to
100 percent of these imported product affirmation. We use the information in products actually do contain cattle-
lines will be for products that actually table 3 to generate recordkeeping costs derived materials.
do contain cattle material and require to importers (in tables 4 and 5) whose
TABLE 3.—ANNUAL LINES PER FDA INDUSTRY PRODUCT CODE FOR WHICH IMPORTERS MUST VERIFY USE OF CATTLE-
DERIVED MATERIALS 1
Fiscal year
FDA industry
Industry description 2004 line
product code count
Bakery products, dough, mix, and icing .................................................................................................................. 03 700,222

Macaroni and noodle products ................................................................................................................................ 04 24,011
Milk, butter, and dried milk products ....................................................................................................................... 09 12,228
Cheese and cheese products .................................................................................................................................. 12 2,712
Ice cream products .................................................................................................................................................. 13 2,698
Filled milk and imitation milk products .................................................................................................................... 14 990
Fishery and seafood products ................................................................................................................................. 16 4,775
Meat, meat products and poultry ............................................................................................................................. 17 5,322
Vegetable protein products ...................................................................................................................................... 18 16,702
Fruit and fruit products ............................................................................................................................................ 20 16,410
Nuts and edible seeds ............................................................................................................................................. 23 24,216
Vegetables and vegetable products ........................................................................................................................ 24 323,004
Vegetables and vegetable products ........................................................................................................................ 25 321,032
Vegetable oils .......................................................................................................................................................... 26 1,532
Dressings and condiments ...................................................................................................................................... 27 16,386
Spices, flavors, and salts ......................................................................................................................................... 28 203
Candy (except chocolate candy), chewing gum ..................................................................................................... 33 275,733
Chocolate and cocoa products ................................................................................................................................ 34 126,719
Gelatin, rennet, pudding mix, pie filling ................................................................................................................... 35 22,485
Multiple food dinners, gravy, and sauces ................................................................................................................ 37 82,105
Soup ......................................................................................................................................................................... 38 37,923
Prepared salad products ......................................................................................................................................... 39 13,357
Baby food products .................................................................................................................................................. 40 576
Dietary convenience foods and meal replacements ............................................................................................... 41 18,189
Food additives (human use) .................................................................................................................................... 45 23,877
Food additives (human use) .................................................................................................................................... 46 14,699
Miscellaneous food related items ............................................................................................................................ 52 1,501
Cosmetics ................................................................................................................................................................ 53 27,867
Vitamins, minerals, proteins, unconventional dietary specialties ............................................................................ 54 63,184
Total annual lines ............................................................................................................................................. ........................ 2,195,302

1 Note that not every import within each two-digit FDA product code will be required to make an affirmation of bovine materials in their
products.
Recordkeeping costs to foreign categories of food from table 3 where (7,486,650).5 The result is a multiplier
facilities. Facilities producing products affirmation could be required but it is (0.0167) that we apply to entry lines to
required to give affirmation on import not likely that products from that estimate the average number of firms by
into the U.S. whose products actually category actually contain cattle-derived product category that exported food or
do contain cattle-derived materials will materials. We estimate only 10 percent cosmetics to the U.S. in fiscal year 2004,
have to create and maintain records of of lines rather than 25 percent or 75 and whose products actually contained
cattle-derived materials used in product percent as we did for domestic products cattle-derived materials for which
production. Therefore, a certain because import category codes tend to records would need to be kept.
percentage of the firms whose products be broader in scope than the categories Table 4 below shows that about 916
are listed in Table 3 above will have to we used for determining the number of foreign firms will need to keep records
incur startup and recurring domestic facilities that produced of cattle-derived materials. The startup
recordkeeping costs, as domestic products using cattle-derived materials. costs to keeping these records will be
facilities do, to comply with the
To estimate the number of foreign about $1.6 million. Since we do not
recordkeeping requirements of this final
rule. firms associated with the 10 percent of have good information on the number of
line entries listed in table 4, we take all firms that actually produce and export
We do not expect many imported food products that contain cattle-derived
products under FDA jurisdiction will foreign firms registered in the Food
Facilities Registration Database as of the materials to the U.S., the costs in table
actually contain cattle-derived 4 below may overestimate
materials. Table 4 below revises table 3 end of the fiscal year 2004
(approximately 125,000) and divide that recordkeeping costs to firms in some
to only include the percentage (10 product categories and may

percent) of certain imported products number of firms by all imported food
likely to contain cattle materials and entry lines for fiscal year 2004 5 Cosmetic lines have been subtracted from the
whose manufacturing firms will keep line total because cosmetics manufacturers do not
records. We do not include the have to register.
underestimate recordkeeping costs to

firms in other product categories.
TABLE 4.—FIRST YEAR RECORDS COSTS FOR FOREIGN FACILITIES

Fiscal year Total setup
10 percent of Number of
Industry description 2004 line costs ($1,793
lines facilities
count per firm)
Milk, butter, and dried milk products ............................................................... 12,228 1,223 20 $36,614
Ice cream products .......................................................................................... 2,698 270 5 8,079
Meat, meat products and poultry ..................................................................... 5,322 532 9 15,936
Vegetable oils .................................................................................................. 1,532 153 3 4,587
Dressings and condiments .............................................................................. 16,386 1,639 27 49,065
Spices, flavors, and salts ................................................................................. 203 20 0 0
Candy (except chocolate candy), chewing gum .............................................. 275,733 27,5723 460 825,630
Gelatin, rennet, pudding mix, pie filling ........................................................... 22,485 2,249 38 67,327
Multiple food dinners, gravy, and sauces ........................................................ 82,105 8,211 137 245,848
Soup ................................................................................................................. 37,923 3,792 63 113,553
Baby food products .......................................................................................... 576 58 1 1,725
Cosmetics ........................................................................................................ 27,867 2,787 47 83,442
Vitamins, minerals, proteins, unconventional dietary specialties .................... 63,184 6,318 106 189,192
Total .......................................................................................................... ........................ ........................ 916 1,640,999

The recurring recordkeeping cost to Bioterrorism Act recordkeeping rule, we affirm annually that the products they
importers whose products contain assume that the average annual rate of are importing contain cattle materials.
cattle-derived materials is the cost of turnover is 10 percent. We therefore This total represents 10 percent of the
ensuring that appropriate records estimate the annual one-time costs for total lines imported for fiscal year 2004
document the absence of prohibited new foreign firms entering the industry for products under FDA product codes
cattle materials in human food and to be 10 percent of the one-time costs of that FDA will be looking to for importer
cosmetics. We use the same method and existing foreign firms estimated in table affirmation. Using an importer hourly
rationale to calculate the recurring 4. wage cost of $46.58 (Ref. 6), which
recordkeeping cost burden to foreign Also shown in table 5 are the annual
includes overhead, FDA estimates that
facilities that we used for domestic costs to importers to affirm that the
importer affirmation will take about two
facilities. human food or cosmetics that they are
In addition to the recurring costs to importing do contain cattle material and minutes per line at a cost of $1.55 per
foreign firms in the industry, as new are in compliance with this rule. affirmation for total annual affirmation
firms enter the industry they will bear Importers of approximately 54,825 lines costs of $84,979.
one-time costs. As in the analysis of the of food and cosmetics are expected to
TABLE 5.—RECURRING ANNUAL RECORDS COSTS FOR FOREIGN FACILITIES

Total recurring
Fiscal year 10 percent of Number of annual costs
Industry description 2004 line lines facilities ($326.30 per
count firm)
Milk, butter, and dried milk products ............................................................... 12,228 1,223 20 $6,663
Ice cream products .......................................................................................... 2,698 270 5 1,470
Meat, meat products and poultry ..................................................................... 5,322 532 9 2,900
Vegetable oils .................................................................................................. 1,532 153 3 835
Dressings and condiments .............................................................................. 16,386 1,639 27 8,929
Spices, flavors, and salts ................................................................................. 203 20 0 111
Candy (except chocolate candy), chewing gum .............................................. 275,733 27,573 460 150,253
Gelatin, rennet, pudding mix, pie filling ........................................................... 22,485 2,249 38 12,253
Multiple food dinners, gravy, and sauces ........................................................ 82,105 8,211 137 44,741
Soup ................................................................................................................. 37,923 3,792 63 20,665
Baby food products .......................................................................................... 576 58 1 314
Cosmetics ........................................................................................................ 27,867 2,787 47 15,185
Vitamins, minerals, proteins, unconventional dietary specialties .................... 63,184 6,318 106 34,430
Total .......................................................................................................... ........................ 54,825 916 298,638
Total Annual Importer Affirmation Costs ($1.55 per line for 54,825 lines) ......................................................................................... 84,979
One-time costs for new firms .............................................................................................................................................................. 164,100

Total annual costs ............................................................................................................................................................................... 547,717
Total costs of recordkeeping for foreign firms (annualized startup costs (7%) + annual costs ......................................................... 781,358
Total costs of recordkeeping for foreign firms (annualized startup costs (3%) + annual costs) ........................................................ 740,092
c. Benefits of the final rule. The illness that precedes certain death for Harvard-Tuskegee study and from
benefits of this final rule are derived victims of vCJD. In a recent rulemaking cosmetics. This final rule will help
from the benefits of the interim final regarding labeling of trans fatty acids ensure that the provisions of the IFR on
rule on use of material from cattle, (68 FR 41434, July 11, 2003), we used use of materials from cattle are carried
which are the value of the public health a range of $5 million to $6.5 million for out. For example, this final rule will
benefits. The public health benefit is the the value of a statistical life. The value require documentation that a
reduction in the risk of the human of preventing a vCJD case may be domestically-produced or foreign-
illness associated with consumption of similar. FDA uses the concept of the produced dietary supplement or
the agent that causes BSE. Value of a Statistical Life (VSL) in order ingredient contains cattle material (e.g.,
If we define the baseline risk as the to describe the value of preventing a brain) only from animals of an
expected annual number of cases of case of vCJD. This term refers to the sum appropriate age.
variant Creutzfeldt-Jakob disease (vCJD) of risk reductions expected in a
per year, then the annual benefits of d. Summary of costs and benefits of
population exposed to small changes in
banning prohibited cattle materials for the final rule. For this final rule, the
risk. It has no application to identifiable
use in foods and cosmetics would be: costs are to set up and then to maintain
individuals or large reductions in risk.
(baseline annual cases of vCJD ¥annual a recordkeeping system to document
Most recent studies suggest values
cases of vCJD under FDA IFR on use of that cattle-derived ingredients used in
ranging from about $1 million to $10
materials from cattle) × (value of million. In recent rulemakings, we have FDA-regulated food and cosmetics do
preventing a case of vCJD). used $5 million and $6.5 million as the not contain prohibited cattle material.
An alternative way to characterize value of a statistical life, and we believe The first year costs of this final rule are
benefits is: it is reasonable to use a similar VSL to about $1.2 million to domestic facilities
(reduction in annual cases in vCJD value the cases of vCJD avoided. and about $1.6 million to foreign
under FDA IFR on use of materials As discussed in FDA’s IFR on use of facilities. The annual costs of this final
from cattle) × (value of preventing materials from cattle, the Harvard- rule are about $352 thousand in
a case of vCJD). Tuskegee study has stated that a ban on recordkeeping costs to domestic
We do not know the baseline SRMs, including cattle brains, spinal facilities, $548 thousand in
expected annual number of cases. But cord, and vertebral column, from recordkeeping costs to foreign facilities.
based on the epidemiology of vCJD in inclusion in human and animal food Costs of this final rule annualized at 7
the United Kingdom, we anticipate would reduce the very few potential percent over 10 years are about $530
much less than one case of vCJD per BSE cases in cattle by 88 percent and thousand to domestic facilities and $781
year in the United States. Because the potential human exposure to infectivity thousand to foreign facilities; costs
IFR on use of materials from cattle and in meat and meat products by 95 annualized at 3 percent over 10 years
this final rule will reduce, rather than percent (Ref. 7). The FDA IFR on use of are $500 thousand to domestic facilities
eliminate, risk of exposure to BSE materials from cattle, in conjunction and $740 thousand to foreign facilities.
infectious materials, the reduction in with USDA’s BSE IFR, will help achieve The benefits of this final rule are to
the number of cases will be some this reduction in potential human ensure that cattle-derived products that
fraction of the expected number. The exposure. FDA’s IFR on use of materials may possibly be contaminated with BSE
value of preventing a case of vCJD is the from cattle will also reduce potential do not find their way into food and
value of a statistical life plus the value human exposure to BSE infectivity in cosmetic products, thus further
of preventing a year-long or longer other human food not covered by the reducing the risk of vCJD to humans.
TABLE 6.—SUMMARY OF COSTS AND BENEFITS

Total costs Total costs
Start-up Recurring
Number of annualized at annualized at
recordkeeping recordkeeping
facilities 7% for 10 3% for 10
costs costs years years
Costs to Domestic Facilities ................................................ 697 $1,249,978 $352,428 $530,397 $498,964

Costs to Foreign Facilities ................................................... 916 $1,640,999 $547,717 $781,358 740,092
Total .............................................................................. 1613 $2,890,977 $900,145 $1,311,755 1,239,056

Benefits—To ensure that cattle-derived products that may possibly be contaminated with BSE do not find their way into food and cosmetic
products, thus further reducing the risk of vCJD to humans.
B. Regulatory Flexibility Analysis significant economic impact on a if the cost sharing is not equal, then one
substantial number of small entities. facility in the partnership may bear zero
FDA has examined the economic First-year costs of this final rule are costs all the way up to the total first-
implications of this final rule as about $1,800 per facility pair, with this year costs of $1,800. Recurring costs of
required by the Regulatory Flexibility cost divided between the upstream this final rule are about $326 per facility
Act (5 U.S.C. 601–612). If a rule has a facility (ingredient input supplier) and relationship, which may be borne by
significant economic impact on a downstream facilities (manufacturers of only one facility or may be shared
substantial number of small entities, the food or cosmetics). FDA cannot between facilities.
Regulatory Flexibility Act requires determine if the cost sharing between Using FDA’s Small Business Model,
agencies to analyze regulatory options the two firms would be equal. If the cost we can estimate, when recordkeeping
that would lessen the economic effect of sharing is equal, then each facility costs are shared and when they are not
the rule on small entities. FDA finds would have to bear about a $900 first- shared, the number of facilities that may
that this final rule will have a year cost to comply with the go out of business as a result of this final
recordkeeping required by the final rule; rule. Table 7 of this document shows
that if facilities are only responsible for the business relationship (either the which may reduce the number of very
one-half of the recordkeeping cost upstream or the downstream firm), then small facilities that will have trouble
burden (the burden is equally shared six very small facilities (fewer than 20 staying in business. Facilities with 20 to
between the upstream and downstream employees) may have trouble complying 499 employees and facilities with at
facilities), then only two very small with this final rule and staying in least 500 employees that must comply
facilities (fewer than 20 employees) may business. The option to use a continuing with this final rule are not in danger of
be affected by having to comply with letter of guarantee, however, may having to stop operating as a result of
this final rule. If the recordkeeping cost introduce sufficient flexibility to reduce the final rule.
burden is borne by only one facility in the burden on some small facilities,
TABLE 7.—POTENTIAL FOR DOMESTIC FACILITY SHUTDOWN

Regulation Number of
Estimated burden on facilities
number of each facility
Industry in industry that
facilities (shared may shut
affected burden or down
total burden)
Canned soups and stews ............................................................................................................ 10 $900 0

Canned soups and stews ............................................................................................................ 10 1,800 0
Fats and oils ................................................................................................................................ 99 900 0
Fats and oils ................................................................................................................................ 99 1,800 0
Flavoring extracts ........................................................................................................................ 32 900 0
Flavoring extracts ........................................................................................................................ 32 1,800 0
Spreads ........................................................................................................................................ 45 900 0
Spreads ........................................................................................................................................ 45 1,800 1
Candy ........................................................................................................................................... 156 900 1
Candy ........................................................................................................................................... 156 1,800 2
Yogurt .......................................................................................................................................... 22 900 0
Yogurt .......................................................................................................................................... 22 1,800 0
Ice cream ..................................................................................................................................... 113 900 0
Ice cream ..................................................................................................................................... 113 1,800 1
Small intestine-derived casings ................................................................................................... 47 900 0
Small intestine-derived casings ................................................................................................... 47 1,800 0
Dietary supplements .................................................................................................................... 131 900 1
Dietary supplements .................................................................................................................... 131 1,800 2
Cosmetics .................................................................................................................................... 42 900 0
Cosmetics .................................................................................................................................... 42 1,800 0
We would expect the potential for Manufactured From, Processed With, or These requirements are necessary
small business shutdown would be Otherwise Containing, Material from because, once materials are separated
similar for foreign firms that continue to Cattle. from an animal, it may not be possible
import their products with cattle- Description: This final rule will without records to know the following:
derived materials into the United States. (1) Whether cattle material that may be
require records on FDA-regulated
It is possible that some foreign firms specified risk material (e.g., brain or
human food, including dietary
would choose to cease doing business spinal cord) came from an animal that
with the United States if the supplements, and cosmetics that are
manufactured from, processed with, or was less than 30 months old, (2)
recordkeeping requirements of this rule whether the source animal for cattle
are too burdensome. otherwise contain, material derived
from cattle. This final rule implements material was inspected and passed, (3)
V. Paperwork Reduction Act Analysis recordkeeping for the provisions of whether the source animal for cattle
This final rule contains information FDA’s interim final rule entitled ‘‘Use of material was nonambulatory disabled,
collection provisions that are subject to Materials Derived From Cattle in and (4) whether tallow in a human food
review by OMB under the Paperwork Human Food and Cosmetics.’’ This final or cosmetic contains less than 0.15
Reduction Act of 1995 (44 U.S.C. 3501– rule will require that manufacturers and percent insoluble impurities. Under the
3520). A description of these provisions processors of human food and cosmetics final rule, manufacturers and processors
follows with an estimate of the annual manufactured from, processed with, or must retain records for 2 years at the
recordkeeping burden. Included in the that otherwise contain, material from manufacturing or processing
estimate is the time for reviewing cattle maintain records demonstrating establishment or another reasonably
instructions, searching existing data that the food or cosmetic has not been accessible location.
sources, gathering and maintaining the
manufactured from, processed with, or A. Information Collection Burden
data needed, and completing and
does not otherwise contain, prohibited Estimate
reviewing each collection of
information. cattle materials and make such records
Title: Recordkeeping Requirements available to FDA for inspection and FDA estimates the burden for this
copying. information collection as follows:
for Human Food and Cosmetics
TABLE 8.—ESTIMATED ANNUAL RECORDKEEPING BURDEN 1

Annual
Number of Total annual Hours per Total capital
21 CFR Section frequency Total hours
recordkeepers records record costs
per record
189.5(c) and 700.27(c) .............................................. 697 1 697 44.33 $480,930 30,898

189.5(c) and 700.27(c) .............................................. 697 52 36,244 0.25 0 9,061
189.5(c)(6) and 700.27(c)(6) ...................................... 54,825 1 54,825 0.033 0 1,809
189.5(c) and 700.27(c) .............................................. 69.7 1 69.7 44.33 48,093 3,090
Total one time burden hours .............................. .......................... .................... .................... .................... .................... 30,898
Total recurring burden hours .............................. .......................... .................... .................... .................... .................... 13,960
1 There are no operating and maintenance costs associated with this collection of information.
B. Hour Burden Estimate document). Dividing the $1,095 of labor hours annually (54,825 lines × 2
FDA has determined that there are costs by the hourly wage for workers of minutes per line).
$25.10 (doubled to include overhead), In addition, there will be an annual
697 domestic facility relationships,
we have a design-time burden per burden associated with new firms
consisting of the following facilities: An
facility of about 44 hours; we multiplied entering the industry. As in the analysis
input supplier of cattle-derived
the burden per facility by 697 facilities of the Bioterrorism Act recordkeeping
materials that require records (the
to get an estimated total training and rule, we assume that the average annual
upstream facility) and a purchaser of rate of turnover is 10 percent. We
design burden of 30,668 hours.
cattle-derived materials requiring Row 1 of table 8 of this document therefore estimate (row 4 of table 8 of
documentation—this may be a human shows the total hour burden from this document) the annual one-time
food or cosmetic manufacturer or training and records design to be 44.33 burden for new firms entering the
processor. Together, the upstream and hours per facility × 697 recordkeepers = industry to be 10 percent of the one-
downstream facilities are responsible for 30,898 hours for the year. time burden of existing firms estimated.
designing records, verifying records,
and storing records that contain D. Recurring Burden E. Capital Cost and Operating and
information on sources of cattle The recurring recordkeeping burden Maintenance Cost Burden
materials. is the burden of sending and verifying We use the FDA Labeling Cost Model
In this hour burden estimate, as in the documents regarding shipments of cattle to estimate the one-time record design
economic analysis, we treat these material that is to be used in human costs per facility of $1,875 per facility,
recordkeeping activities as shared food and cosmetics. We estimate that based on the facility producing multiple
activities between the upstream and this recurring recordkeeping burden products with ingredients that now
downstream facilities. It is in the best will be about 15 minutes per week, or require records (Ref. 5). Over $1,000 of
interests of both facilities in the 13 hours per year. FDA assumes that the record design cost is due to labor,
relationship to share the burden this recordkeeping burden will be but $690 of the records design
necessary to comply with this final rule; shared between two entities (i.e., the represents capital costs to each facility.
therefore we estimate the time burden of ingredient supplier and the The total capital costs for records design
developing these records as a joint task manufacturer of finished products). for all facilities is $690 × 697 =
between the two facilities. Therefore the total recurring burden will $480,930. These one time costs are
C. One Time Burden be 13 hours × 697 = 9,061 hours, as shown in row 1 of table 5 of this
shown in row 2 of table 8 of this document. We estimate the annual
The one-time burden of the final document. capital costs for new firms entering the
recordkeeping requirement consists of There will also be a recurring industry to be 10 percent of the one-
the facilities training their employees on recordkeeping burden for importers of time burden of existing firms, or
how to keep the records necessary to human food and cosmetics that are $48,093. These annual costs are shown
comply with this rule and designing the manufactured from, processed with, or in row 4 of table 8.
records. The one-time training burden otherwise contain, cattle material. The information collection provisions
incurred for each facility is assumed to Importers of these products must affirm of this final rule have been submitted to
be approximately one-third of an hour. that the food or cosmetic is not OMB for review. Prior to the effective
This time includes both the training manufactured from, processed with, or date of this final rule, FDA will publish
required for personnel to verify that does not otherwise contain, prohibited a notice in the Federal Register
appropriate records have been received cattle materials. Affirmation by announcing OMB’s decision to approve,
or created, and also the training importers is expected to take modify, or disapprove the information
required by personnel to file and approximately 2 minutes per entry line. collection provisions in this final rule.
maintain those records. Therefore, the Row 3 of table 8 of this document shows An agency may not conduct or sponsor,
total one-time training burden is 697 × that 54,825 lines of food and cosmetics and a person is not required to respond
0.33 hrs = 230 hours. that likely contain cattle materials are to, a collection of information unless it
We use the FDA Labeling Cost Model imported annually. This total represents displays a currently valid OMB control
to estimate the one-time records design 10 percent of the total lines imported for number.
costs per facility of $1,785 (Ref. 5). This fiscal year 2004 for products under FDA
VI. Federalism
cost includes the costs of designing product codes that FDA will be looking
records for multiple products and to for importer affirmation. The annual FDA has analyzed this final rule in
consists of $1,095 in labor costs (and reporting burden of affirming whether accordance with the principles set forth
$690 in capital costs which we deal import entry lines contain cattle-derived in Executive Order 13132. FDA has
with in the next section of this materials is estimated to take 1,809 determined that the final rule does not
contain policies that have substantial Administration amends 21 CFR parts provisions or regulations remain subject
direct effects on the States, on the 189 and 700 as follows: to part 11 of this chapter.
relationship between the National * * * * *
Government and the States, or on the PART 189—SUBSTANCES
distribution of power and PROHIBITED FROM USE IN HUMAN PART 700—GENERAL
responsibilities among the various FOOD
levels of government. Accordingly, the ■ 3. The authority citation for 21 CFR
■ 1. The authority citation for 21 CFR part 700 continues to read as follows:
agency concludes that the final rule part 189 is revised to read as follows:
does not contain policies that have Authority: 21 U.S.C. 321, 331, 352, 355,
Authority: 21 U.S.C. 321, 342, 348, 371, 361, 362, 371, 374.
federalism implications as defined in
381.
the Executive order and, consequently, ■ 4. Section 700.27 is amended by
a federalism summary impact statement ■ 2. Section 189.5 is amended by revising paragraph (c) to read as follows:
is not required. revising paragraph (c) to read as follows:
§ 700.27 Use of prohibited cattle materials
VII. References § 189.5 Prohibited cattle materials. in cosmetic products.
The following references have been * * * * * * * * * *
placed on public display in the Division (c) Records. (1) Manufacturers and (c) Records. (1) Manufacturers and
of Dockets Management (see ADDRESSES) processors of a human food that is processors of a cosmetic that is
and may be seen by interested persons manufactured from, processed with, or manufactured from, processed with, or
between 9 a.m. and 4 p.m., Monday otherwise contains, material from cattle otherwise contains, material from cattle
through Friday. (FDA has verified the must establish and maintain records must establish and maintain records
Web site addresses, but FDA is not sufficient to demonstrate that the food is sufficient to demonstrate that the
responsible for any subsequent changes not manufactured from, processed with, cosmetic is not manufactured from,
to the Web sites after this document or does not otherwise contain, processed with, or does not otherwise
publishes in the Federal Register.) prohibited cattle materials. contain, prohibited cattle materials.
(2) Records must be retained for 2 (2) Records must be retained for 2
1. Department of Commerce, Bureau of years after the date they were created. years after the date they were created.
Economic Analysis, National Economic (3) Records must be retained at the (3) Records must be retained at the
Accounts, http://www.bea.gov/bea/dn.1.htm. manufacturing or processing
manufacturing or processing
2. Model for Estimating the Impacts of
Regulatory Costs on the Survival of Small establishment or at a reasonably establishment or at a reasonably
Businesses and its Application to Four FDA- accessible location. accessible location.
Regulated Industries, Final Report, Eastern (4) The maintenance of electronic (4) The maintenance of electronic
Research Group, July 2002. records is acceptable. Electronic records records is acceptable. Electronic records
3. CTFA International Buyer’s Guide, are considered to be reasonably are considered to be reasonably
produced by the Cosmetic, Toiletry, and accessible if they are accessible from an accessible if they are accessible from an
Fragrance Association (CTFA), http:// onsite location. onsite location.
www.ctfa-buyersguide.org. (5) Records required by this section (5) Records required by this section
4. FDA Database of Dietary Supplement and existing records relevant to and existing records relevant to
Products that Contain Animal Ingredients compliance with this section must be compliance with this section must be
(DSPD–A), RTI International, September
available to FDA for inspection and available to FDA for inspection and
2002.
5. FDA Labeling Cost Model, Final Report, copying. copying.
RTI International, January 2003. (6) When filing entry with U.S. (6) When filing entry with U.S.
6. May 2004 Occupational Employment Customs and Border Protection, the Customs and Border Protection, the
and Wage Estimates, National Cross-Industry importer of record of a human food importer of record of a cosmetic
estimates, U.S. Department of Labor, Bureau manufactured from, processed with, or manufactured from, processed with, or
of Labor Statistics, accessed October 2, 2006, otherwise containing, cattle material otherwise containing, cattle material
http://www.bls.gov/oes/oes_dl.htm. must affirm that the food was must affirm that the cosmetic was
7. Harvard Center for Risk Analysis, manufactured from, processed with, or manufactured from, processed with, or
Harvard School of Public Health, ‘‘Evaluation otherwise contains, cattle material and otherwise contains, cattle material and
of the Potential for Bovine Spongiform
Encephalopathy in the United States,’’
must affirm that the food was must affirm that the cosmetic was
accessed online at http:// manufactured in accordance with this manufactured in accordance with this
www.hcra.harvard.edu/pdf/madcow.pdf, section. If a human food is section. If a cosmetic is manufactured
2003. manufactured from, processed with, or from, processed with, or otherwise
otherwise contains, cattle material, then contains, cattle material, then the
List of Subjects the importer of record must, if importer of record must, if requested,
21 CFR Part 189 requested, provide within 5 days provide within 5 days records sufficient
records sufficient to demonstrate that to demonstrate that the cosmetic is not
Food additives, Food packaging, the food is not manufactured from, manufactured from, processed with, or
Reporting and recordkeeping processed with, or does not otherwise does not otherwise contain, prohibited
requirements. contain, prohibited cattle material. cattle material.
21 CFR Part 700 (7) Records established or maintained (7) Records established or maintained
to satisfy the requirements of this to satisfy the requirements of this
Cosmetics, Packaging and containers, subpart that meet the definition of subpart that meet the definition of
Reporting and recordkeeping electronic records in § 11.3(b)(6) of this electronic records in § 11.3(b)(6) of this
requirements.
chapter are exempt from the chapter are exempt from the
■ Therefore, under the Federal Food, requirements of part 11 of this chapter. requirements of part 11 of this chapter.
Drug, and Cosmetic Act, and under Records that satisfy the requirements of Records that satisfy the requirements of
authority delegated to the Commissioner this subpart but that are also required this subpart but that are also required
of Food and Drugs, the Food and Drug under other applicable statutory under other applicable statutory
provisions or regulations remain subject The estimated annual burden per presumption of deemed satisfaction
to part 11 of this chapter. respondent varies from 6 minutes to 4 should apply only to certain disregarded
* * * * * hours, depending on individual entities, such as disregarded entities
circumstances, with an estimated that comprise substantially all of the
Dated: October 4, 2006.
average of 2 hours. Comments owner’s assets, or disregarded entities
Jeffrey Shuren, concerning the accuracy of this burden that hold active trades or businesses.
Assistant Commissioner for Policy. estimate and suggestions for reducing
[FR Doc. E6–16830 Filed 10–10–06; 8:45 am]
The IRS and the Treasury Department
this burden should be sent to the believe that applying the presumption
BILLING CODE 4160–01–P Internal Revenue Service, Attn: IRS of deemed satisfaction to a disregarded
Reports Clearance Officer, entity that shields the federal tax
SE:W:CAR:MP:T:T:SP, Washington, DC partner from liability for the entity’s
DEPARTMENT OF THE TREASURY 20224, and to the Office of Management obligations would, in many cases, cause
and Budget, Attn: Desk Officer for the partnership liabilities that are
Internal Revenue Service Department of Treasury, Office of economically indistinguishable from
Information and Regulatory Affairs, nonrecourse liabilities to be classified as
26 CFR Parts 1 and 602 Washington, DC 20503.
recourse for purposes of section 752.
[TD 9289] Books and records relating to these
Applying the presumption of deemed
collections of information must be
RIN 1545–BD48 satisfaction to disregarded entities
retained as long as their contents may
would distort the allocation of
become material in the administration
Treatment of Disregarded Entities partnership liabilities in those cases.
of any internal revenue law. Generally,
Under Section 752 Accordingly, these comments are not
tax returns and return information are
adopted in the final regulations.
AGENCY: Internal Revenue Service (IRS), confidential, as required by 26 U.S.C.
Treasury. 6103. One commentator suggested that
ACTION: Final regulations. § 1.752–2 be amended to provide that,
Background in addition to statutory and contractual
SUMMARY: This document contains final On August 12, 2004, the IRS and the obligations, statutory and contractual
regulations under section 752 for taking Treasury Department issued proposed limitations should be taken into account
into account certain obligations of a regulations under section 752 providing in determining a partner’s economic risk
business entity that is disregarded as rules for taking into account certain of loss. The IRS and the Treasury
separate from its owner under section obligations of disregarded entities (69 Department believe that such
856(i) or section 1361(b)(3) of the FR 49832). Comments were received in limitations are already taken into
Internal Revenue Code, or §§ 301.7701– response to the notice of proposed account under § 1.752–2(b)(3). As a
1 through 301.7701–3 of the Procedure rulemaking, and a public hearing was result, the comment is not adopted.
and Administration Regulations. These scheduled. However, the public hearing Another commentator suggested that
final regulations clarify the existing was later cancelled when no one the goal of the proposed regulation
regulations concerning when a partner requested to speak. After consideration could be better achieved by adding an
may be treated as bearing the economic of all the comments, the proposed example to the current anti-abuse rule
risk of loss for a partnership liability regulations are adopted as amended by in § 1.752–2(j) (or by publishing a
based upon an obligation of a this Treasury decision. revenue ruling) to illustrate a situation
disregarded entity. The rules affect under which a partner’s § 1.752–2(b)(1)
Summary of Comments and
partnerships and their partners. payment obligation is limited because
Explanation of Provisions
DATES: Effective Date: These regulations the partner holds its interest in a
are effective on October 11, 2006. 1. Net Value Approach In General partnership through a disregarded entity
Applicability Date: These regulations The proposed regulations provide that with a principal purpose to eliminate
generally are applicable for liabilities a payment obligation under § 1.752– the partner’s economic risk of loss with
incurred or assumed by a partnership on 2(b)(1) (§ 1.752–2(b)(1) payment respect to the partnership’s liabilities.
or after October 11, 2006. obligation) of a disregarded entity for The IRS and the Treasury Department
FOR FURTHER INFORMATION CONTACT: which a partner is treated as bearing the agree that, in certain circumstances, the
Charlotte Chyr, 202–622–3070 (not a economic risk of loss is taken into current anti-abuse rule under section
toll-free number). account only to the extent of the net 752 prevents allocation of partnership
SUPPLEMENTARY INFORMATION: value of the disregarded entity. Certain liabilities to a partner that is a
commentators disagreed with the disregarded entity. However, if a partner
Paperwork Reduction Act approach taken in the proposed holds a partnership interest through a
The collection of information regulations, arguing that the regulations disregarded entity, and only the assets
contained in these final regulations has will result in inconsistent treatment of of the disregarded entity are available to
been reviewed and approved by the similar economic situations and satisfy § 1.752–2(b)(1) payment
Office of Management and Budget in unwarranted complexity. obligations undertaken by the
accordance with the Paperwork Some commentators argued that the disregarded entity, the IRS and the
Reduction Act of 1995 (44 U.S.C. presumption of deemed satisfaction of Treasury Department believe that a
3507(d)) under control number 1545– § 1.752–2(b)(1) payment obligations of partner should be treated as bearing the
1905. Response to this collection of partners and related persons that is economic risk of loss for a partnership
information is mandatory. provided in § 1.752–2(b)(6) liability only to the extent of the net
An agency may not conduct or (presumption of deemed satisfaction) value of a disregarded entity’s assets,
sponsor, and a person is not required to should be applied to disregarded whether or not the principal purpose of
respond to, a collection of information, entities that have § 1.752–2(b)(1) the arrangement is to limit the partner’s
unless the collection of information payment obligations. Other economic risk of loss. As a result, the
displays a valid control number. commentators argued that the comment is not adopted.

Rule: Food For Human Consumption and Cosmetics: Cattle Materials Prohibited Use Recordkeeping Requirements

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Federal Register / Vol. 71, No.

196 / Wednesday, October 11, 2006 / Rules and Regulations 59653

(1) 777–200LR series airplanes .............................................................................................................................................. GE90–110B engines.

Unsafe Condition Alternative Methods of Compliance ACTION: Final rule.

Special Flight Permit and Drug Administration, 5100 Paint

3 Section 402(a)(4) states that a food shall be

Canned soups and stews ................................................................................ 10 $1,785 $8.37 $17,934

Total .......................................................................................................... 697 1,785 8.37 1,249,978

Startup Costs Annualized over 10 years (7%) .................................................................................................................................... 177,969

Startup Costs Annualized over 10 years (3%) .................................................................................................................................... 146,536

TABLE 2.—RECURRING ANNUAL RECORDS COSTS FOR DOMESTIC FACILITIES

Canned soups and stews ............................................................................................................ 10 $326.30 $3,263

One-time costs for new firms .............................................................................................................................................................. 124,998

Bakery products, dough, mix, and icing .................................................................................................................. 03 700,222

Total annual lines ............................................................................................................................................. ........................ 2,195,302

to only include the percentage (10 product categories and may

underestimate recordkeeping costs to

TABLE 4.—FIRST YEAR RECORDS COSTS FOR FOREIGN FACILITIES

Total .......................................................................................................... ........................ ........................ 916 1,640,999

Startup Costs Annualized over 10 years (7%) .................................................................................................................................... 233,641

TABLE 5.—RECURRING ANNUAL RECORDS COSTS FOR FOREIGN FACILITIES

Total .......................................................................................................... ........................ 54,825 916 298,638

One-time costs for new firms .............................................................................................................................................................. 164,100

TABLE 6.—SUMMARY OF COSTS AND BENEFITS

Costs to Domestic Facilities ................................................ 697 $1,249,978 $352,428 $530,397 $498,964

Total .............................................................................. 1613 $2,890,977 $900,145 $1,311,755 1,239,056

TABLE 7.—POTENTIAL FOR DOMESTIC FACILITY SHUTDOWN

Canned soups and stews ............................................................................................................ 10 $900 0

for Human Food and Cosmetics

TABLE 8.—ESTIMATED ANNUAL RECORDKEEPING BURDEN 1

189.5(c) and 700.27(c) .............................................. 697 1 697 44.33 $480,930 30,898

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