Color Additive Certification; Increase in Fees for Certification Services, 88635-88642 [2024-25974]
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Federal Register / Vol. 89, No. 217 / Friday, November 8, 2024 / Rules and Regulations
auditor must, as soon as practical, report
through the methods indicated below,
all instances of fraud, illegal acts, and
all indications or instances of
noncompliance with laws, whether
material or not, to:
(1) The president of the auditee’s
governance board via the auditor’s
preferred method;
(2) RUS via email;
(3) OC–ECD via email; and
(4) OIG, as follows:
(i) For all audits performed in
accordance with § 1773.3(d) (audits
conducted in accordance with 2 CFR
part 200), report to the USDA–OIG–
Audit, National Single Audit
Coordinator for USDA, 1400
Independence Ave. SW, Ste. 419,
Washington, DC 20250, email: OIGUSDAsingleaudit@oig.usda.gov, or
online at: https://usdaoig.oversight.gov.
(ii) For all other audits conducted in
accordance with § 1773.3 report to the
USDA Office of Inspector General
online at: https://usdaoig.oversight.gov.
(1) Significant deficiencies and
material weaknesses in internal control;
(2) Identified or suspected instances
of noncompliance with provisions of
laws, regulations, contracts and grant
agreements that have a material effect
on the financial statements or other
financial data significant to the audit
objectives and any other instances that
warrant the attention of those charged
with governance;
(3) Identified or suspected instances
of fraud that have a material effect,
either quantitatively or qualitatively, to
the financial statements or other
financial data significant to the audit
objectives; and
(4) Identified or suspected instances
of abuse that have a material effect,
either quantitatively or qualitatively, to
the financial statements or other
financial data significant to the audit
objectives.
*
*
*
*
*
■ 9. Revise § 1773.34 to read as follows:
§ 1773.45
Subpart C—RUS Requirements for the
Submission and Review of the
Reporting Package
§ 1773.34 Schedule of findings and
recommendations.
RIN 0910–AI69
The auditor must prepare a schedule
of findings and recommendations to be
included with the reports on internal
control; compliance with laws,
regulations, contracts, and grant
agreements; and instances of fraud. The
report must contain the status of known
but uncorrected deficiencies from prior
audits that affect the current audit
objective. The schedule of findings and
recommendations shall be developed
and presented utilizing the elements of
a finding discussed in GAGAS and shall
include recommendations for
remediation. If the schedule does not
include responses from management, as
well as any planned corrective actions,
those items must be submitted directly
to RUS by management in accordance
with § 1773.4(j).
Color Additive Certification; Increase
in Fees for Certification Services
7. Amend § 1773.21 by revising
paragraph (d) to read as follows:
■
§ 1773.21 Auditee’s review and
submission of the reporting package.
*
*
*
*
*
(d) The auditee must include a
complete reporting package as defined
in § 1773.2.
*
*
*
*
*
Subpart D—RUS Reporting
Requirements
8. Amend § 1773.32 by revising
paragraph (a) and removing paragraph
(d).
The revision reads as follows:
■
§ 1773.32 Reports on internal control;
compliance with provisions of laws,
regulations, contracts, and grant
agreements; and instances of fraud.
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Subpart E—RUS Audit Requirements
and Documentation
(a) As required by GAGAS, the
auditor must prepare a written report
describing the scope of the auditor’s
testing of internal control over financial
reporting and of compliance with
provisions of laws, regulations,
contracts, and grant agreements, and
state whether the tests provided
sufficient, appropriate evidence to
support opinions on the effectiveness of
internal control and on compliance with
provisions of laws, regulations,
contracts, and grant agreements. This
report must include the manual or
printed signature of the audit firm and
must include the following items as
appropriate:
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10. Revise § 1773.40 to read as
follows:
■
§ 1773.40
Regulatory assets.
The auditor’s audit documentation
shall support that the auditor tested
whether all regulatory assets comply
with the requirements of FASB
Accounting Standards Codification
(ASC) 980 or GASB Statement (GASBS)
62, as appropriate. For Electric auditees
only, the auditor’s audit documentation
shall support that all regulatory assets
have received RUS approval.
■ 11. Revise § 1773.45 to read as
follows:
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Regulatory liabilities.
The auditor’s audit documentation
shall support that all regulatory
liabilities comply with the requirements
of FASB Accounting Standards
Codification (ASC) 980 or GASB
Statement (GASBS) 62, as appropriate.
For electric auditees only, the auditor’s
audit documentation shall document
whether all regulatory liabilities have
received RUS approval.
Andrew Berke,
Administrator, Rural Utilities Service, Rural
Development.
[FR Doc. 2024–25914 Filed 11–7–24; 8:45 am]
BILLING CODE 3410–15–P
DEPARTMENT OF HEALTH AND
HUMAN SERVICES
Food and Drug Administration
21 CFR Part 80
[Docket No. FDA–2022–N–1635]
AGENCY:
Food and Drug Administration,
HHS.
ACTION:
Final rule.
The Food and Drug
Administration is amending the
regulation setting fees for color additive
certification services to increase these
fees. This increase will allow FDA to
continue to provide, maintain, and
equip an adequate color additive
certification program as required by the
Federal Food, Drug, and Cosmetic Act
(FD&C Act).
DATES: This rule is effective December 9,
2024.
ADDRESSES: 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 final rule into the
‘‘Search’’ box and follow the prompts,
and/or go to the Dockets Management
Staff, 5630 Fishers Lane, Rm. 1061,
Rockville, MD 20852, 240–402–7500.
FOR FURTHER INFORMATION CONTACT:
With regard to the final rule: Bryan
Bowes, Office of the Chief Scientist,
Office of Cosmetics and Colors, Food
and Drug Administration, 5001 Campus
Dr., College Park, MD 20740, 240–402–
1122; or Carrol Bascus, Office of Policy,
Regulations and Information, Human
Foods Program, Food and Drug
Administration, 5001 Campus Dr.,
College Park, MD 20740, 240–402–2378.
SUMMARY:
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SUPPLEMENTARY INFORMATION:
Table of Contents
I. Executive Summary
A. Purpose of the Final Rule
B. Summary of the Major Provisions of the
Final Rule
C. Legal Authority
D. Costs and Benefits
II. Background
A. Need for the Regulation/History of the
Rulemaking
B. Summary of Comments to the Proposed
Rule
C. General Overview of the Final Rule
III. Legal Authority
IV. Comments on the Proposed Rule and FDA
Response
A. Introduction
B. Description of Comments and FDA
Response
V. Effective/Compliance Date(s)
VI. Economic Analysis of Impacts
A. Introduction
B. Overview of Benefits, Costs, and
Transfers
VII. Analysis of Environmental Impact
VIII. Paperwork Reduction Act of 1995
IX. Federalism
X. Consultation and Coordination With
Indian Tribal Governments
XI. References
I. Executive Summary
A. Purpose of the Final Rule
The Food and Drug Administration
(FDA or we) is amending the regulation
setting fees for color additive
certification services to increase these
fees. This increase will allow FDA to
continue to provide, maintain, and
equip an adequate color additive
certification program as required by the
FD&C Act. The fees will help to recover
the full costs of operating FDA’s color
additive certification program.
B. Summary of the Major Provisions of
the Final Rule
The final rule amends the color
additive regulation to increase the fees
for certification services. The fees for
straight colors including lakes will be
$0.45 per pound ($0.10 per pound
increase) with a minimum fee of $288.
There will be similar increases in fees
for repacks of certified color additives
and color additive mixtures.
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C. Legal Authority
We are issuing the final rule
consistent with our statutory authority,
under the FD&C Act, which requires
fees to provide, maintain, and equip an
adequate color additive certification
program, as specified in our regulations.
D. Costs and Benefits
The final rule amends existing color
additive regulations to increase fees for
certification services. The costs of the
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rule include the cost to read and
understand the rule. As the increase in
fees is not associated with any change
in our certification program, no
economic benefits are expected to result
from the final rule. Similarly, the impact
of the increase in certification fees on
color additive manufacturers is
considered a transfer, rather than an
economic cost. Accordingly, we do not
estimate economic benefits associated
with this final rule, and the impact of
the increase in color certification fees is
estimated as an ongoing transfer from
manufacturers of color additives to the
Federal Government. The economic
burden of the final rule accrues to color
additive manufacturers. We estimate a
one-time cost to read and understand
the rule for all color additive
manufacturers. The present value of this
cost is approximately $5,384 at a 3
percent rate of discount, and $5,183 at
a 7 percent rate of discount. The
annualized value of these costs
estimates is approximately $631 at a 3
percent discount rate and $738 at a 7
percent discount rate.
II. Background
A. Need for the Regulation/History of
the Rulemaking
In accordance with section
721(a)(1)(B) of the FD&C Act (21 U.S.C.
379e(a)(1)(B)), certain color additives
must be certified for use by FDA in
food, drugs, cosmetics, and certain
medical devices. Section 721(e) of the
FD&C Act provides in relevant part that
the certification of color additives must
only be performed upon payment of
fees, to be specified by regulation, as
necessary to provide, maintain, and
equip an adequate service for such
purpose. When certifying a color
additive, FDA analyzes samples from
each batch of color additive received
from a manufacturer and verifies that it
meets composition and purity
specifications. FDA certification is
necessary before color additives that are
subject to certification are permitted to
be used in these FDA-regulated
products. Under the color additive
certification fee regulation,
manufacturers pay fees, based on the
weight of each batch for certification.
These fees support the full costs of
operating FDA’s color additive
certification program.
The current fee schedule specified in
part 80 (21 CFR part 80) became
effective in 2005 (and was amended in
2006 to correct a typographical error).
Since 2005, the costs of the certification
program have significantly increased
because of the increase in general
operating expenses, including the
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purchase and maintenance of critical
equipment, rent and facility charges,
and staff payroll. Therefore, in the
Federal Register of November 2, 2022
(87 FR 66116), we published a proposed
rule to amend the color additive
regulation to increase the fees for
certification services. The change in fees
will allow FDA to continue to provide,
maintain, and equip an adequate color
additive certification program as
required by section 721(e) of the FD&C
Act. We proposed to increase the fees
for certifying color additives to reflect
increasing operating costs for the
certification program. The fee schedule
for color certification, as provided for in
our regulations, is designed to cover all
the costs involved in certifying batches
of color additives. This includes the cost
of specific tests required by the
regulations and the general costs
associated with the certification
program, such as costs of accounting,
reviewing data, issuing certificates,
conducting research, inspecting
establishments, and purchasing and
maintaining equipment. The current fee
schedule is insufficient to provide,
maintain, and equip an adequate color
additive certification program. As fees
have not kept pace with inflation, we
have struggled to recover the full costs
of operating FDA’s color certification
program, resulting in a financial
shortfall for the program.
Our Color Certification Fee Study (Fee
Study) (Ref. 1) provides data and
information about the current financial
condition of the color additive
certification program. As noted in our
Fee Study, in recent years, successful
operation of color certification activities
has relied upon prior year carryover
funding to address a deficit between
program expenses and annual fee
collections. This is not sustainable
because carryover funding and annual
fee collections are diminishing due to
increased costs and low collections.
Therefore, the fee increase will help
to ensure that collected fees are
sufficient to fund the full cost of our
color certification activities. Consistent
with section 721(e) of the FD&C Act, the
fee increase in the final rule is necessary
to cover rising operating costs and
maintain an adequate color additive
certification program.
B. Summary of Comments to the
Proposed Rule
The proposed rule provided a 60-day
comment period. Based on a request
from stakeholders, we re-opened the
comment period for an additional 45
days (88 FR 4117 (January 24, 2023)). In
April 2024, we reopened the comment
period a second time to add the Fee
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Study to the docket (89 FR 32384 (April
26, 2024)). In May 2024, based on a
request from stakeholders, we extended
the comment period again for 30 days
(89 FR 46042 (May 28, 2024)). We
received fewer than 15 comments on the
proposed rule. The comments were from
individuals and an industry trade
association. A few comments supported
the rulemaking. Other comments raised
questions and concerns about our
rationale for the $0.10 per pound
increase. The comments urged FDA to
provide supporting data to justify the
need for the fee increase.
We address the comments in more
detail in section IV.
C. General Overview of the Final Rule
This final rule revises § 80.10, ‘‘Fees
for certification services,’’ to:
• increase the fee for certification
services from $0.35 to $0.45 per pound
for straight colors including lakes, and
change the minimum fee from $224 to
$288 (§ 80.10(a));
• increase the fees for repacks of
certified color additives and color
additive mixtures from $35 for 100
pounds or less to $45 (§ 80.10(b)(1));
• increase the fees for repacks of
certified color additives and color
additive mixtures over 100 pounds, but
not over 1,000 pounds, from $35 plus
$0.06 for each pound over 100 pounds
to $45 plus $0.08 for each pound over
100 pounds (§ 80.10(b)(2)); and
• increase the fees for repacks of
certified color additives and color
additive mixtures over 1,000 pounds
from $89 plus $0.02 for each pound over
1,000 pounds to $114 plus $0.03 for
each pound over 1,000 pounds
(§ 80.10(b)(3)).
The fee increase will help to ensure
the continued viability of an adequate
certification program in accordance
with section 721(e) of the FD&C Act.
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III. Legal Authority
FDA is issuing this final rule
consistent with our authority under
section 721(e) of the FD&C Act which
requires that fees necessary to provide,
maintain, and equip an adequate color
additive certification program be
specified in our regulations. FDA is also
issuing this final rule under section
701(a) of the FD&C Act (21 U.S.C.
371(a)), which gives us the authority to
issue regulations for the efficient
enforcement of the FD&C Act.
IV. Comments on the Proposed Rule
and FDA Response
A. Introduction
We received fewer than 15 comments
on the proposed rule. The comments
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were from individuals and an industry
trade association. Some comments
supported the rulemaking, including a
few that expressed general support
without focusing on a particular
provision in the proposed rule. Other
comments questioned the fee increase
and asked that we provide additional
information to support the increase in
fees. Some comments expressed
concerns about our rationale for the
$0.10 per pound increase for straight
colors including lakes and urged FDA to
explain the need more thoroughly for
the fee increase. One comment
suggested that we consider an
alternative increase of $0.05 per pound
instead of the proposed fee of $0.10 per
pound, which they stated, would
significantly impact costs for color
manufacturers. Another comment
questioned if the color certification fee
is used only to fund activities that
support color certification. A comment
also argued that annual financial
reserves would be sufficient to allow the
program to operate with no additional
fee increase.
We describe and respond to the
comments in section B of this
document. We numbered each comment
to help distinguish between different
comments. We grouped similar
comments together under the same
number, and, in some cases, we
separated different issues discussed in
the same comment and designated them
as distinct comments for purposes of
our responses. The number assigned to
each comment or comment topic is
purely for organizational purposes and
does not signify the comment’s value or
importance or the order in which
comments were received.
B. Description of Comments and FDA
Response
(Comment 1) A few comments
expressed general support for FDA’s
color additive certification program. The
comments stated that the regulations,
‘‘particularly for food and cosmetics
products are necessary to ensure the
safety and well-being of Americans.’’
With respect to the proposed fee
increase in the proposed rule, one
comment stated that the proposed rule
‘‘would aid funding of a federal agency,
but it would take into account recent
inflation.’’ Another comment noted that
‘‘recovering the operational costs will
provide the FDA with more resources to
test and evaluate color additives in
consumer products, which could help
protect public health.’’
(Response 1) We agree that the final
rule will help FDA’s color additive
certification program by covering the
increased costs of certifying the color
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additives. The fee increase will also
benefit public health by maintaining an
adequate certification program that
continues to ensure the safety of the
color additives used in food and other
products.
(Comment 2) One comment stated
that ‘‘there does not seem to be reason
for the sudden want to increase the
fees.’’ It suggests that the process for
analyzing color additives has not
changed much and asserts that ‘‘an
explanation that more thoroughly
explains the need to spend more on
analyzing color additives’’ should be
provided.
(Response 2) As stated in the
proposed rule, the current fee schedule
is insufficient to provide, maintain, and
equip an adequate color additive
certification program (87 FR 66116 at
66117). In our Fee Study, we explain
that a diminishing prior year carryover
and reduced collections is placing the
color certification program in a
financially precarious position,
necessitating the fee increase. Further,
the funding shortfall prevents FDA from
updating and replacing laboratory
equipment necessary for color
certification. The additional funding
will allow FDA to replace obsolete items
and invest in new laboratory equipment,
contributing to the overall efficiency of
the certification program, and ensure we
cover all the costs of our color
certification activities and continue to
meet our statutory obligation to
maintain an adequate certification
program in accordance with section
721(e) of the FD&C Act.
(Comment 3) One comment agreed
with the necessity to adjust fees and our
goal of maintaining an effective
certification program. However, the
comment noted that ‘‘careful
consideration is warranted to strike a
balance between covering program costs
and avoiding undue financial burden on
manufacturers.’’ It also stated that we
must ‘‘assess the proposed fee
adjustment to ensure they are
reasonable and justified.’’
(Response 3) We carefully considered
the need for the fee increase and
decided on an amount that would help
to ensure funding to provide, maintain,
and equip an adequate color
certification program. Our Fee Study
further explains and illustrates the
funding challenges we are experiencing
in the color certification program. We
did not raise color certification fees for
almost 20 years. As a result, in recent
years, collections have cumulatively
lagged behind expenditures by more
than $3 million (Ref. 1). This is causing
significant funding shortfalls and
preventing the color certification
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program from operating efficiently (e.g.,
causing longer batch certification times).
Also, as described in the previous
response, additional funding will allow
FDA to replace obsolete items and
invest in new laboratory equipment.
Therefore, it is necessary to increase the
fees to ensure collected fees cover all
the costs of our color certification
activities as required by law. In light of
the increased costs of the color
certification program, the increase in
fees is reasonable and justified.
(Comment 4) One comment disagreed
with the proposed rule and stated that
it was ‘‘not sufficiently clear as to the
accounting or the rationale to warrant a
$0.10 per pound increase.’’ The
comment asserted that the last fee
increase was $0.05 per pound and
‘‘based on recent account figures, even
a $0.05 increase would be sufficient.’’
(Response 4) Our Fee Study lists the
costs and the collections for the color
additive certification program. Color
certification fees have not kept up with
inflation and as a result, current
collections are not sufficient to sustain
the program. The Fee Study also
compared the proposed increase to an
alternate amount of $0.05. The resulting
estimates show that an increase that is
50 percent less than the proposed $0.10
per pound would not be sufficient to
maintain an adequate color certification
program. The last color certification fees
increase was almost 20 years ago. Given
the current funding shortfall, the
increase is necessary to sustain and
maintain an adequate color additive
certification program.
(Comment 5) One comment that
opposed the proposed fee increase
argued that the proposed rule does not
‘‘explain or identify with any specificity
where increases in operating costs’’ may
warrant the increase.
(Response 5) We disagree with this
assertion. In the proposed rule, we
stated ‘‘since 2005, the costs of the
certification program have significantly
increased because of general operating
expenses, including the purchase and
maintenance of critical equipment, rent
and facility charges, and escalating staff
payroll’’ (87 FR 66116 at 66117). We
also added a Fee Study to the
administrative record to explain the
funding challenges for the certification
program as well as provide additional
information to support the fee increase.
(Comment 6) One comment asserted
that the proposal to increase the fee by
$0.10 per pound ‘‘is a more significant
increase than the agency has proposed
in the past.’’
(Response 6) The comment’s assertion
is incorrect. In 1982, we also
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implemented a $0.10 per pound
increase (47 FR 24691, June 8, 1982).
(Comment 7) One comment suggested
that if we are not able to justify the need
for a $0.10 per pound increase, we
should provide for a $0.05 increase as
we have done previously.
(Response 7) We have justified the
need for a $0.10 per pound increase.
Our Fee Study provides additional
information to support this increase.
The data and information show that
dwindling carryover balances, coupled
with reduced collections and high
inflation, are not sufficient to sustain an
adequate color additive certification
program as required by the FD&C Act.
Without the fee increase, continuing
shortfalls will limit the operation of the
color certification program. Therefore, a
$0.10 per pound increase is necessary to
provide, maintain, and equip an
adequate color certification program.
(Comment 8) One comment
recommended that FDA establish a
maximum fee of $1,600 for batches of
4,000 pounds or more. Further, the
comment said this would incentivize
industry to submit larger batches while
also saving Agency resources.
(Response 8) We disagree with the
comment. If implemented, the
maximum fee proposed by the comment
would be based on a certification fee of
$0.40 per pound, a $0.05 increase over
the current fee. As outlined in our Fee
Study, an increase of $0.05 per pound
is not sufficient to maintain an adequate
color certification program.
(Comment 9) One comment expressed
concern about whether color
certification fees were being used to
only fund color certification activities.
Specifically, the comment questioned if
the lab equipment in the color
certification lab ‘‘are used solely for the
certification of color additives.’’ Further,
the comment questioned if ‘‘all the costs
accounted for in the Study provided,
such as payroll costs and equipment
usage, are specific to color certification
activities.’’ The comment asserted that
‘‘equipment used for activities beyond
color certification should not serve as
the basis for a fee increase.’’
(Response 9): Certification fees are
used to cover the costs of the color
certification program and are not used
to support unrelated activities. To
ensure the safety of color additives, the
color certification program engages in
many functions, including testing,
research, methods development,
publication of scientific research,
subject matter expertise for inspections
of color additive manufacturers, as well
as other related administrative and
operational activities. Fees are collected,
pooled, and used to support all color
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certification-related activities. As
outlined in the Fee Study, collected fees
are used to fund labor (e.g., payroll) and
nonpayroll operating expenses (e.g.,
equipment usage) because such
activities are necessary to provide,
maintain, and equip an adequate color
additive certification program, as
required by the FD&C Act.
(Comment 10) One comment opposed
the proposed rule and stated that
‘‘recent account figures provide no basis
or suggest any financial deficit that
would require a fee increase.’’ Further,
the comment asserted that the ‘‘Lab has
a financial reserve that would allow the
Lab to operate with no additional fee
increase.’’ The comment argued that the
certification program ‘‘does not operate
on deficit spending and typically has
carryover from year-to-year.’’ For these
reasons, the comment questioned the
need for the proposed fee increase.
(Response 10) We disagree with the
comment. Our Fee Study provides data
and information that describes the
current financial condition of the color
additive certification program. The Fee
Study explains that we previously relied
upon prior year carryover funding to
address the deficit between program
expenses and annual fee collections.
However, carryover funding and annual
fee collections are diminishing due to
low collections and the increased costs
of maintaining an adequate certification
program, which make the fee increases
necessary. Relying on the carryover
balance is no longer viable to support
the color certification program.
(Comment 11) Another comment
suggested that we ‘‘establish a policy on
the management of the color
certification lab’s reserves.’’ The policy
would ‘‘ensure the agency is
maintaining an appropriate reserve and
that future refunds or fee increases are
based on specific metrics.’’
(Response 11) Fees that are collected
and not obligated at the end of the fiscal
year are available to support the color
certification program in future fiscal
years. We refer to this as ‘‘carryover’’
while the comment refers to these funds
as ‘‘reserves.’’ The FDA color
certification program maintains a
modest carryover balance to operate the
color certification program successfully,
which enables us to mitigate financial
risks to the color certification program,
such as the risk of under collecting fees
and issues relating to funds availability
during the transition to a new fiscal
year. FDA constantly monitors and
analyzes its carryover balance, but, due
to the complexity of program
operations, it is unrealistic to target a
specific reserve balance as several
factors outside of our control impact
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funds availability, including fee
collections, inflation, unexpected
equipment costs, etc. As explained in
our Fee Study, we cannot rely on
dwindling carryover balances to sustain
the color certification program. A fee
increase is necessary to cover the full
costs of our color certification activities.
(Comment 12) Another comment
stated that a ‘‘manufacturer’s suggested
end-of-life is not indicative of an
equipment’s actual lifespan’’ and that
‘‘the lab should be able to continue to
utilize any equipment that is still
operable.’’ The comments speculated if
there are reasons beyond end-of-life that
explain why we are seeking new
equipment and ‘‘would new equipment
result in a demonstrable benefit to the
companies receiving certification?’’
(Response 12) We agree that the
manufacturer’s suggested end-of-life
does not mean that a piece of laboratory
equipment is no longer useful. However,
when the manufacturer stops servicing
the laboratory equipment, it can be
costly and inefficient to maintain the
aged items. We require properly
functioning laboratory equipment to
conduct color certification activities and
maintain an adequate color certification
program. It would not be prudent for us
to wait for equipment to fail before
seeking to replace it because this would
contribute to delays in the color
certification process and reduce the
program’s efficiency. Therefore, when a
manufacturer notifies us that a piece of
equipment is reaching end-of-life, we
begin the procurement process to obtain
new equipment. The procurement
process is lengthy and can take months.
In recent years, we were unable to
purchase new equipment because of
ongoing budget concerns.
The fee increase will help to resolve
budget concerns and enable us to timely
purchase new, more efficient equipment
to replace those items that have reached
end-of life, cannot be maintained, or are
obsolete. The fee increase will also help
to address delays in batch certification
times caused by reduced resources. The
purchase of new equipment will allow
FDA to maintain an adequate color
certification program while supporting
efficient operations, which, in turn,
benefits companies that require
certification.
(Comment 13) One comment stated
that our recent decision to stop
providing bottles for sample submission
‘‘passes a significant cost to
manufacturers’’ and required
‘‘manufacturers to use the same vendor,
removing a company’s ability to
negotiate a reasonable price.’’ The
comment argued that continuing to pass
the cost on to manufacturers should be
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15:38 Nov 07, 2024
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‘‘factored into any decision to raise
fees.’’
(Response 13) In April 2024, we
notified color manufacturers that we
would stop providing bottles for sample
submission. We previously supplied
sample bottles to all color certification
customers. We stopped the service as
part of our overall effort to conserve
funds and reduce program costs. While
this action helped reduce some program
costs, the fee increase is still necessary
to cover many other program expenses.
Contrary to the claim in the comment,
we are not requiring manufacturers to
use the same vendor. The notice
instructs manufacturers to use the same
type of bottles because of our storage
limitations; however, the bottles are
available from multiple vendors.
(Comment 14) In arguing against the
fee increase, one comment asserted that
lower color certification volumes ‘‘can
most likely be attributed to destocking
occurring by companies with products
containing certified colors.’’ Because
companies are destocking certified
colors ‘‘that built up during the recent
COVID pandemic,’’ the comment
claimed that ‘‘manufacturers expect the
collection to adjust as companies work
through their existing stock.’’
(Response 14) We appreciate the
information about destocking, but
disagree with the suggestion. The color
certification program is sustained by
collected fees. Lower certification
volumes contribute to a reduction in the
amount of collected fees we receive.
This directly affects our ability to
provide, maintain, and equip an
adequate color certification program.
Relying on industry’s assertion that
collections will adjust does not resolve
the ongoing funding concerns of the
color certification program. Given that
collected fees are meant to cover the full
costs of the color certification program,
lower certification volumes support the
need for a fee increase.
(Comment 15) Using the example of
FD&C Red No. 3, one comment claimed
that ‘‘if a certified color suffers a
downward trend in response to
regulatory activity’’ by FDA, ‘‘the lab
should be able to foresee the resulting
impacts on its activity and cut costs
accordingly.’’ The comment stated that
the downward trend ‘‘should not be a
reason to trigger a fee increase.’’
(Response 15) We note that we
continue to certify batches of FD&C Red
No. 3 for its listed uses. We disagree
with the suggestion that FDA activities
related to certain color additive listings
triggered FDA’s proposed fee increase.
As discussed in our Fee Study,
collections that have not kept pace with
inflation and a diminishing carryover
PO 00000
Frm 00009
Fmt 4700
Sfmt 4700
88639
balance explain the need for a fee
increase. These funding concerns for the
color certification program predate
FDA’s filing of the pending color
additive petition requesting that FDA
remove the color additive listing for
FD&C Red No. 3 (88 FR 10245).
(Comment 16) One comment
expressed concern about ‘‘the lack of
communication and transparency’’ by
our color certification laboratory.
Specifically, the comment raised
questions and sought information about
FDA’s method development and
publication process.
(Response 16) This rule does not
cover methods development and
publication. These activities are outside
the scope of this rulemaking.
(Comment 17) A few comments
questioned the safety of FD&C Red. No.
40. They urged FDA to either ban this
color additive or, alternatively, replace
the additive in certain products.
(Response 17) The comments are
outside the scope of this rulemaking, so
we decline to address them.
V. Effective/Compliance Date(s)
The preamble to the proposed rule
stated that we would make any final
rule resulting from this rulemaking
effective 30 days after its date of
publication in the Federal Register (87
FR 66116 at 66117).
We did not receive any comments on
the proposed effective date for the final
rule. Therefore, the final rule will
become effective December 9, 2024.
VI. Economic Analysis of Impacts
A. Introduction
We have examined the impacts of the
final rule under Executive Order 12866,
Executive Order 13563, Executive Order
14094, the Regulatory Flexibility Act (5
U.S.C. 601–612), the Congressional
Review Act/Small Business Regulatory
Enforcement Fairness Act (5 U.S.C. 801,
Pub. L. 104–121), and the Unfunded
Mandates Reform Act of 1995 (Pub. L.
104–4).
Executive Orders 12866, 13563, and
14094 direct us to assess all benefits,
costs, and transfers of available
regulatory alternatives and, when
regulation is necessary, to select
regulatory approaches that maximize
net benefits (including potential
economic, environmental, public health
and safety, and other advantages;
distributive impacts; and equity). Rules
are ‘‘significant’’ under Executive Order
12866 Section 3(f)(1) (as amended by
Executive Order 14094) if they ‘‘have an
annual effect on the economy of $200
million or more (adjusted every 3 years
by the Administrator of [the Office of
E:\FR\FM\08NOR1.SGM
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Federal Register / Vol. 89, No. 217 / Friday, November 8, 2024 / Rules and Regulations
Information and Regulatory Affairs
(OIRA)] for changes in gross domestic
product); or adversely affect in a
material way the economy, a sector of
the economy, productivity, competition,
jobs, the environment, public health or
safety, or State, local, territorial, or tribal
governments or communities.’’ OIRA
has determined that this final rule is not
a significant regulatory action under
Executive Order 12866 Section 3(f)(1).
Because this rule is not likely to result
in an annual effect on the economy of
$100 million or more or meet other
criteria specified in the Congressional
Review Act/Small Business Regulatory
Enforcement Fairness Act, OIRA has
determined that this rule does not fall
within the scope of 5 U.S.C. 804(2).
The Regulatory Flexibility Act
requires us to analyze regulatory options
that would minimize any significant
impact of a rule on small entities.
Because the increase in fees for color
certification services would not
significantly increase costs to
manufacturers, we certify that the final
rule will not have a significant
economic impact on a substantial
number of small entities.
The Unfunded Mandates Reform Act
of 1995 (section 202(a)) requires us to
prepare a written statement, which
includes estimates of anticipated
impacts, before issuing ‘‘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 $183
million, using the most current (2023)
Implicit Price Deflator for the Gross
Domestic Product. This final rule will
not result in an expenditure in any year
that meets or exceeds this amount.
B. Overview of Benefits, Costs, and
Transfers
This final rule amends existing color
additive regulations by increasing fees
for certification services. The fee
schedule for color certification, as
provided for in this final rule, is
designed to cover all the costs of
operating FDA’s color certification
program. This includes both the cost of
specific tests required by the regulations
and the general costs associated with
the certification program, such as the
costs of accounting, reviewing data,
issuing certificates, conducting research,
inspecting establishments, and
purchasing and maintaining equipment.
The fee for certification services of
straight colors including lakes will
increase from $0.35 per pound to $0.45
per pound, with the minimum fee
increasing from $224 to $288. The fees
for repacks of certified color additives
and color additive mixtures will
increase from $35 for 100 pounds or less
to $45. The fee for repacks of certified
color additives and color additive
mixtures over 100 pounds, but not over
1,000 pounds will increase from $35
plus $0.06 for each pound over 100
pounds to $45 plus $0.08 for each
pound over 100 pounds. The fee for
repacks of certified color additives and
color additive mixtures over 1,000
pounds will increase from $89 plus
$0.02 for each pound over 1,000 pounds
to $114 plus $0.03 for each pound over
1,000 pounds.
The economic burdens of this final
rule accrue to color additive
manufacturers. We estimate a one-time
cost to read and understand the rule for
all color additive manufacturers. The
present value of this cost is
approximately $5,384 at a 3 percent rate
of discount and $5,183 at a 7 percent
rate of discount. The annualized value
of these cost estimates are
approximately $631 at a 3 percent
discount rate and $738 at a 7 percent
discount rate. Because the value of these
impacts is small relative to
manufacturer revenues, we assume that
the supply of color additives will not be
affected by this final rule. Consequently,
we estimate no other impacts associated
with this final rule.
As noted in the preamble, the fees are
intended to recover the full costs of
operating FDA’s color certification
program. Since 2005, the costs of the
certification program have significantly
increased as a result of escalating staff
payroll, rent, and facility charges, as
well as general operational expenses,
including purchasing and maintaining
equipment. As the increase in fees is not
associated with any change in FDA’s
certification program, no economic
benefits are expected to result from this
final rule. Similarly, the impact of the
increase in certification fees on color
additive manufacturers is considered a
transfer, rather than an economic cost.
Accordingly, we do not estimate
economic benefits associated with this
final rule, and the impact of the increase
in color certification fees is estimated as
an ongoing transfer from manufacturers
of color additives to the Federal
Government. Our estimates are
summarized in table 1.
TABLE 1—SUMMARY OF BENEFITS, COSTS, AND DISTRIBUTIONAL EFFECTS OF THE FINAL RULE
[Thousands of 2023 dollars]
Category
ddrumheller on DSK120RN23PROD with RULES1
Benefits:
Annualized monetized benefits ......................................
Annualized quantified, but non-monetized, benefits ......
Unquantified benefits .....................................................
Costs:
Annualized monetized costs ..........................................
Annualized quantified, but non-monetized, costs ..........
Unquantified costs .........................................................
Transfers:
Annualized monetized Federal budgetary transfers ......
Bearers of transfer gain and loss? ................................
Primary
estimate
Low
estimate
High
estimate
Dollar year
Discount
rate
(%)
Time
horizon
..................
..................
..................
..................
..................
..................
..................
..................
..................
..................
..................
..................
..................
..................
..................
..................
..................
..................
$0.63
$0.74
..................
..................
..................
..................
..................
..................
..................
..................
..................
..................
..................
..................
..................
..................
3
7
..................
..................
..................
..................
..................
..................
$2,507
$2,507
..................
..................
..................
..................
..................
..................
3
7
..................
..................
Bearer of transfer loss: Manufacturers
of color additives
Bearer of transfer gain: Federal Government
Effects
Notes
Category
Effects on State, local, or Tribal governments ..............
VerDate Sep<11>2014
15:38 Nov 07, 2024
Jkt 265001
PO 00000
Notes (e.g., risk
assumptions; source
citations; whether
inclusion of capital
effects differs across
low, primary, high
estimates; etc.)
No effect
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Federal Register / Vol. 89, No. 217 / Friday, November 8, 2024 / Rules and Regulations
88641
TABLE 1—SUMMARY OF BENEFITS, COSTS, AND DISTRIBUTIONAL EFFECTS OF THE FINAL RULE—Continued
[Thousands of 2023 dollars]
Primary
estimate
Category
Low
estimate
Category
This final rule generates costs to
small businesses, as well as transfers from small businesses to FDA
that we treat as costs from the perspective of the small business. On
average, these costs amount to approximately 0.25% of annual average revenues of the small firms in
the affected industry
Effects on wages ...........................................................
No Effect
Effects on growth ...........................................................
No Effect
VII. Analysis of Environmental Impact
We have determined under 21 CFR
25.30(h) that this action is of a type that
does not individually or cumulatively
have a significant effect on the human
environment. Therefore, neither an
environmental assessment nor an
environmental impact statement is
required.
VIII. Paperwork Reduction Act of 1995
This final rule contains no collection
of information. Therefore, clearance by
the Office of Management and Budget
under the Paperwork Reduction Act of
1995 is not required.
IX. Federalism
We have analyzed this final rule in
accordance with the principles set forth
in Executive Order 13132. We have
determined that the rule does not
contain policies that have substantial
direct effects on the States, on the
relationship between the National
Government and the States, or on the
distribution of power and
responsibilities among the various
levels of government. Accordingly, we
conclude that the rule does not contain
policies that have federalism
implications as defined in the Executive
order and, consequently, a federalism
summary impact statement is not
required.
15:38 Nov 07, 2024
Discount
rate
(%)
Jkt 265001
X. Consultation and Coordination With
Indian Tribal Governments
We have analyzed this rule in
accordance with the principles set forth
in Executive Order 13175. We have
determined that the rule does not
contain policies that have substantial
direct effects on one or more Indian
Tribes, on the relationship between the
Federal Government and Indian Tribes,
or on the distribution of power and
responsibilities between the Federal
Government and Indian Tribes.
Accordingly, we conclude that the rule
does not contain policies that have
tribal implications as defined in the
Executive order and, consequently, a
tribal summary impact statement is not
required.
XI. References
The following references are on
display at the Dockets Management Staff
(see ADDRESSES) and are available for
viewing by interested persons between
9 a.m. and 4 p.m. Monday through
Friday; they are also available
electronically at https://
www.regulations.gov. Although FDA
verified the website addresses in this
document, please note that websites are
subject to change over time.
1. FDA, ‘‘Color Certification Fee Study,’’
March 2024.
2. FDA, ‘‘Color Additive Certification;
Increase in Fees for Certification
Services’’ Final Regulatory Impact
Analysis, Final Regulatory Flexibility
Analysis, Unfunded Mandates Reform
Act Analysis. Available at https://
www.fda.gov/AboutFDA/
ReportsManualsForms/Reports/
EconomicAnalyses/default.htm.
PO 00000
Frm 00011
Fmt 4700
Time
horizon
Notes
Effects on small businesses ..........................................
VerDate Sep<11>2014
Dollar year
Effects
We have developed a comprehensive
Economic Analysis of Impacts that
assesses the impacts of the final rule.
The full analysis of economic impacts is
available in the docket for this final rule
(docket number FDA–2022–N–1635)
(Ref. 2) and at https://www.fda.gov/
about-fda/economics-staff/regulatoryimpact-analyses-ria.
ddrumheller on DSK120RN23PROD with RULES1
High
estimate
Notes (e.g., risk
assumptions; source
citations; whether
inclusion of capital
effects differs across
low, primary, high
estimates; etc.)
Sfmt 4700
List of Subjects in 21 CFR Part 80
Color additives, Cosmetics, Drugs,
Reporting and recordkeeping
requirements.
Therefore, under the Federal Food,
Drug, and Cosmetic Act and under
authority delegated to the Commissioner
of Food and Drugs, 21 CFR part 80 is
amended as follows:
PART 80—COLOR ADDITIVE
CERTIFICATION
1. The authority citation for part 80
continues to read as follows:
■
Authority: 21 U.S.C. 371, 379e.
2. In § 80.10, revise paragraphs (a) and
(b) to read as follows:
■
§ 80.10
Fees for certification services.
(a) Fees for straight colors including
lakes. The fee for the services provided
by the regulations in this part in the
case of each request for certification
submitted in accordance with
§ 80.21(j)(1) and (2) shall be $0.45 per
pound of the batch covered by such
requests, but no such fee shall be less
than $288.
(b) Fees for repacks of certified color
additives and color additive mixtures.
The fees for the services provided under
the regulations in this part in the case
of each request for certification
submitted in accordance with
§ 80.21(j)(3) and (4) shall be:
(1) 100 pounds or less—$45.
(2) Over 100 pounds but not over
1,000 pounds—$45 plus $0.08 for each
pound over 100 pounds.
(3) Over 1,000 pounds—$114 plus
$0.03 for each pound over 1,000
pounds.
*
*
*
*
*
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Federal Register / Vol. 89, No. 217 / Friday, November 8, 2024 / Rules and Regulations
Dated: October 30, 2024.
Robert M. Califf,
Commissioner of Food and Drugs.
[FR Doc. 2024–25974 Filed 11–7–24; 8:45 am]
BILLING CODE 4164–01–P
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 54
DEPARTMENT OF LABOR
Employee Benefits Security
Administration
29 CFR Parts 2560 and 2590
Extension of Certain Timeframes for
Employee Benefit Plans, Participants,
Beneficiaries, Qualified Beneficiaries,
and Claimants Affected by Hurricane
Helene, Tropical Storm Helene, or
Hurricane Milton
Employee Benefits Security
Administration, Department of Labor;
Internal Revenue Service, Department of
the Treasury.
ACTION: Extension of timeframes.
AGENCIES:
This document announces the
extension of certain timeframes under
the Employee Retirement Income
Security Act and the Internal Revenue
Code for group health plans, disability
and other welfare plans, pension plans,
and participants, beneficiaries, qualified
beneficiaries, and claimants of these
plans affected by Hurricane Helene,
Tropical Storm Helene, or Hurricane
Milton.
SUMMARY:
DATES:
November 8, 2024.
FOR FURTHER INFORMATION CONTACT:
ddrumheller on DSK120RN23PROD with RULES1
Department of Labor, Elizabeth
Schumacher or David Sydlik, Office of
Health Plan Standards and Compliance
Assistance, Employee Benefits Security
Administration, at 202–693–8335, and
Thomas Hindmarch, Office of
Regulations and Interpretations,
Employee Benefits Security
Administration, at 202–693–8500; or
William Fischer, Internal Revenue
Service, Department of the Treasury at
202–317–5500.
SUPPLEMENTARY INFORMATION:
I. Purpose
In this document, the Employee
Benefits Security Administration,
Department of Labor, Internal Revenue
Service, and Department of the Treasury
(the Agencies) are extending certain
timeframes otherwise applicable to
group health plans, disability and other
VerDate Sep<11>2014
15:38 Nov 07, 2024
Jkt 265001
welfare benefit plans, pension plans,
and their participants, beneficiaries,
qualified beneficiaries, and claimants
under the Employee Retirement Income
Security Act of 1974 (ERISA) and the
Internal Revenue Code of 1986 (the
Code), under the authority of section
518 of ERISA and section 7508A(b) of
the Code.1 2 In order to ensure that
plans, participants, beneficiaries,
qualified beneficiaries, and claimants in
disaster areas are not further adversely
affected by Hurricane Helene, Tropical
Storm Helene, and Hurricane Milton
with respect to their employee benefit
plans, certain timeframes are extended
during the Relief Period established by
this document, as explained in further
detail below.
As a result of Hurricane Helene,
Tropical Storm Helene, and Hurricane
Milton, participants, beneficiaries,
qualified beneficiaries, and claimants
covered by group health plans,
disability or other employee welfare
benefit plans, and employee pension
benefit plans may encounter problems
in exercising their health coverage
portability and continuation coverage
rights, or in filing or perfecting their
benefit claims. Recognizing the
numerous challenges such individuals
already face as a result of these natural
disasters, it is important that the
Agencies take steps to minimize the
possibility of such individuals losing
benefits because of a failure to comply
with certain pre-established timeframes.
Similarly, the Agencies recognize that
affected group health plans may have
difficulty in complying with the timing
of certain notice obligations.
The Agencies believe the relief
established by this document is
immediately needed to preserve and
1 ERISA section 518 and Code section 7508A(b)
generally provide that, in the case of an employee
benefit plan, sponsor, administrator, participant,
beneficiary, or other person with respect to such a
plan affected by a federally declared disaster (as
defined in section 162(i)(5) of the Code), a
terroristic or military action, or a public health
emergency declared by the Secretary of Health and
Human Services pursuant to section 319 of the
Public Health Service Act, notwithstanding any
other provision of law, the Secretaries of Labor and
the Treasury may prescribe (by notice or otherwise)
a period of up to 1 year that may be disregarded
in determining the date by which any action is
required or permitted to be completed. Section 518
of ERISA and section 7508A(b) of the Code further
provide that no plan shall be treated as failing to
be operated in accordance with the terms of the
plan solely as a result of complying with the
postponement of a deadline under those sections.
2 See, e.g., Hurricane Helene Recovery: Brief
Overview of FEMA Programs and Resources,
(October 3, 2024), available at https://
crsreports.congress.gov/product/pdf/IN/IN12429;
89 FR 84908 (October 24, 2024); 89 FR 84923
(October 24, 2024); 89 FR 84919 (October 24, 2024);
89 FR 84914 (October 24, 2024); 89 FR 84912
(October 24, 2024); 89 FR 84920 (October 24, 2024).
PO 00000
Frm 00012
Fmt 4700
Sfmt 4700
protect the benefits of participants,
beneficiaries, qualified beneficiaries,
and claimants in affected plans.
Accordingly, the Agencies have
determined, pursuant to section 553 of
the Administrative Procedure Act, 5
U.S.C. 553(b)(A), (B) and 553(d), that
there is good cause for granting the
relief provided by this document
effective immediately upon publication,
and that notice and public participation
may result in undue delay and,
therefore, be contrary to the public
interest.
This document has been reviewed by
the Department of Health and Human
Services (HHS), which has advised the
Agencies that HHS concurs with the
relief specified in this document in the
application of the laws under its
jurisdiction.3
HHS has advised the Agencies that
HHS encourages plan sponsors of nonFederal governmental plans and health
insurance issuers offering group or
individual health insurance coverage to
extend otherwise applicable timeframes
under titles XXII and XXVII of the
Public Health Service Act (PHS Act) 4
for participants, beneficiaries, and
3 Section 104 of Title I of the Health Insurance
Portability and Accountability Act of 1996 (HIPAA)
requires that the Secretaries of Labor, the Treasury,
and Health and Human Services (the Departments)
ensure through an interagency Memorandum of
Understanding (MOU) that regulations, rulings, and
interpretations issued by each of the Departments
relating to the same matter over which two or more
departments have jurisdiction, are administered so
as to have the same effect at all times. Under section
104 of HIPAA, the Departments, through the MOU,
are to provide for coordination of policies relating
to enforcement of the same requirements in order
to have a coordinated enforcement strategy that
avoids duplication of enforcement efforts and
assigns priorities in enforcement. See section 104 of
HIPAA and Memorandum of Understanding
applicable to Title XXVII of the PHS Act, Part 7 of
ERISA, and Chapter 100 of the Code, published at
64 FR 70164, December 15, 1999.
4 The applicable PHS Act provisions are (1) the
30-day period (or 60-day period, if applicable) to
request special enrollment under PHS Act section
2704(f); (2) the 60-day election period for COBRA
continuation coverage under PHS Act section 2205;
(3) the date for making COBRA premium payments
pursuant to PHS Act section 2202(2)(C) and (3); (4)
the date for individuals to notify the plan of a
qualifying event or determination of disability
under PHS Act section 2206(3); (5) the date within
which individuals may file a benefit claim under
the plan’s claims procedure pursuant to 45 CFR
147.136(b) (incorporating 29 CFR 2560.503–1); (6)
the date within which claimants may file an appeal
of an adverse benefit determination under the
plan’s claims procedure pursuant to 45 CFR
147.136(b) (incorporating 29 CFR 2560.503–1(h));
(7) the date within which claimants may file a
request for an external review after receipt of an
adverse benefit determination or final internal
adverse benefit determination pursuant to 45 CFR
147.136(c)(2)(vi) and (d)(2)(i), and (8) the date
within which a claimant may file information to
perfect a request for external review upon a finding
that the request was not complete pursuant to 45
CFR 147.136(d)(2)(ii).
E:\FR\FM\08NOR1.SGM
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]]>Agencies
[Federal Register Volume 89, Number 217 (Friday, November 8, 2024)]
[Rules and Regulations]
[Pages 88635-88642]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-25974]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Food and Drug Administration
21 CFR Part 80
[Docket No. FDA-2022-N-1635]
RIN 0910-AI69
Color Additive Certification; Increase in Fees for Certification
Services
AGENCY: Food and Drug Administration, HHS.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The Food and Drug Administration is amending the regulation
setting fees for color additive certification services to increase
these fees. This increase will allow FDA to continue to provide,
maintain, and equip an adequate color additive certification program as
required by the Federal Food, Drug, and Cosmetic Act (FD&C Act).
DATES: This rule is effective December 9, 2024.
ADDRESSES: 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 final rule into
the ``Search'' box and follow the prompts, and/or go to the Dockets
Management Staff, 5630 Fishers Lane, Rm. 1061, Rockville, MD 20852,
240-402-7500.
FOR FURTHER INFORMATION CONTACT:
With regard to the final rule: Bryan Bowes, Office of the Chief
Scientist, Office of Cosmetics and Colors, Food and Drug
Administration, 5001 Campus Dr., College Park, MD 20740, 240-402-1122;
or Carrol Bascus, Office of Policy, Regulations and Information, Human
Foods Program, Food and Drug Administration, 5001 Campus Dr., College
Park, MD 20740, 240-402-2378.
[[Page 88636]]
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Executive Summary
A. Purpose of the Final Rule
B. Summary of the Major Provisions of the Final Rule
C. Legal Authority
D. Costs and Benefits
II. Background
A. Need for the Regulation/History of the Rulemaking
B. Summary of Comments to the Proposed Rule
C. General Overview of the Final Rule
III. Legal Authority
IV. Comments on the Proposed Rule and FDA Response
A. Introduction
B. Description of Comments and FDA Response
V. Effective/Compliance Date(s)
VI. Economic Analysis of Impacts
A. Introduction
B. Overview of Benefits, Costs, and Transfers
VII. Analysis of Environmental Impact
VIII. Paperwork Reduction Act of 1995
IX. Federalism
X. Consultation and Coordination With Indian Tribal Governments
XI. References
I. Executive Summary
A. Purpose of the Final Rule
The Food and Drug Administration (FDA or we) is amending the
regulation setting fees for color additive certification services to
increase these fees. This increase will allow FDA to continue to
provide, maintain, and equip an adequate color additive certification
program as required by the FD&C Act. The fees will help to recover the
full costs of operating FDA's color additive certification program.
B. Summary of the Major Provisions of the Final Rule
The final rule amends the color additive regulation to increase the
fees for certification services. The fees for straight colors including
lakes will be $0.45 per pound ($0.10 per pound increase) with a minimum
fee of $288. There will be similar increases in fees for repacks of
certified color additives and color additive mixtures.
C. Legal Authority
We are issuing the final rule consistent with our statutory
authority, under the FD&C Act, which requires fees to provide,
maintain, and equip an adequate color additive certification program,
as specified in our regulations.
D. Costs and Benefits
The final rule amends existing color additive regulations to
increase fees for certification services. The costs of the rule include
the cost to read and understand the rule. As the increase in fees is
not associated with any change in our certification program, no
economic benefits are expected to result from the final rule.
Similarly, the impact of the increase in certification fees on color
additive manufacturers is considered a transfer, rather than an
economic cost. Accordingly, we do not estimate economic benefits
associated with this final rule, and the impact of the increase in
color certification fees is estimated as an ongoing transfer from
manufacturers of color additives to the Federal Government. The
economic burden of the final rule accrues to color additive
manufacturers. We estimate a one-time cost to read and understand the
rule for all color additive manufacturers. The present value of this
cost is approximately $5,384 at a 3 percent rate of discount, and
$5,183 at a 7 percent rate of discount. The annualized value of these
costs estimates is approximately $631 at a 3 percent discount rate and
$738 at a 7 percent discount rate.
II. Background
A. Need for the Regulation/History of the Rulemaking
In accordance with section 721(a)(1)(B) of the FD&C Act (21 U.S.C.
379e(a)(1)(B)), certain color additives must be certified for use by
FDA in food, drugs, cosmetics, and certain medical devices. Section
721(e) of the FD&C Act provides in relevant part that the certification
of color additives must only be performed upon payment of fees, to be
specified by regulation, as necessary to provide, maintain, and equip
an adequate service for such purpose. When certifying a color additive,
FDA analyzes samples from each batch of color additive received from a
manufacturer and verifies that it meets composition and purity
specifications. FDA certification is necessary before color additives
that are subject to certification are permitted to be used in these
FDA-regulated products. Under the color additive certification fee
regulation, manufacturers pay fees, based on the weight of each batch
for certification. These fees support the full costs of operating FDA's
color additive certification program.
The current fee schedule specified in part 80 (21 CFR part 80)
became effective in 2005 (and was amended in 2006 to correct a
typographical error). Since 2005, the costs of the certification
program have significantly increased because of the increase in general
operating expenses, including the purchase and maintenance of critical
equipment, rent and facility charges, and staff payroll. Therefore, in
the Federal Register of November 2, 2022 (87 FR 66116), we published a
proposed rule to amend the color additive regulation to increase the
fees for certification services. The change in fees will allow FDA to
continue to provide, maintain, and equip an adequate color additive
certification program as required by section 721(e) of the FD&C Act. We
proposed to increase the fees for certifying color additives to reflect
increasing operating costs for the certification program. The fee
schedule for color certification, as provided for in our regulations,
is designed to cover all the costs involved in certifying batches of
color additives. This includes the cost of specific tests required by
the regulations and the general costs associated with the certification
program, such as costs of accounting, reviewing data, issuing
certificates, conducting research, inspecting establishments, and
purchasing and maintaining equipment. The current fee schedule is
insufficient to provide, maintain, and equip an adequate color additive
certification program. As fees have not kept pace with inflation, we
have struggled to recover the full costs of operating FDA's color
certification program, resulting in a financial shortfall for the
program.
Our Color Certification Fee Study (Fee Study) (Ref. 1) provides
data and information about the current financial condition of the color
additive certification program. As noted in our Fee Study, in recent
years, successful operation of color certification activities has
relied upon prior year carryover funding to address a deficit between
program expenses and annual fee collections. This is not sustainable
because carryover funding and annual fee collections are diminishing
due to increased costs and low collections.
Therefore, the fee increase will help to ensure that collected fees
are sufficient to fund the full cost of our color certification
activities. Consistent with section 721(e) of the FD&C Act, the fee
increase in the final rule is necessary to cover rising operating costs
and maintain an adequate color additive certification program.
B. Summary of Comments to the Proposed Rule
The proposed rule provided a 60-day comment period. Based on a
request from stakeholders, we re-opened the comment period for an
additional 45 days (88 FR 4117 (January 24, 2023)). In April 2024, we
reopened the comment period a second time to add the Fee
[[Page 88637]]
Study to the docket (89 FR 32384 (April 26, 2024)). In May 2024, based
on a request from stakeholders, we extended the comment period again
for 30 days (89 FR 46042 (May 28, 2024)). We received fewer than 15
comments on the proposed rule. The comments were from individuals and
an industry trade association. A few comments supported the rulemaking.
Other comments raised questions and concerns about our rationale for
the $0.10 per pound increase. The comments urged FDA to provide
supporting data to justify the need for the fee increase.
We address the comments in more detail in section IV.
C. General Overview of the Final Rule
This final rule revises Sec. 80.10, ``Fees for certification
services,'' to:
increase the fee for certification services from $0.35 to
$0.45 per pound for straight colors including lakes, and change the
minimum fee from $224 to $288 (Sec. 80.10(a));
increase the fees for repacks of certified color additives
and color additive mixtures from $35 for 100 pounds or less to $45
(Sec. 80.10(b)(1));
increase the fees for repacks of certified color additives
and color additive mixtures over 100 pounds, but not over 1,000 pounds,
from $35 plus $0.06 for each pound over 100 pounds to $45 plus $0.08
for each pound over 100 pounds (Sec. 80.10(b)(2)); and
increase the fees for repacks of certified color additives
and color additive mixtures over 1,000 pounds from $89 plus $0.02 for
each pound over 1,000 pounds to $114 plus $0.03 for each pound over
1,000 pounds (Sec. 80.10(b)(3)).
The fee increase will help to ensure the continued viability of an
adequate certification program in accordance with section 721(e) of the
FD&C Act.
III. Legal Authority
FDA is issuing this final rule consistent with our authority under
section 721(e) of the FD&C Act which requires that fees necessary to
provide, maintain, and equip an adequate color additive certification
program be specified in our regulations. FDA is also issuing this final
rule under section 701(a) of the FD&C Act (21 U.S.C. 371(a)), which
gives us the authority to issue regulations for the efficient
enforcement of the FD&C Act.
IV. Comments on the Proposed Rule and FDA Response
A. Introduction
We received fewer than 15 comments on the proposed rule. The
comments were from individuals and an industry trade association. Some
comments supported the rulemaking, including a few that expressed
general support without focusing on a particular provision in the
proposed rule. Other comments questioned the fee increase and asked
that we provide additional information to support the increase in fees.
Some comments expressed concerns about our rationale for the $0.10 per
pound increase for straight colors including lakes and urged FDA to
explain the need more thoroughly for the fee increase. One comment
suggested that we consider an alternative increase of $0.05 per pound
instead of the proposed fee of $0.10 per pound, which they stated,
would significantly impact costs for color manufacturers. Another
comment questioned if the color certification fee is used only to fund
activities that support color certification. A comment also argued that
annual financial reserves would be sufficient to allow the program to
operate with no additional fee increase.
We describe and respond to the comments in section B of this
document. We numbered each comment to help distinguish between
different comments. We grouped similar comments together under the same
number, and, in some cases, we separated different issues discussed in
the same comment and designated them as distinct comments for purposes
of our responses. The number assigned to each comment or comment topic
is purely for organizational purposes and does not signify the
comment's value or importance or the order in which comments were
received.
B. Description of Comments and FDA Response
(Comment 1) A few comments expressed general support for FDA's
color additive certification program. The comments stated that the
regulations, ``particularly for food and cosmetics products are
necessary to ensure the safety and well-being of Americans.'' With
respect to the proposed fee increase in the proposed rule, one comment
stated that the proposed rule ``would aid funding of a federal agency,
but it would take into account recent inflation.'' Another comment
noted that ``recovering the operational costs will provide the FDA with
more resources to test and evaluate color additives in consumer
products, which could help protect public health.''
(Response 1) We agree that the final rule will help FDA's color
additive certification program by covering the increased costs of
certifying the color additives. The fee increase will also benefit
public health by maintaining an adequate certification program that
continues to ensure the safety of the color additives used in food and
other products.
(Comment 2) One comment stated that ``there does not seem to be
reason for the sudden want to increase the fees.'' It suggests that the
process for analyzing color additives has not changed much and asserts
that ``an explanation that more thoroughly explains the need to spend
more on analyzing color additives'' should be provided.
(Response 2) As stated in the proposed rule, the current fee
schedule is insufficient to provide, maintain, and equip an adequate
color additive certification program (87 FR 66116 at 66117). In our Fee
Study, we explain that a diminishing prior year carryover and reduced
collections is placing the color certification program in a financially
precarious position, necessitating the fee increase. Further, the
funding shortfall prevents FDA from updating and replacing laboratory
equipment necessary for color certification. The additional funding
will allow FDA to replace obsolete items and invest in new laboratory
equipment, contributing to the overall efficiency of the certification
program, and ensure we cover all the costs of our color certification
activities and continue to meet our statutory obligation to maintain an
adequate certification program in accordance with section 721(e) of the
FD&C Act.
(Comment 3) One comment agreed with the necessity to adjust fees
and our goal of maintaining an effective certification program.
However, the comment noted that ``careful consideration is warranted to
strike a balance between covering program costs and avoiding undue
financial burden on manufacturers.'' It also stated that we must
``assess the proposed fee adjustment to ensure they are reasonable and
justified.''
(Response 3) We carefully considered the need for the fee increase
and decided on an amount that would help to ensure funding to provide,
maintain, and equip an adequate color certification program. Our Fee
Study further explains and illustrates the funding challenges we are
experiencing in the color certification program. We did not raise color
certification fees for almost 20 years. As a result, in recent years,
collections have cumulatively lagged behind expenditures by more than
$3 million (Ref. 1). This is causing significant funding shortfalls and
preventing the color certification
[[Page 88638]]
program from operating efficiently (e.g., causing longer batch
certification times). Also, as described in the previous response,
additional funding will allow FDA to replace obsolete items and invest
in new laboratory equipment. Therefore, it is necessary to increase the
fees to ensure collected fees cover all the costs of our color
certification activities as required by law. In light of the increased
costs of the color certification program, the increase in fees is
reasonable and justified.
(Comment 4) One comment disagreed with the proposed rule and stated
that it was ``not sufficiently clear as to the accounting or the
rationale to warrant a $0.10 per pound increase.'' The comment asserted
that the last fee increase was $0.05 per pound and ``based on recent
account figures, even a $0.05 increase would be sufficient.''
(Response 4) Our Fee Study lists the costs and the collections for
the color additive certification program. Color certification fees have
not kept up with inflation and as a result, current collections are not
sufficient to sustain the program. The Fee Study also compared the
proposed increase to an alternate amount of $0.05. The resulting
estimates show that an increase that is 50 percent less than the
proposed $0.10 per pound would not be sufficient to maintain an
adequate color certification program. The last color certification fees
increase was almost 20 years ago. Given the current funding shortfall,
the increase is necessary to sustain and maintain an adequate color
additive certification program.
(Comment 5) One comment that opposed the proposed fee increase
argued that the proposed rule does not ``explain or identify with any
specificity where increases in operating costs'' may warrant the
increase.
(Response 5) We disagree with this assertion. In the proposed rule,
we stated ``since 2005, the costs of the certification program have
significantly increased because of general operating expenses,
including the purchase and maintenance of critical equipment, rent and
facility charges, and escalating staff payroll'' (87 FR 66116 at
66117). We also added a Fee Study to the administrative record to
explain the funding challenges for the certification program as well as
provide additional information to support the fee increase.
(Comment 6) One comment asserted that the proposal to increase the
fee by $0.10 per pound ``is a more significant increase than the agency
has proposed in the past.''
(Response 6) The comment's assertion is incorrect. In 1982, we also
implemented a $0.10 per pound increase (47 FR 24691, June 8, 1982).
(Comment 7) One comment suggested that if we are not able to
justify the need for a $0.10 per pound increase, we should provide for
a $0.05 increase as we have done previously.
(Response 7) We have justified the need for a $0.10 per pound
increase. Our Fee Study provides additional information to support this
increase. The data and information show that dwindling carryover
balances, coupled with reduced collections and high inflation, are not
sufficient to sustain an adequate color additive certification program
as required by the FD&C Act. Without the fee increase, continuing
shortfalls will limit the operation of the color certification program.
Therefore, a $0.10 per pound increase is necessary to provide,
maintain, and equip an adequate color certification program.
(Comment 8) One comment recommended that FDA establish a maximum
fee of $1,600 for batches of 4,000 pounds or more. Further, the comment
said this would incentivize industry to submit larger batches while
also saving Agency resources.
(Response 8) We disagree with the comment. If implemented, the
maximum fee proposed by the comment would be based on a certification
fee of $0.40 per pound, a $0.05 increase over the current fee. As
outlined in our Fee Study, an increase of $0.05 per pound is not
sufficient to maintain an adequate color certification program.
(Comment 9) One comment expressed concern about whether color
certification fees were being used to only fund color certification
activities. Specifically, the comment questioned if the lab equipment
in the color certification lab ``are used solely for the certification
of color additives.'' Further, the comment questioned if ``all the
costs accounted for in the Study provided, such as payroll costs and
equipment usage, are specific to color certification activities.'' The
comment asserted that ``equipment used for activities beyond color
certification should not serve as the basis for a fee increase.''
(Response 9): Certification fees are used to cover the costs of the
color certification program and are not used to support unrelated
activities. To ensure the safety of color additives, the color
certification program engages in many functions, including testing,
research, methods development, publication of scientific research,
subject matter expertise for inspections of color additive
manufacturers, as well as other related administrative and operational
activities. Fees are collected, pooled, and used to support all color
certification-related activities. As outlined in the Fee Study,
collected fees are used to fund labor (e.g., payroll) and nonpayroll
operating expenses (e.g., equipment usage) because such activities are
necessary to provide, maintain, and equip an adequate color additive
certification program, as required by the FD&C Act.
(Comment 10) One comment opposed the proposed rule and stated that
``recent account figures provide no basis or suggest any financial
deficit that would require a fee increase.'' Further, the comment
asserted that the ``Lab has a financial reserve that would allow the
Lab to operate with no additional fee increase.'' The comment argued
that the certification program ``does not operate on deficit spending
and typically has carryover from year-to-year.'' For these reasons, the
comment questioned the need for the proposed fee increase.
(Response 10) We disagree with the comment. Our Fee Study provides
data and information that describes the current financial condition of
the color additive certification program. The Fee Study explains that
we previously relied upon prior year carryover funding to address the
deficit between program expenses and annual fee collections. However,
carryover funding and annual fee collections are diminishing due to low
collections and the increased costs of maintaining an adequate
certification program, which make the fee increases necessary. Relying
on the carryover balance is no longer viable to support the color
certification program.
(Comment 11) Another comment suggested that we ``establish a policy
on the management of the color certification lab's reserves.'' The
policy would ``ensure the agency is maintaining an appropriate reserve
and that future refunds or fee increases are based on specific
metrics.''
(Response 11) Fees that are collected and not obligated at the end
of the fiscal year are available to support the color certification
program in future fiscal years. We refer to this as ``carryover'' while
the comment refers to these funds as ``reserves.'' The FDA color
certification program maintains a modest carryover balance to operate
the color certification program successfully, which enables us to
mitigate financial risks to the color certification program, such as
the risk of under collecting fees and issues relating to funds
availability during the transition to a new fiscal year. FDA constantly
monitors and analyzes its carryover balance, but, due to the complexity
of program operations, it is unrealistic to target a specific reserve
balance as several factors outside of our control impact
[[Page 88639]]
funds availability, including fee collections, inflation, unexpected
equipment costs, etc. As explained in our Fee Study, we cannot rely on
dwindling carryover balances to sustain the color certification
program. A fee increase is necessary to cover the full costs of our
color certification activities.
(Comment 12) Another comment stated that a ``manufacturer's
suggested end-of-life is not indicative of an equipment's actual
lifespan'' and that ``the lab should be able to continue to utilize any
equipment that is still operable.'' The comments speculated if there
are reasons beyond end-of-life that explain why we are seeking new
equipment and ``would new equipment result in a demonstrable benefit to
the companies receiving certification?''
(Response 12) We agree that the manufacturer's suggested end-of-
life does not mean that a piece of laboratory equipment is no longer
useful. However, when the manufacturer stops servicing the laboratory
equipment, it can be costly and inefficient to maintain the aged items.
We require properly functioning laboratory equipment to conduct color
certification activities and maintain an adequate color certification
program. It would not be prudent for us to wait for equipment to fail
before seeking to replace it because this would contribute to delays in
the color certification process and reduce the program's efficiency.
Therefore, when a manufacturer notifies us that a piece of equipment is
reaching end-of-life, we begin the procurement process to obtain new
equipment. The procurement process is lengthy and can take months. In
recent years, we were unable to purchase new equipment because of
ongoing budget concerns.
The fee increase will help to resolve budget concerns and enable us
to timely purchase new, more efficient equipment to replace those items
that have reached end-of life, cannot be maintained, or are obsolete.
The fee increase will also help to address delays in batch
certification times caused by reduced resources. The purchase of new
equipment will allow FDA to maintain an adequate color certification
program while supporting efficient operations, which, in turn, benefits
companies that require certification.
(Comment 13) One comment stated that our recent decision to stop
providing bottles for sample submission ``passes a significant cost to
manufacturers'' and required ``manufacturers to use the same vendor,
removing a company's ability to negotiate a reasonable price.'' The
comment argued that continuing to pass the cost on to manufacturers
should be ``factored into any decision to raise fees.''
(Response 13) In April 2024, we notified color manufacturers that
we would stop providing bottles for sample submission. We previously
supplied sample bottles to all color certification customers. We
stopped the service as part of our overall effort to conserve funds and
reduce program costs. While this action helped reduce some program
costs, the fee increase is still necessary to cover many other program
expenses. Contrary to the claim in the comment, we are not requiring
manufacturers to use the same vendor. The notice instructs
manufacturers to use the same type of bottles because of our storage
limitations; however, the bottles are available from multiple vendors.
(Comment 14) In arguing against the fee increase, one comment
asserted that lower color certification volumes ``can most likely be
attributed to destocking occurring by companies with products
containing certified colors.'' Because companies are destocking
certified colors ``that built up during the recent COVID pandemic,''
the comment claimed that ``manufacturers expect the collection to
adjust as companies work through their existing stock.''
(Response 14) We appreciate the information about destocking, but
disagree with the suggestion. The color certification program is
sustained by collected fees. Lower certification volumes contribute to
a reduction in the amount of collected fees we receive. This directly
affects our ability to provide, maintain, and equip an adequate color
certification program. Relying on industry's assertion that collections
will adjust does not resolve the ongoing funding concerns of the color
certification program. Given that collected fees are meant to cover the
full costs of the color certification program, lower certification
volumes support the need for a fee increase.
(Comment 15) Using the example of FD&C Red No. 3, one comment
claimed that ``if a certified color suffers a downward trend in
response to regulatory activity'' by FDA, ``the lab should be able to
foresee the resulting impacts on its activity and cut costs
accordingly.'' The comment stated that the downward trend ``should not
be a reason to trigger a fee increase.''
(Response 15) We note that we continue to certify batches of FD&C
Red No. 3 for its listed uses. We disagree with the suggestion that FDA
activities related to certain color additive listings triggered FDA's
proposed fee increase. As discussed in our Fee Study, collections that
have not kept pace with inflation and a diminishing carryover balance
explain the need for a fee increase. These funding concerns for the
color certification program predate FDA's filing of the pending color
additive petition requesting that FDA remove the color additive listing
for FD&C Red No. 3 (88 FR 10245).
(Comment 16) One comment expressed concern about ``the lack of
communication and transparency'' by our color certification laboratory.
Specifically, the comment raised questions and sought information about
FDA's method development and publication process.
(Response 16) This rule does not cover methods development and
publication. These activities are outside the scope of this rulemaking.
(Comment 17) A few comments questioned the safety of FD&C Red. No.
40. They urged FDA to either ban this color additive or, alternatively,
replace the additive in certain products.
(Response 17) The comments are outside the scope of this
rulemaking, so we decline to address them.
V. Effective/Compliance Date(s)
The preamble to the proposed rule stated that we would make any
final rule resulting from this rulemaking effective 30 days after its
date of publication in the Federal Register (87 FR 66116 at 66117).
We did not receive any comments on the proposed effective date for
the final rule. Therefore, the final rule will become effective
December 9, 2024.
VI. Economic Analysis of Impacts
A. Introduction
We have examined the impacts of the final rule under Executive
Order 12866, Executive Order 13563, Executive Order 14094, the
Regulatory Flexibility Act (5 U.S.C. 601-612), the Congressional Review
Act/Small Business Regulatory Enforcement Fairness Act (5 U.S.C. 801,
Pub. L. 104-121), and the Unfunded Mandates Reform Act of 1995 (Pub. L.
104-4).
Executive Orders 12866, 13563, and 14094 direct us to assess all
benefits, costs, and transfers of available regulatory alternatives
and, when regulation is necessary, to select regulatory approaches that
maximize net benefits (including potential economic, environmental,
public health and safety, and other advantages; distributive impacts;
and equity). Rules are ``significant'' under Executive Order 12866
Section 3(f)(1) (as amended by Executive Order 14094) if they ``have an
annual effect on the economy of $200 million or more (adjusted every 3
years by the Administrator of [the Office of
[[Page 88640]]
Information and Regulatory Affairs (OIRA)] for changes in gross
domestic product); or adversely affect in a material way the economy, a
sector of the economy, productivity, competition, jobs, the
environment, public health or safety, or State, local, territorial, or
tribal governments or communities.'' OIRA has determined that this
final rule is not a significant regulatory action under Executive Order
12866 Section 3(f)(1).
Because this rule is not likely to result in an annual effect on
the economy of $100 million or more or meet other criteria specified in
the Congressional Review Act/Small Business Regulatory Enforcement
Fairness Act, OIRA has determined that this rule does not fall within
the scope of 5 U.S.C. 804(2).
The Regulatory Flexibility Act requires us to analyze regulatory
options that would minimize any significant impact of a rule on small
entities. Because the increase in fees for color certification services
would not significantly increase costs to manufacturers, we certify
that the final rule will not have a significant economic impact on a
substantial number of small entities.
The Unfunded Mandates Reform Act of 1995 (section 202(a)) requires
us to prepare a written statement, which includes estimates of
anticipated impacts, before issuing ``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 $183
million, using the most current (2023) Implicit Price Deflator for the
Gross Domestic Product. This final rule will not result in an
expenditure in any year that meets or exceeds this amount.
B. Overview of Benefits, Costs, and Transfers
This final rule amends existing color additive regulations by
increasing fees for certification services. The fee schedule for color
certification, as provided for in this final rule, is designed to cover
all the costs of operating FDA's color certification program. This
includes both the cost of specific tests required by the regulations
and the general costs associated with the certification program, such
as the costs of accounting, reviewing data, issuing certificates,
conducting research, inspecting establishments, and purchasing and
maintaining equipment. The fee for certification services of straight
colors including lakes will increase from $0.35 per pound to $0.45 per
pound, with the minimum fee increasing from $224 to $288. The fees for
repacks of certified color additives and color additive mixtures will
increase from $35 for 100 pounds or less to $45. The fee for repacks of
certified color additives and color additive mixtures over 100 pounds,
but not over 1,000 pounds will increase from $35 plus $0.06 for each
pound over 100 pounds to $45 plus $0.08 for each pound over 100 pounds.
The fee for repacks of certified color additives and color additive
mixtures over 1,000 pounds will increase from $89 plus $0.02 for each
pound over 1,000 pounds to $114 plus $0.03 for each pound over 1,000
pounds.
The economic burdens of this final rule accrue to color additive
manufacturers. We estimate a one-time cost to read and understand the
rule for all color additive manufacturers. The present value of this
cost is approximately $5,384 at a 3 percent rate of discount and $5,183
at a 7 percent rate of discount. The annualized value of these cost
estimates are approximately $631 at a 3 percent discount rate and $738
at a 7 percent discount rate. Because the value of these impacts is
small relative to manufacturer revenues, we assume that the supply of
color additives will not be affected by this final rule. Consequently,
we estimate no other impacts associated with this final rule.
As noted in the preamble, the fees are intended to recover the full
costs of operating FDA's color certification program. Since 2005, the
costs of the certification program have significantly increased as a
result of escalating staff payroll, rent, and facility charges, as well
as general operational expenses, including purchasing and maintaining
equipment. As the increase in fees is not associated with any change in
FDA's certification program, no economic benefits are expected to
result from this final rule. Similarly, the impact of the increase in
certification fees on color additive manufacturers is considered a
transfer, rather than an economic cost. Accordingly, we do not estimate
economic benefits associated with this final rule, and the impact of
the increase in color certification fees is estimated as an ongoing
transfer from manufacturers of color additives to the Federal
Government. Our estimates are summarized in table 1.
Table 1--Summary of Benefits, Costs, and Distributional Effects of the Final Rule
[Thousands of 2023 dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Notes (e.g., risk assumptions;
Primary Low High Dollar Discount Time source citations; whether inclusion
Category estimate estimate estimate year rate (%) horizon of capital effects differs across
low, primary, high estimates; etc.)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Benefits:
Annualized monetized benefits......... .......... .......... .......... .......... .......... .......... ....................................
Annualized quantified, but non- .......... .......... .......... .......... .......... .......... ....................................
monetized, benefits.
Unquantified benefits................. .......... .......... .......... .......... .......... .......... ....................................
Costs:
Annualized monetized costs............ $0.63 .......... .......... .......... 3 .......... ....................................
$0.74 .......... .......... .......... 7 .......... ....................................
Annualized quantified, but non- .......... .......... .......... .......... .......... .......... ....................................
monetized, costs.
Unquantified costs.................... .......... .......... .......... .......... .......... .......... ....................................
Transfers:
Annualized monetized Federal budgetary $2,507 .......... .......... .......... 3 .......... ....................................
transfers.
$2,507 .......... .......... .......... 7 .......... ....................................
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Bearers of transfer gain and loss?.... Bearer of transfer loss:
Manufacturers of color additives
Bearer of transfer gain: Federal Government
--------------------------------------------------------------------------------------------------------------------------------------------------------
Category Effects
Notes
--------------------------------------------------------------------------------------------------------------------------------------------------------
Effects on State, local, or Tribal No effect
governments.
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[[Page 88641]]
Effects on small businesses........... This final rule generates costs to
small businesses, as well as
transfers from small businesses to
FDA that we treat as costs from
the perspective of the small
business. On average, these costs
amount to approximately 0.25% of
annual average revenues of the
small firms in the affected
industry
-------------------------------------------------------------------------------------------------------------
Effects on wages...................... No Effect
-------------------------------------------------------------------------------------------------------------
Effects on growth..................... No Effect
--------------------------------------------------------------------------------------------------------------------------------------------------------
We have developed a comprehensive Economic Analysis of Impacts that
assesses the impacts of the final rule. The full analysis of economic
impacts is available in the docket for this final rule (docket number
FDA-2022-N-1635) (Ref. 2) and at https://www.fda.gov/about-fda/economics-staff/regulatory-impact-analyses-ria.
VII. Analysis of Environmental Impact
We have determined under 21 CFR 25.30(h) that this action is of a
type that does not individually or cumulatively have a significant
effect on the human environment. Therefore, neither an environmental
assessment nor an environmental impact statement is required.
VIII. Paperwork Reduction Act of 1995
This final rule contains no collection of information. Therefore,
clearance by the Office of Management and Budget under the Paperwork
Reduction Act of 1995 is not required.
IX. Federalism
We have analyzed this final rule in accordance with the principles
set forth in Executive Order 13132. We have determined that the rule
does not contain policies that have substantial direct effects on the
States, on the relationship between the National Government and the
States, or on the distribution of power and responsibilities among the
various levels of government. Accordingly, we conclude that the rule
does not contain policies that have federalism implications as defined
in the Executive order and, consequently, a federalism summary impact
statement is not required.
X. Consultation and Coordination With Indian Tribal Governments
We have analyzed this rule in accordance with the principles set
forth in Executive Order 13175. We have determined that the rule does
not contain policies that have substantial direct effects on one or
more Indian Tribes, on the relationship between the Federal Government
and Indian Tribes, or on the distribution of power and responsibilities
between the Federal Government and Indian Tribes. Accordingly, we
conclude that the rule does not contain policies that have tribal
implications as defined in the Executive order and, consequently, a
tribal summary impact statement is not required.
XI. References
The following references are on display at the Dockets Management
Staff (see ADDRESSES) and are available for viewing by interested
persons between 9 a.m. and 4 p.m. Monday through Friday; they are also
available electronically at https://www.regulations.gov. Although FDA
verified the website addresses in this document, please note that
websites are subject to change over time.
1. FDA, ``Color Certification Fee Study,'' March 2024.
2. FDA, ``Color Additive Certification; Increase in Fees for
Certification Services'' Final Regulatory Impact Analysis, Final
Regulatory Flexibility Analysis, Unfunded Mandates Reform Act
Analysis. Available at https://www.fda.gov/AboutFDA/ReportsManualsForms/Reports/EconomicAnalyses/default.htm.
List of Subjects in 21 CFR Part 80
Color additives, Cosmetics, Drugs, Reporting and recordkeeping
requirements.
Therefore, under the Federal Food, Drug, and Cosmetic Act and under
authority delegated to the Commissioner of Food and Drugs, 21 CFR part
80 is amended as follows:
PART 80--COLOR ADDITIVE CERTIFICATION
0
1. The authority citation for part 80 continues to read as follows:
Authority: 21 U.S.C. 371, 379e.
0
2. In Sec. 80.10, revise paragraphs (a) and (b) to read as follows:
Sec. 80.10 Fees for certification services.
(a) Fees for straight colors including lakes. The fee for the
services provided by the regulations in this part in the case of each
request for certification submitted in accordance with Sec.
80.21(j)(1) and (2) shall be $0.45 per pound of the batch covered by
such requests, but no such fee shall be less than $288.
(b) Fees for repacks of certified color additives and color
additive mixtures. The fees for the services provided under the
regulations in this part in the case of each request for certification
submitted in accordance with Sec. 80.21(j)(3) and (4) shall be:
(1) 100 pounds or less--$45.
(2) Over 100 pounds but not over 1,000 pounds--$45 plus $0.08 for
each pound over 100 pounds.
(3) Over 1,000 pounds--$114 plus $0.03 for each pound over 1,000
pounds.
* * * * *
[[Page 88642]]
Dated: October 30, 2024.
Robert M. Califf,
Commissioner of Food and Drugs.
[FR Doc. 2024-25974 Filed 11-7-24; 8:45 am]
BILLING CODE 4164-01-P
