Food Labeling; Calorie Labeling of Articles of Food in Vending Machines, 19238-19255 [2011-8037]

Agencies

• Food and Drug Administration
• DEPARTMENT OF HEALTH AND HUMAN SERVICES

[Federal Register Volume 76, Number 66 (Wednesday, April 6, 2011)]
[Proposed Rules]
[Pages 19238-19255]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-8037]



[[Page 19237]]

Vol. 76

Wednesday,

No. 66

April 6, 2011

Part III





Department of Health and Human Services





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Food and Drug Administration



21 CFR Parts 11 and 101



Food Labeling; Calorie Labeling of Articles of Food in Vending 
Machines; Proposed Rule

Federal Register / Vol. 76, No. 66 / Wednesday, April 6, 2011 / 
Proposed Rules

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

21 CFR Parts 11 and 101

[Docket No. FDA-2011-F-0171]
RIN 0910-AG56


Food Labeling; Calorie Labeling of Articles of Food in Vending 
Machines

AGENCY: Food and Drug Administration, HHS.

ACTION: Proposed rule.

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SUMMARY: To implement the vending machine labeling provisions of the 
Patient Protection and Affordable Care Act of 2010 (Affordable Care 
Act), the Food and Drug Administration (FDA) is proposing requirements 
for providing calorie information for certain articles of food sold 
from vending machines. The Affordable Care Act, in part, amended the 
Federal Food, Drug and Cosmetic Act (FD&C Act) to, among other things, 
require that for an article of food sold from a vending machine that 
does not permit a prospective purchaser to examine the Nutrition Facts 
Panel before purchasing the article, or does not otherwise provide 
visible nutrition information at the point of purchase, and is operated 
by a person engaged in the business of owning or operating 20 or more 
vending machines, the vending machine operator must disclose the number 
of calories for the article of food. Vending machine operators not 
subject to the requirements of the Affordable Care Act may elect to be 
subject to the Federal requirements by registering with FDA. Providing 
calorie disclosures for food sold from vending machines would assist 
consumers in making healthier dietary choices.

DATES: Submit either written or electronic comments on the proposed 
rule by July 5, 2011. Submit comments on the information collection 
issues under the Paperwork Reduction Act of 1995 by May 6, 2011, (see 
the ``Paperwork Reduction Act of 1995'' section of this document).

ADDRESSES: You may submit comments, identified by Docket No. FDA-2011-
F-0171 and/or RIN 0910-AG56, by any of the following methods, except 
that comments on information collection issues under the Paperwork 
Reduction Act of 1995 must be submitted to the Office of Regulatory 
Affairs, Office of Management and Budget (OMB) (see the ``Paperwork 
Reduction Act of 1995'' section of this document).

Electronic Submissions

    Submit electronic comments in the following way:
    Federal eRulemaking Portal: https://www.regulations.gov. Follow the 
instructions for submitting comments.

Written Submissions

    Submit written submissions in the following ways:
    FAX: 301-827-6870.
    Mail/Hand delivery/Courier (for paper, disk, or CD-ROM 
submissions): Division of Dockets Management (HFA-305), Food and Drug 
Administration, 5630 Fishers Lane, rm. 1061, Rockville, MD 20852.
    Instructions: All submissions received must include the Agency name 
and docket number and Regulatory Information Number (RIN) for this 
rulemaking. All comments received may be posted without change to 
https://www.regulations.gov, including any personal information 
provided. For additional information on submitting comments, see the 
``Comments'' heading of the SUPPLEMENTARY INFORMATION section of this 
document.
    Docket: For access to the docket to read background documents or 
comments received, go to https://www.regulations.gov and insert the 
docket number, found in brackets in the heading of this document, into 
the ``Search'' box and follow the prompts and/or go to the Division of 
Dockets Management, 5630 Fishers Lane, rm. 1061, Rockville, MD 20852.

FOR FURTHER INFORMATION CONTACT: Daniel Y. Reese, Center for Food 
Safety and Applied Nutrition (HFS-820), Food and Drug Administration, 
5100 Paint Branch Pkwy., College Park, MD 20740, 301-436-2371.

SUPPLEMENTARY INFORMATION:

I. Background

A. Nutrition Labeling Requirements That Currently Apply to Packaged 
Foods

    The Nutrition Labeling and Education Act of 1990 (NLEA) amended the 
FD&C Act, in part, by adding section 403(q) (21 U.S.C. 343(q)), which 
specifies, in pertinent part and with certain exceptions, that a food 
is considered to be misbranded unless its label or labeling bears 
nutrition information. See 21 U.S.C. 343(q)(1). When a food is in 
package form, the required nutrition information generally must appear 
on the label of the food. FDA's final regulations establishing 
nutrition labeling requirements were published in 1993 (58 FR 2079, 
January 6, 1993) and are found at Title 21 of the Code of Federal 
Regulations (21 CFR) section 101.9. Regulations implementing the NLEA 
require nutrition information for a food product intended for human 
consumption and offered for sale unless an exemption is provided for 
the product (Sec.  101.9(a)). The declaration of nutrition information 
on the label and labeling of food generally must include information 
about the following nutrients: Total calories, calories from fat 
(unless the product contains less than 0.5 g of fat), total fat, 
saturated fat, trans fat, cholesterol, sodium, total carbohydrate, 
dietary fiber, sugars, protein, and certain vitamins and minerals 
(Sec.  101.9).
    The NLEA amendments to the FD&C Act included an exemption from 
nutrition labeling for food that is served in restaurants or other 
establishments in which food is served for immediate human consumption 
or sold for sale or use in such establishments (21 U.S.C. 343 
(q)(5)(A)(i)). The NLEA amendments to the FD&C Act also included an 
exemption from nutrition labeling for food that is processed and 
prepared primarily in a retail establishment, ready for human 
consumption, of the type of food described in section 403(q)(5)(A)(i) 
of the FD&C Act, offered for sale to consumers but not for immediate 
human consumption in such establishment, and not offered for sale 
outside such establishment (21 U.S.C. 343(q)(5)(A)(ii)). However, these 
exemptions were contingent on there being no nutrient content claims or 
health claims made on the label or labeling, or in the advertising, for 
the food. In our regulations implementing these exemptions, we included 
vending machines among the examples of establishments in which food is 
served for immediate human consumption that generally are exempt from 
nutrition labeling requirements because like the other examples, 
vending machines offer food products that are generally consumed 
immediately where purchased or while the consumer is walking away. See 
Sec.  101.9(j)(2).

B. Requirements of Section 4205 of the Affordable Care Act

    On March 23, 2010, the Affordable Care Act (Pub. L. 111-148) was 
signed into law. Section 4205 of the Affordable Care Act (section 
4205), amends section 403(q) of the FD&C Act, which governs nutrition 
labeling requirements, and section 403A of the FD&C Act (21 U.S.C. 343-
1), which governs Federal preemption of State and local food labeling 
requirements. The Affordable Care Act requires FDA to issue proposed 
regulations to carry out section 403(q)(5)(H) of the FD&C Act no later

[[Page 19239]]

than one year from the date of enactment. As amended, section 
403(q)(5)(H)(viii) of the FD&C Act requires that if an article of food 
is sold from a vending machine that does not permit a prospective 
purchaser to examine the Nutrition Facts Panel before purchasing the 
food or does not otherwise provide visible nutrition information at the 
point of purchase and the vending machine is operated by a person who 
is engaged in the business of owning or operating 20 or more vending 
machines, the vending machine operator must provide calorie information 
for the food. Specifically, the vending machine operator must ``provide 
a sign in close proximity to each article of food or the selection 
button that includes a clear and conspicuous statement disclosing the 
number of calories contained in the article.''
    Section 403(q)(5)(H)(ix) of the FD&C Act allows vending machine 
operators not subject to the requirements of section 4205 of the 
Affordable Care Act to voluntarily register with FDA to become subject 
to the Federal requirements. In the Federal Register of July 23, 2010, 
(75 FR 43182), FDA published a notice in the Federal Register 
specifying the terms and conditions for implementation of voluntary 
registration, pending promulgation of final regulations. See 75 FR 
43182.

C. FDA Activities Related to Implementation of Section 4205 of the 
Affordable Care Act

    Section 4205 of the Affordable Care Act also requires certain 
restaurants and similar retail food establishments to provide calorie 
and other nutrition information for standard menu items, including food 
on display and self-service food. Elsewhere in this issue of the 
Federal Register, FDA is proposing requirements to implement the menu 
labeling provisions of section 4205. As discussed in that proposal, FDA 
has published in the Federal Register a number of documents concerning 
section 4205. On July 7, 2010, FDA published a notice entitled 
``Disclosure of Nutrient Content Information for Standard Menu Items 
Offered for Sale at Chain Restaurants or Similar Retail Food 
Establishments and for Articles of Food Sold from Vending Machines'' 
(``docket notice'') (75 FR 39026, July 7, 2010) to solicit comments and 
suggestions on the new law. In response to this notice, FDA received 
approximately 875 letters and e-mails. Of those, approximately 60 
contained one or more comments pertaining to vending machine calorie 
labeling. Many of these comments were general comments on the law 
itself and either supported or opposed the requirement in section 
403(q)(5)(H)(viii) of the FD&C Act that calorie information be provided 
for foods sold from vending machines. Comments in opposition stated 
that providing calorie information for foods sold from vending machines 
would be overly burdensome to the industry. FDA describes these 
comments in more detail and responds to those comments in this 
proposal.
    On July 23, 2010, FDA published the Federal Register notice 
entitled ``Voluntary Registration by Authorized Officials of Non-
Covered Retail Food Establishments and Vending Machine Operators 
Electing to be Subject to the Menu and Vending Machine Labeling 
Requirements Established by Section 4205 of the Patient Protection and 
Affordable Care Act of 2010'' (``registration notice'') (75 FR 43182). 
FDA issued this registration notice to provide assistance for voluntary 
registration for restaurants, similar retail establishments, and 
vending machine operators that are not subject to the nutrition 
labeling requirements of section 4205 (e.g., restaurants and similar 
retail food establishments with fewer than 20 locations, and vending 
machine operators with fewer than 20 machines). In the registration 
notice, FDA specified the terms and conditions for implementation of 
voluntary registration, pending promulgation of regulations. In 
response to the notice, FDA received 7 comments, none of which 
addressed registration.
    On August 25, 2010, FDA published a ``Guidance for Industry: 
Questions and Answers Regarding the Effect of Section 4205 of the 
Patient Protection and Affordable Care Act of 2010 on State and Local 
Menu and Vending Machine Labeling Laws'' (``preemption guidance'') (75 
FR 52427, August 25, 2010). The preemption guidance discusses the 
preemptive effect of section 4205 and identifies the provisions of 
amended section 403(q) of the FD&C Act that became requirements upon 
enactment. Our current thinking on the preemptive effect of section 
4205 is set out in section VII of this document.
    Also on August 25, 2010, FDA published a ``Draft Guidance for 
Industry: Questions and Answers Regarding the Menu Labeling Provisions 
of Section 4205 of the Patient Protection and Affordable Care Act of 
2010; Availability'' (``draft implementation guidance'') (75 FR 52426, 
August 25, 2010). This draft guidance addressed only the menu labeling 
provisions of section 4205. It did not address the calorie labeling 
requirements for vending machine operators in section 4205. FDA 
subsequently withdrew the draft implementation guidance (76 FR 4360, 
January 25, 2011).

II. Legal Authority

    As stated in section I.C. of this document, on March 23, 2010, the 
Affordable Care Act was signed into law. Section 4205 of the Affordable 
Care Act amended 403(q)(5) of the FD&C Act (21 U.S.C. 343(q)(5)) by 
amending section 403(q)(5)(A) and by creating new clause (H) to 
require, in relevant part, that vending machine operators provide 
calorie information for certain articles of food sold from vending 
machines. Under section 403(a)(1), such information must be truthful 
and nonmisleading. Food to which these requirements apply is deemed 
misbranded if these requirements are not met. In addition, under 
section 201(n) of the FD&C Act (21 U.S.C. 321(n)), the labeling of food 
is misleading if it fails to reveal facts that are material in light of 
representations actually made in the labeling. Section 403(q)(5)(H)(x) 
requires the Secretary of Health and Human Services (Secretary) to 
issue proposed regulations no later than 1 year after enactment . Thus, 
FDA has the authority to issue this proposed rule under sections 
201(n), 403(a)(1), and 403(q)(5)(H), as well as under section 701(a) of 
the FD&C Act (21 U.S.C. 371(a)), which vests the Secretary with the 
authority to issue regulations for the efficient enforcement of the 
FD&C Act.
    FDA is proposing requirements that vending machine operators 
provide calorie information for certain articles of food sold from 
vending machines. FDA is also proposing the terms and conditions for 
voluntary registration by vending machine operators not subject to the 
requirements of section 4205 of the Affordable Care Act that elect to 
become subject the requirements. FDA is proposing to set out these 
provisions in new Sec.  101.8.

III. The Proposal

A. Definitions

    We are proposing in the introductory paragraph of Sec.  101.8(a) 
that the terms defined in section 201 of the FD&C Act are applicable 
when these terms are used. Additional terms are defined alphabetically 
in the proposed codified and are discussed in alphabetical order in 
this section. ``Act'' is defined as the Federal Food, Drug, and 
Cosmetic Act.

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1. Authorized Official of a Vending Machine Operator
    We are proposing in Sec.  101.8(a) that the term ``authorized 
official of a vending machine operator'' means the owner, operator, or 
agent in charge of a vending machine, or any other person authorized by 
a vending machine operator not subject to the requirements of section 
4205 of the Affordable Care Act to voluntarily register the vending 
machine operator with FDA to become subject to the requirements. For 
the purposes of this definition, the agent in charge would not be the 
person who is only in charge or in control of the location where the 
vending machine is located.
2. Vending Machine Operator
    We are proposing in Sec.  101.8(a) that the term ``vending machine 
operator'' means a person that controls or directs the function of the 
vending machine, including deciding which articles of food are sold 
from the vending machine or the placement of the articles of food 
within the vending machine, and is compensated for the control or 
direction of the function of the vending machine. Section 201(e) of the 
FD&C Act defines ``person'' to include an individual, partnership, 
corporation, and association. For example, a vending machine operator 
could be a corporation that manufacturers beverages and sells these 
products in its machines. A vending machine operator also could be an 
individual or a business that only operates and stocks vending 
machines, such as a private company with onsite vending machines.
3. Vending Machine
    Section 403(q)(5)(H)(viii) of the FD&C Act sets forth labeling 
requirements for certain vending machine food but does not define the 
term ``vending machine.'' We are proposing in Sec.  101.8(a) that the 
term ``vending machine'' means a self-service device that, upon 
insertion of a coin, paper currency, token, card, or key, or by 
optional manual operation, dispenses servings of food in bulk, in 
packages, or prepared by the machine, without the necessity of 
replenishing the device between each vending operation. This definition 
is almost identical to the definition of ``vending machine'' in the FDA 
Food Code 2009.\1\ Examples of food dispensed from vending machines may 
include prepackaged foods (e.g., candy, snacks, gum, bottled or canned 
soft drinks), unpackaged bulk foods (e.g., handful of gum, candy, or 
mixed nuts), prepared foods (e.g., sandwiches or fresh fruit), multi-
serving foods (e.g., gallon of milk), or foods prepared in the machine 
and dispensed in bulk (e.g., coffee, soup, or popcorn).
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    \1\ FDA regularly publishes the Food Code, which provides 
guidance on food safety, sanitation, and fair dealing that can be 
uniformly adopted by State and local governments for the retail 
segment of the food industry. The Food Code provisions are not 
Federal requirements; however, they are designed to be consistent 
with Federal food laws and regulations. The 2009 Food Code defined 
the term ``vending machine'' to mean a ``self-service device that, 
upon insertion of a coin, paper currency, token, card, or key, or by 
optional manual operation, dispenses unit servings of food in bulk 
or in packages without the necessity of replenishing the device 
between each vending operation.'' (U.S. Public Health Service, FDA, 
2009 Food Code, U.S. Department of Health and Human Services, Public 
Health Service, Food and Drug Administration, College Park, MD 
20740, chapter 1, section 1-201.) https://www.fda.gov/Food/FoodSafety/RetailFoodProtection/FoodCode/FoodCode2009/ucm186464.htm.
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B. Who Must Comply With This Rule

    Section 4205 of the Affordable Care Act provides that ``in the case 
of an article of food sold from a vending machine that does not permit 
a prospective purchaser to examine the Nutrition Facts Panel before 
purchasing the article, or does not otherwise provide visible nutrition 
information at the point of purchase, and is operated by a person 
engaged in the business of owning or operating 20 or more vending 
machines, the vending machine operator shall provide a sign in close 
proximity to each article of food or the selection button that includes 
a clear and conspicuous statement disclosing the number of calories 
contained in the article of food.'' Consistent with the requirements of 
section 4205, all vending machine operators with 20 or more vending 
machines, as defined in section III.A.3. of this document, will be 
subject to these requirements. Therefore, FDA is proposing in Sec.  
101.8(c)(1)(i)(A) and (B) that the labeling requirements of this 
proposed rule apply to vending machine operators that own or operate 20 
or more vending machines that do not allow a prospective purchaser to 
examine the Nutrition Facts Panel prior to purchase or do not otherwise 
provide visible nutrition information at the point of purchase. As 
discussed in below in section III.D. of this document, vending machine 
operators that are not subject to the requirements of the law may elect 
to be subject to the Federal requirements by voluntarily registering 
with FDA.
    Several comments requested that FDA apply the small business 
nutrition labeling exemption (Sec.  101.9(j)(1)) to vending machine 
operators. The comments said that: (1) 90-95 percent of vending machine 
operators have 20 or more machines, and therefore, would be covered by 
section 403(q)(5)(H) of the FD&C Act and (2) 70 percent of vending 
machine operators have three or fewer employees, and would likely be 
generating sales less than $500,000.
    FDA is not proposing an exemption from the vending machine 
nutrition labeling requirements for small businesses. FDA notes that 
section 403(q)(5)(H) of the FD&C Act does not include an exemption from 
the vending machine nutrition labeling requirements for small 
businesses. Section 403(q)(5)(D) includes an exemption from the 
nutrition labeling requirements in sections 403(q)(1) through (q)(4) 
for small businesses. The requirement that vending machine operators 
disclose calories for covered vending machine food is not found in 
sections 403(q)(1) through (q)(4); instead, it is found in section 
403(q)(5)(H)(viii). Therefore, the small business exemption in 
403(q)(5)(D) does not apply. We believe that the proposed rule provides 
adequate flexibility to allow these small businesses to comply with the 
proposed requirements in a cost-effective and equitable way. For 
example, the proposed requirements allow vending machine operators to 
choose from various approaches for compliance, including adopting less 
expensive measures as discussed below in section III.E. and section IV. 
of this document. We request comment on additional ways that FDA can 
make the requirements of this rule less burdensome on small businesses, 
while still meeting the requirements of section 403(q)(5)(H).
    The Agency also received comments regarding operators of vending 
machines who are blind and operate vending machines through the Vending 
Facility Program operated by the U.S. Department of Education under the 
Randolph-Sheppard Act of 1936, 20 U.S.C. 107 et seq. These comments 
suggested that regardless of the number of machines that were operated 
by an operator, all operators of vending machines under the Randolph-
Sheppard Act would be covered.
    The Agency wishes to clarify its interpretation of the 
applicability of section 4205 of the Affordable Care Act to vending 
machine operators who fall under the Randolph-Sheppard Act. Section 
403(q)(5)(H)(viii) of the FD&C Act sets forth requirements for vending 
machine operators based on the number of machines that they operate. 
Thus, as with other operators, Randolph-Sheppard Act operators would 
only be covered by the disclosure requirements if they operate 20 or 
more vending

[[Page 19241]]

machines that dispense food or if they voluntarily register to be 
covered.
    These comments also stated that operators of vending machines who 
are blind ``may place different products in the same row due to limited 
visual recognition and the similarity of product packaging.'' These 
comments requested flexibility for posting calorie information. 
Specifically, the comments requested that the calorie disclosure 
requirements permit the ``stacking of multiple products in the same 
coil.''
    FDA is proposing requirements that provide flexibility for vending 
machine operators to comply with the labeling requirements for covered 
vending machine food. As discussed later in this document, the required 
calorie information may be posted on a sign adjacent to the vending 
machine, so long as the sign is visible to the prospective purchaser at 
the same time as the food, its description, or its selection button is 
visible.

C. Who Is Not Required to Comply With This Rule

    FDA is aware that many vending machine operators operate machines 
that dispense a variety of articles other than articles of food. For 
example, some vending machines may dispense detergent, compact discs, 
gift cards or toiletries. If a vending machine operator operated a 
total of 50 vending machines, only 15 of which sell articles of food, 
the vending machine operator would not be subject to the requirements 
of 403(q)(5)(H)(viii) of the FD&C Act because the vending machine 
operator operates fewer than 20 vending machines that sell articles of 
food.
    Further, FDA tentatively concludes that vending machines that may 
dispense food as part of a game or other non-food related activity are 
not covered by 403(q)(5)(H) of the FD&C Act. For example, a vending 
machine may contain a variety of items ranging from small toys, coins, 
or individually wrapped candies that can be picked up by maneuvering a 
large claw arm. In this instance, the vending machine does not sell 
articles of food, even though in the course of maneuvering the arm, 
candies could be dispensed. The vending machine is selling the 
opportunity to play the game. FDA seeks comment on this tentative 
conclusion.
    Bulk vending machines dispense unpackaged articles of food in 
preselected amounts (e.g. gumball machines, mixed nut machines). FDA 
received a few comments suggesting that bulk vending machines are 
different from ``more modern types of vending machines,'' and therefore 
should be exempt from these disclosure requirements. The comments 
argued that bulk vending machines should be distinguished from other 
vending machines for three reasons. First, they noted that these 
machines do not have selection buttons, and as a result a vending 
machine operator could not place a sign ``in close proximity to * * * 
the selection button'' that includes the calorie information required 
by section 403(a)(5)(H)(viii)(I) of the FD&C Act. Second, they argued 
that food sold from bulk vending machines represents only a small 
fraction of overall market sales of the vending machine industry. 
Finally, the comments stated that there is no reported association 
between foods sold from bulk vending machines and obesity.
    FDA notes that section 403(q)(5)(H)(viii) of the FD&C Act does not 
limit its applicability to vending machines for which there has been a 
reported association between the food vended by the machine and 
obesity. However, section 403(q)(5)(H)(viii) provides that for covered 
vending machine food, the vending machine operator must provide a sign 
disclosing the number of calories contained in the food ``in close 
proximity to each article of food or the selection button.'' FDA 
tentatively concludes that the reference to ``selection button'' in the 
statute can be read to mean that the types of vending machines subject 
to requirements in section 403(q)(5)(H)(viii) are those with selection 
buttons. FDA is not aware of vending machines without selection buttons 
other than bulk vending machines that dispense, by use of a crank, 
single types of unpackaged articles of food in preselected amounts 
(e.g., a single piece of gum or a handful of candy or nuts). FDA 
tentatively concludes that vending machines, including bulk vending 
machines, without any type of selection button are not covered by 
section 403(q)(5)(H)(viii). However, FDA tentatively concludes that a 
bulk vending machine that has a selection button, regardless of the 
type of food it dispenses, e.g., unpackaged articles of food such as 
soup, popcorn, or hot or cold beverages, is covered under section 
403(q)(5)(H)(viii), if it meets the other statutory criteria. FDA is 
proposing in Sec.  101.8(c)(1)(i)(C) that the nutrition labeling 
requirements of Sec.  101.8 apply to an article of food sold from a 
vending machine that, among other things, has a selection button. FDA 
seeks comment on these tentative conclusions. FDA is also interested in 
comments demonstrating any unintended adverse effect resulting from the 
exclusion of vending machines without selection buttons from the 
calorie labeling requirements.

D. Voluntary Registration by a Vending Machine Operator That Is Not 
Subject to the Requirements of Section 4205 of the Affordable Care Act 
That Elects To Be Subject to the Requirements

    Section 4205 of the Affordable Care Act provides that vending 
machine operators not subject to the requirements of section 
403(q)(5)(H)(viii) \2\ of the FD&C Act may elect to become subject to 
the requirements by registering ``biannually'' with FDA (21 U.S.C. 
343(q)(5)(H)(ix)). As discussed below, operators that choose to be 
subject to the Federal requirements would not be subject to non-
identical state or local nutrition labeling laws for food sold from 
vending machines. In the proposed rule entitled: Food Labeling; 
Nutrition Labeling of Standard Menu Items in Restaurants and Similar 
Retail Food Establishments, published elsewhere in this issue of the 
Federal Register, FDA explains that ``biannual'' can be defined as 
occurring twice every year or as occurring every other year. (Ref. 1). 
FDA tentatively concludes that registration every other year is a more 
reasonable interpretation, because it does not seem warranted or 
necessary for a vending machine operator to tell FDA every 6 months 
that the operator wants to be subject to Federal requirements. FDA 
began accepting registrations on July 21, 2010, and will continue to 
accept them on a continuous basis. FDA is proposing in Sec.  101.8(d) 
that an authorized official for a vending machine operator that is not 
subject to the Federal requirements may register with FDA every other 
year by providing FDA the following information:
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    \2\ As discussed in section I.B. of this document, vending 
machine operators that own or operate fewer than 20 vending machines 
could elect to be subject to the requirements of 403(q)(5)(H)(viii) 
of the FD&C Act by voluntarily registering with FDA.
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     The contact information (including name, address, phone 
number, e-mail address), for the vending machine operator;
     The address of the location of each vending machine owned 
or operated by the vending machine operator that is being registered;
     Preferred mailing address (if different from the vending 
machine operator address), for purposes of receiving correspondence; 
and
     Certification that the information submitted is true and 
accurate, that the person or firm submitting it is authorized to do so, 
and that each registered vending machine will be subject to the 
requirements of Sec.  101.8.

[[Page 19242]]

    An authorized official of a vending machine operator who elects to 
be subject to the Federal requirements can register by visiting https://www.fda.gov/menulabeling. FDA has created a form that contains fields 
requesting the information in Sec.  101.8(d) and made the form 
available at this Web site. Registrants must use this form to ensure 
that complete information is submitted.

E. Requirements for Vending Machine Operators Subject to This Rule and 
Operators That Elect To Be Subject to the Rule When Calorie 
Declarations Are Required

Calorie Declaration for a Covered Vending Machine Food
    a. Calorie declaration. Section 403(q)(5)(H)(viii) of the FD&C Act 
provides that, for a covered vending machine food, the vending machine 
operator must ``provide a sign in close proximity to the article of 
food or the selection button that includes a clear and conspicuous 
statement disclosing the number of calories contained in the article.'' 
FDA is proposing in Sec.  101.8(c)(2)(i)(A) to require that for a 
covered vending machine food, the statement of the number of calories 
in the food must be expressed to the nearest 5-calorie increment up to 
and including 50 calories, and 10-calorie increment above 50 calories. 
For a covered vending machine food that has fewer than 5 calories, the 
calorie declaration may be expressed as zero. These rounding rules are 
consistent with the declaration of calories for packaged foods as 
provided in Sec.  101.9(c)(1).
    In addition, FDA tentatively concludes that the number of calories 
must be accompanied by a term, e.g., ``calories,'' to make clear what 
that number refers to. Consequently, FDA is proposing in Sec.  
101.8(c)(2)(i)(B) that the term ``Calories'' or ``Cal'' must appear 
adjacent to the number of calories for the covered vending machine 
food. This is the ``calorie declaration.'' We tentatively conclude that 
permitting the use of the abbreviation ``Cal'' will provide flexibility 
for vending machine operators, especially those that have limited space 
on their machines, in meeting the proposed requirements.
    Because section 403(q)(5)(H)(viii) of the FD&C Act refers to ``an 
article of food sold from a vending machine,'' FDA tentatively 
concludes that calorie information must include the total calories 
present in the covered vending machine food as it is vended. For 
example, if a covered vending machine food, such as a sandwich, is 
dispensed with a single serving unit of a condiment, such as 
mayonnaise, the calorie declaration must include the number of calories 
contained in the sandwich and the package of mayonnaise. FDA also 
tentatively concludes that the number of calories declared for the 
article of food must be identical to the number of calories that are 
declared in the Nutrition Facts, if present. If the food contains 
multiple servings and bears a Nutrition Facts Panel, FDA tentatively 
concludes that the number of calories declared must be equal to the 
total number of calories contained in the food item as dispensed. The 
total number of calories can be determined by multiplying the number of 
calories per serving by the number of servings in the package. For 
example, if the Nutrition Facts states 80 calories per serving and 3 
servings per container, the total number of calories in the entire 
package would be 240 calories. FDA tentatively concludes that for a 
covered vending machine food that contains multiple servings, a vending 
machine operator may voluntarily disclose calories per serving in 
addition to total calories for the food.
    Several comments requested that FDA permit the use of calorie 
ranges, similar to those provided for restaurants and similar retail 
food establishments under section 403(q)(5)(H)(v) of the FD&C Act, in 
declaring calorie information for covered vending machine foods that 
come in different flavors and varieties, e.g., coffee which comes in 
different flavors, brew strength, serving size, sweeteners or different 
types of sandwiches or fruit. The comments discussed the need for 
flexibility to provide calorie ranges for such items.
    FDA acknowledges that some articles of food sold from vending 
machines come in varieties, such as different flavors and types of hot 
beverages (e.g., coffee or hot chocolate). For some of these varieties, 
there could be a large range for calories. For example, calories for 
coffee could range from zero calories for a plain brewed coffee to over 
400 calories for a large mocha coffee with whole milk and whipped 
cream. We point out, however, that a vending machine operator could 
post a calorie declaration in close proximity to the selection button 
for a food that comes in different varieties and flavors that is sold 
in a vending machine that has selection buttons corresponding to the 
different options. For example, if there is a button to select cream 
for a coffee, a vending machine operator would be able to post a 
calorie declaration for that cream item in close proximity to the 
selection button. FDA has considered vending machines that typically 
dispense fresh sandwiches and fruit (often these machines are turnstile 
type). FDA believes that such machines do not present a unique 
situation where the proposed options for declaring calorie information 
would not be appropriate. FDA tentatively concludes, therefore, that 
calorie ranges are not necessary within the context of vending machines 
because a vending machine operator would be able to disclose calorie 
information under other options, as explained below (e.g., use of signs 
including posters).
    b. Determination of calorie content. If a covered vending machine 
food does not bear Nutrition Facts, FDA anticipates that the 
manufacturer or supplier of the food may provide the number of total 
calories for the food to the vending machine operator so that the 
operator has the necessary calorie information to meet the calorie 
disclosure requirements of section 403(q)(5)(H)(viii) of the FD&C Act. 
FDA notes that covered vending machine operators must ensure that the 
calorie declaration is truthful and not misleading in accordance with 
section 403(a)(1) of the FD&C Act. In the event the calorie information 
is not available from the manufacturer of the food, FDA seeks comments 
on whether a vending machine operator may use nutrient databases, 
cookbooks, laboratory analyses, and other reasonable means. FDA notes 
that such flexibility is provided in Sec.  101.10 and section 
403(q)(5)(H)(iv). Further, FDA seeks comment on whether vending machine 
operators should be required to provide FDA the information on which 
they relied to determine the total calories posted for the vending 
machine food.
    c. Placement and prominence of calorie declarations. Section 
403(q)(5)(H)(viii) of the FD&C Act provides that for a covered vending 
machine food, the vending machine operator must provide a sign in close 
proximity to the article of food or the selection button that includes 
a clear and conspicuous statement disclosing the number of calories 
contained in the food. FDA is interpreting the requirement that a sign 
be placed in close proximity to the article to mean that the sign is 
placed either in or on the vending machine itself or adjacent to the 
vending machine and near the food, its price, its selection number, or 
its selection button.
    Section 403(q)(5)(H)(viii) also requires that the calorie 
declaration be clear and conspicuous. FDA notes that to be clear and 
conspicuous the calorie declaration must be in a font size large enough 
to be seen and easily readable. However, FDA recognizes that vending 
machines come in a variety of sizes, shapes, and

[[Page 19243]]

styles. We also understand that vending machines will often have 
limited space. We think that it is important to provide businesses with 
flexibility while, at the same time, fulfilling the requirements of the 
statute. Therefore, we think it would not be appropriate to require one 
specific type size and font for calorie declarations for all covered 
vending machine food. Generally, if a calorie declaration is in a 
similar color as and a type size no smaller than the name \3\ of the 
food, price of the food, or the selection number (e.g., A9 or E4), 
consumers should be able to read the calories in the same manner as 
they read the name and price of the food item. Therefore, FDA is 
proposing in Sec.  101.8(c)(2)(i)(C) that if the calorie declaration is 
in or on the vending machine itself, the calorie declaration for a 
covered vending machine food must be in a type size no smaller than the 
name, selection number, or price of the food as displayed on the 
vending machine, whichever is smallest. In addition, to help ensure 
that the calorie declaration is clear and conspicuous, FDA is proposing 
in Sec.  101.8(c)(2)(i)(B) and Sec.  101.8(c)(2)(i)(C) that the calorie 
declaration be made in the same color, or in a color at least as 
conspicuous, as the color of the name, price, or selection number of 
the food. Further, FDA proposes that the calorie declaration on the 
machine must have the same contrasting background as the name or price 
or selection number it is in closest proximity to. FDA notes that if a 
calorie declaration is presented in a color that is not sufficiently 
contrasted with its background or the declaration is in a type size 
that is too small to be read by a prospective purchaser, FDA 
tentatively concludes that the calorie declaration for a covered 
vending machine food is not disclosed in a clear and conspicuous 
manner, and the declaration would not be in compliance with the 
requirements of section 403(q)(5)(H)(viii)(I). FDA requests comment on 
whether these requirements meet the conditions for ``clear and 
conspicuous'' or whether the requirements should be more or less 
prescriptive.
---------------------------------------------------------------------------

    \3\ Here the discussion of ``name'' refers to the name of the 
food on or in the vending machine and not the name of the food on 
the label of the food package.
---------------------------------------------------------------------------

    A number of comments suggested that calorie information be provided 
on a poster or sign near the machine, such as for a bank of several 
vending machines that may use a common singular payment acceptor. 
However, several comments noted a concern that calorie information 
would not be read by the consumer unless the calorie information were 
posted immediately next to each food item. The comments stated that 
``vending menus'' (such as a menu poster for a bank of vending 
machines) would not provide the buyer with easy access to the calorie 
information.
    FDA agrees with the comments that a sign that is a poster may be an 
appropriate medium to convey the required calorie declarations, so long 
as the sign is in close proximity to the covered vending machine food 
or selection button. The Agency tentatively concludes that ``close 
proximity'' could mean adjacent to the vending machine, but not 
necessarily attached, so long as the sign adjacent to the machine is 
clear and conspicuous at the same time as the food, its name, or its 
selection button or selection number is visible. The Agency requests 
comments on this tentative conclusion. FDA is also proposing in Sec.  
101.8(c)(2)(ii)(B) that if the sign required by section 
403(q)(5)(H)(viii) of the FD&C Act is placed adjacent to the vending 
machine, the calorie declaration must be in type that is all black or 
one color printed on a white or other neutral background that contrasts 
with the type color. The Agency is not proposing a minimum type size 
for the calorie declaration, but we request comment on this tentative 
decision. Comments should provide a rationale supporting their position 
and any supporting data, including consumer research. Where the vending 
machine only displays a vignette (i.e., picture of the food) or name of 
the food item, FDA is proposing in Sec.  101.8(c)(2)(ii)(D) that the 
calorie disclosure sign must be in close proximity to the vignette or 
name or in close proximity to the selection button.
    For electronic vending machines (e.g., machines with digital or 
electronic or liquid crystal display (LCD) displays), FDA tentatively 
concludes that the calorie disclosure sign required by the statute may 
be displayed when the selection numbers are entered but before the 
selection is confirmed, as proposed in Sec.  101.8(c)(2)(ii)(E).
    FDA tentatively concludes, that for certain types of vending 
machines with a limited number of selections, (e.g., popcorn with or 
without added butter), the sign with the statement of calories may 
appear anywhere on the front (or face) of the vending machine. A sign 
may consist of a handwritten sticker in permanent marking that is 
affixed to the machine, provided that the statement is prominent, not 
crowded by other labeling on the machine and in a type size reasonably 
related to the largest print on the vending machine.

F. When Calorie Declaration Is Not Required

1. Examination of the Nutrition Facts Panel
    If the Nutrition Facts Panel of an article of food sold from a 
vending machine may be examined by a prospective purchaser before 
purchasing the article, the vending machine operator is not required to 
provide the calorie information. FDA is interpreting the term 
``Nutrition Facts Panel'' to mean the nutrition information in the 
format required in Sec.  101.9(c) and (d) on the label of the food. FDA 
tentatively concludes in order for the Nutrition Facts Panel to be 
examined, it must be visible in full, without obstruction, before 
purchase. For example, a vending machine's automatic dispensing coil 
that holds the food in place or the placement of the package in the 
machine must not obscure, cover, or cause to be covered any portion of 
the Nutrition Facts Panel. To enable the prospective buyer to obtain 
the total number of calories of the article of food, the information 
that would be required to be made available on a sign by the vending 
machine operator if the provisions of section 403(q)(5)(H)(viii)(I)(aa) 
are not met, the agency notes that, in most cases, the prospective 
purchaser must use several parts of the panel to determine the total 
number of calories for the article of food. This is one reason that it 
is critical that no portion of the Nutrition Facts Panel be obscured.
    In addition, the Nutrition Facts Panel must be in a size that 
permits the prospective purchaser to easily read the nutrition 
information while the food is in the vending machine. FDA regulations 
allow certain foods to bear Nutrition Facts in a modified or smaller 
format based on the composition of the food, the size of the food 
package or other factors (see Sec.  101.9(d), (e), (f), (h) and (j)). 
Where the Nutrition Facts Panel is in a smaller format consistent with 
the regulations, a prospective purchaser is unlikely to be able to 
easily read it on the label of the article of food in the vending 
machine prior to purchase. In such cases, the Agency tentatively 
concludes that the prospective purchaser is not able to examine the 
Nutrition Facts Panel prior to purchase. FDA requests comment on these 
tentative conclusions.
    FDA recognizes that ordinarily the vending machine operator is not 
responsible for the printing of the Nutrition Facts Panel. Nor is the 
vending machine operator required by section 403(q)(5)(H)(viii)(I) to 
make examination of the Nutrition Facts

[[Page 19244]]

possible by the prospective purchaser prior to purchase. However, food 
manufacturers may have an incentive to work with vending machine 
operators to find ways to have their packaged food displayed with the 
Nutrition Facts easily readable in the vending machine. In this way, 
potential purchasers would have more information about the 
manufacturers' food than just calories.
2. Visible Nutrition Information at the Point of Purchase
    The second prong of section 403(q)(5)(H)(viii)(I)(aa) specifies 
that if a vending machine ``otherwise provide[s] visible nutrition 
information at the point of purchase'' for an article of food sold from 
the machine, the vending machine operator is not required to provide 
the calorie information. As with the Nutrition Facts Panel this 
alternative means of satisfying the requirement of section 
403(q)(5)(H)(viii) is optional for vending machine operators.
    The terms ``visible nutrition information'' and ``point of 
purchase'' in section 403(q)(5)(H)(viii)(I)(aa) are not defined in the 
statute. FDA sees two possible ways to understand and apply the terms. 
One approach is to conclude that (1) ``nutrition information'' in this 
context means total calories in the article of food, because this is 
the information that the vending machine operator must provide by sign 
if the provisions in section 403(q)(5)(H)(viii)(I)(aa) are not met; and 
(2) ``otherwise provide[d] * * * at the point of purchase'' suggests, 
in the context of the provision as a whole, that the information, like 
the Nutrition Facts Panel, should be on the article of food itself. FDA 
proposes this approach in proposed Sec.  101.8(b).
    FDA received several comments supporting the use of ``front of 
package'' nutrition information contained on the food label as a means 
of ``providing visible nutrition information at the point of 
purchase.'' For example, some packaged food manufacturers voluntarily 
place certain nutrition information on the principal display panel that 
includes calorie and other nutrition information about the product. 
This type of nutrition information is sometimes referred to as ``front 
of package'' by industry, whereas Nutrition Facts typically appear on 
the information panel of a food label. FDA tentatively concludes that 
``front of package'' nutrition information could be a way to provide 
visible nutrition information, so long as the criteria for color, font 
and type size are met and total calories in the article of food are 
included. If a nutrient content claim or a health claim for the article 
of food also is included on the front of the package, the claim must 
comply with relevant FDA regulations authorizing nutrient content 
claims (a claim on food labeling regarding the level of a nutrient, 
e.g., low fat) or health claims (a claim on food labeling regarding the 
relationship between a substance and a disease, e.g., calcium and 
osteoporosis), as applicable.
    FDA also received a few comments stating that the Nutrition Facts 
Panel and any ``front of package'' nutrition information may be small 
and difficult to read in a vending machine. FDA recognizes that a 
consumer may not be able to easily read some nutrition information in a 
vending machine and therefore this information may not inform the 
consumer about the number of total calories in the article of food. 
Section 101.8(b) of this proposed rule sets out the provisions 
regarding ``visible nutrition information at the point of purchase'' 
discussed above.
    Under proposed Sec.  101.8(b), for the nutrition information on the 
label to be considered ``visible,'' it must be clear and conspicuous. 
To ensure that it is clear and conspicuous, it must be both (1) in a 
type size easily readable from the distance between the prospective 
purchaser and the label and (2) in print with sufficient color and 
contrasting background to be readily distinguishable from other types 
of information on the label. FDA tentatively concludes that the visible 
nutrition information presented on the label of the food at the point 
of purchase must be in a type size reasonably related to the most 
prominent printed matter on the label and in a color that sufficiently 
contrasts with the background, such that a prospective purchaser is 
able to notice and read the information. Generally, FDA has considered 
``reasonably related'' to mean a type size that is at least 50 percent 
of the size of the largest print on the label. (Ref. 2).
    The alternative approach is to interpret the words ``otherwise 
provide visible nutrition information at the point of purchase'' by 
concluding that (1) ``nutrition information'' means something more than 
total calories, and (2) ``point of purchase'' means something more than 
on the package of the food itself. Under this interpretation, the non-
Nutrition Facts Panel option in the statute would include information 
in addition to total calories because the broader term ``nutrition 
information'' was used instead of ``calories.'' Just as the Nutrition 
Facts Panel contains more than calorie information, so too, would 
``visible nutrition information at the point of purchase.'' This could 
include, in addition to total calories in the food, information such as 
serving size information or information on the nutrients that are 
required to be disclosed in the Nutrition Facts as described in Sec.  
101.9 or 21 U.S.C. 343(q)(1)(D) and (E). FDA seeks comment on what 
other nutrition information, if any, should be required if this 
alternative interpretation were adopted. FDA also notes that under this 
alternative interpretation, the vending machine operator could rely on 
any ``visible nutrition information at the point of purchase'' that 
included total calories in addition to other nutrition information 
regardless of what entity supplied the information.
    Likewise, under the alternative approach, ``point of purchase'' 
would be read to mean that the ``visible nutrition information'' could 
be provided in places other than on the package of the food in the 
vending machine, such as on the vending machine itself.
    In the case of the alternative interpretation, in which the 
``visible nutrition information at the point of purchase'' appears 
other than on the label of the article of food, there are also the 
questions of where and through what means the information may be 
provided. The agency specifically requests comment on whether, under 
this alternative interpretation, signs (including posters) or booklets 
would be sufficient in providing ``otherwise visible nutrition 
information at the point of purchase'' and we especially request any 
consumer studies or social scientific data on this issue.
    Regardless of the precise location or means of providing the 
nutrition information, under the alternative interpretation there would 
also be a question of ensuring that the information is adequately 
``visible.'' At a minimum, the nutrition information should be clear 
and conspicuous and noticeable at the point of purchase, in the context 
of the surroundings. One way to ensure this visibility if the nutrition 
information is not on the label of the article of food would be to 
provide the information in type that is all black or one color, printed 
on a white or other neutral background that contrasts with the type 
color. Another way would be to also provide the information using a 
minimum type size. The agency requests comments on these and other ways 
to determine if the information is ``visible.''
    Another aspect of whether information that is not on the food 
itself is visible to the consumer is where the information is placed 
relative to the ``point of purchase.'' FDA requests comment on the 
meaning of ``the point of purchase'' in this context and on all

[[Page 19245]]

aspects of the alternative interpretation of ``visible nutrition 
information at the point of purchase.''
    FDA seeks comment on the alternative approaches to interpreting and 
applying ``otherwise provide visible nutrition information at the point 
of purchase.''

G. Conforming Amendment

    FDA is proposing to exempt electronic signatures submitted to 
satisfy the requirements of this proposed section from the requirement 
to comply with Part 11--Electronic Records; Electronic Signatures (21 
CFR part 11) and proposing to amend part 11 to reflect this exemption. 
We expect this exemption to facilitate the registration process for 
those vending machine operators who voluntarily choose to register 
under section 403(q)(5)(H)(ix) of the FD&C Act.

H. Effective Date

    FDA received a few comments regarding the effective date of the 
final rule that would issue based on this proposal. These comments 
suggested that vending machine operators would need 2 years to 
implement the requirements for calorie labeling for vending machines 
due to the costs of producing posters and driving to each site to post 
the information.
    FDA is proposing that the final rule become effective one year from 
the date of its publication. Because FDA is proposing flexibility for 
compliance, i.e., the use of signs in, on, or adjacent to vending 
machines, vending machine operators would be able to choose among a 
wide variety of less expensive avenues to achieve compliance, depending 
on their situation. Many foods sold from vending machines are packaged 
and have Nutrition Facts. Therefore, vending machine operators have the 
opportunity of orienting the food in the vending machine such that the 
prospective customer may examine the Nutrition Facts Panel. In this 
case, the operators would not need to provide calorie information 
required by 403(q)(5)(H)(viii)(I) of the FD&C Act. If the operator 
chooses not to orient the food such that the prospective customer may 
examine the Nutrition Facts Panel, or if it is not practicable to do so 
because the vending machine is not of the type where the food is 
visible, the operator may obtain the calorie information from the 
Nutrition Facts to place on the signs. Further, the proposed rule, if 
finalized, does not require any particular manner of obtaining calorie 
information. As discussed above in this document, FDA anticipates that, 
if a covered vending machine food does not bear Nutrition Facts because 
it falls under an exemption, the manufacturer or supplier of the food 
may provide the number of total calories for the food to the vending 
machine operator so that the operator has the necessary calorie 
information to meet the calorie disclosure requirements of section 
403(q)(5)(H)(viii)(I). Because of the flexibility provided in this 
proposed rule, the Agency finds that it is reasonable to make the 
requirements effective in 1 year. Based on the comments and on what 
vending machine operators will need to do to come into compliance, the 
Agency tentatively finds that making the final rule effective 1 year 
after publication is practicable. The Agency seeks comment on the 
appropriateness of this timeframe.

IV. Summary Preliminary Regulatory Impact Analysis

    The summary analysis of benefits and costs included in this 
document is drawn from the detailed Preliminary Regulatory Impact 
Analysis which is available at https://www.regulations.gov, Docket No. 
FDA-2011-F-0171, and is also available on FDA's Web site at https://www.fda.gov/Food/LabelingNutrition/ucm217762.htm.

A. Introduction

    FDA has examined the impacts of the proposed rule under Executive 
Orders 13563 and 12866, the Regulatory Flexibility Act (5 U.S.C. 601-
612), and the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4). 
Executive Orders 13563 and 12866 direct agencies to assess all costs 
and benefits of available regulatory alternatives and, if regulation is 
necessary, to select regulatory approaches that maximize net benefits 
(including potential economic, environmental, public health and safety 
effects, distributive impacts, and equity). Executive Order 13563 
emphasizes the importance of quantifying both costs and benefits, of 
reducing costs, of harmonizing rules, and of promoting flexibility. 
This proposed rule has been designated an ``economically'' significant 
rule, under section 3(f)(1) of Executive Order 12866. Accordingly, the 
proposed rule has been reviewed by the Office of Management and Budget 
(OMB).
    The Regulatory Flexibility Act requires agencies to analyze 
regulatory options that would minimize any significant impact of a rule 
on small entities. Using the Small Business Administration (SBA) 
definition of small vending machine operators as classified by the 
North American Industry Classification System (NAICS 45421), FDA 
estimates that a significant number of operators impacted by this 
proposed rule are small businesses. As directed by statute, the 
requirements of the proposed rule only apply to vending machine 
operators that own or operate 20 or more vending machines. However, 
according to data from the Vending Times Census and from the National 
Automatic Merchandising Association (NAMA), the average annual revenue 
per machine is less than $7,000 (Refs. 3 and 4). An operator with only 
20 machines may have vending machine revenue of less than $140,000. In 
order to exceed the SBA's definition of a small vending machine 
operator, a firm would need at least $10 million in annual revenue 
(Ref. 5). This suggests that a firm with revenue exclusively from 
vending machine sales would need more than 1,400 machines to exceed the 
definition of small business. Based on the latest available U.S. 
Economic Census data that breaks down establishments by revenue, we 
project that 97 percent of firms selling covered vending machine food, 
as that term is used in this document, that identify primarily as 
vending machine operators that are engaged in the business of owning or 
operating 20 or more vending machines would be small businesses as 
defined by SBA. Therefore, the Agency believes that the proposed rule 
would have a significant economic impact on a substantial number of 
small entities. This impact is discussed further in section V of this 
document.
    Section 202(a) of the Unfunded Mandates Reform Act of 1995 requires 
that agencies prepare a written statement, which includes an assessment 
of anticipated costs and benefits, before proposing ``any rule that 
includes any Federal mandate that may result in the expenditure by 
State, local, and tribal governments, in the aggregate, or by the 
private sector, of $100,000,000 or more (adjusted annually for 
inflation) in any one year.'' The current threshold after adjustment 
for inflation is $135 million, using the most current (2009) Implicit 
Price Deflator for the Gross Domestic Product. FDA does not expect this 
proposed rule to result in any 1-year expenditure that would meet or 
exceed this amount.

B. Need for This Regulation

    This proposed rule is necessary to implement section 4205 of the 
Affordable Care Act, which principally amends sections 403 and 403A of 
the FD&C Act, and requires operators of 20 or more vending machines to 
disclose calorie information for covered vending machine food. The 
provision of calorie information for covered vending

[[Page 19246]]

machine food may help consumers make better informed dietary choices.
    Economic justifications for regulatory interventions in private 
markets rely on the presence of some market failure. In the case of 
food sold from a vending machine, the private market is particularly 
robust and competitive. Thousands of individual firms vie for consumer 
dollars in millions of vending machines across the United States (Ref. 
3). Low entry costs for firms and low switching costs for customers 
suggest that if a sizable fraction of consumers were willing to pay 
for--and discriminate based on--the visible calorie information at the 
point of purchase then the industry would provide it to them. In fact, 
some vending machine operators are voluntarily providing more healthful 
choices and additional information on machines (Refs. 4 and 6).
    Although many of the usual market failures that justify regulatory 
action, such as the existence of market power or of ill-defined 
property rights, do not apply here (Refs. 7 and 8), the primary support 
for regulatory intervention is that there are systematic biases in how 
consumers process information and weigh current benefits (from 
consuming higher calorie foods) against future costs (higher 
probability of obesity and its comorbidities).
    The bias is more directly related to the requirements of this 
proposed rule: Consumer demand for calorie information does not create 
incentives for the provision of calorie information at the vending 
machine. This market failure occurs because at the time of purchase, 
consumers do not value calorie information as much as they do later, 
when the effects of excess calorie consumption are evident. Studies 
have shown that consumers have present-based preferences, meaning that 
they are continually optimistic about the healthfulness of their future 
choices (Ref. 9, 10 and 11).
    These studies suggest that calorie information often lacks 
salience, or relevance, for consumers at the time of purchase and 
consumption, even though they may experience regret about their 
decisions at a later date. This tendency may explain why consumers have 
not generally demanded calorie and other nutrition information for food 
sold from vending machines before, or at, the point of purchase, even 
if they may, at a later point in time, value that information. Because 
of competition for consumer time and attention vending machine 
operators have limited time and space in which to convey information to 
consumers. These limits mean that there is a substantial opportunity 
cost to the operator of providing calorie information. That is, just as 
an operator may have to decide which possible foods to leave out of a 
vending machine with limited space (thus giving up the opportunity to 
sell those items), it must choose which pieces of information about its 
foods it wants to convey. Adding an additional piece of information 
means that an operator may need to downplay or remove some other piece 
of information. This opportunity cost of information holds true whether 
the calorie information is displayed on the machine or, as with an 
increasing number of packaged foods, on the principal display panel of 
the package.
    The proposed requirements mitigate the apparent market failure in 
information provision stemming from present-biase