[Federal Register Volume 59, Number 228 (Tuesday, November 29, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-29381]

[[Page Unknown]]

[Federal Register: November 29, 1994]


21 CFR Part 80

[Docket No. 94C-0041]


Color Additive Certification; Increase in Fees For Certification 

AGENCY: Food and Drug Administration, HHS.

ACTION: Interim rule; opportunity for public comment.


SUMMARY: The Food and Drug Administration (FDA) is amending the color 
additive regulations by increasing the fees for certification services. 
The change in fees will allow FDA to continue to maintain an adequate 
color certification program as required by the Federal Food, Drug, and 
Cosmetic Act (the act). The fees are intended to recover the full costs 
of operation of FDA's color certification program, including the 
unfunded liability of the Civil Service Retirement Fund and the 
appropriate overhead costs of the Public Health Service (PHS) and the 
Department of Health and Human Services (DHHS).

DATES: Effective December 29, 1994; written comments by February 13, 

ADDRESSES: Submit written comments to the Dockets Management Branch 
(HFA-305), Food and Drug Administration, rm. 1-23, 12420 Parklawn Dr., 
Rockville, MD 20857.

FOR FURTHER INFORMATION CONTACT: David R. Petak, Accounting Branch 
(HFA-120), Food and Drug Administration, 5600 Fishers Lane, Rockville, 
MD 20857, 301-443-1766.


I. Background

    FDA is increasing the fees now provided for in its regulations for 
certifying color additives. This increase is necessary because of a 
general increase in all costs of operating the certification program.
    The current fee schedule specified in the regulations became 
effective in 1982. While costs of the certification program have 
increased through the years, until 1991, the steady growth of the color 
additive market and corresponding increase in the batches certified 
generated sufficient revenue to cover these increased costs. Since 
1991, however, the volume of batches certified has leveled off, while 
the costs have continued to rise at approximately 10 percent per year.
    Sections 721(e) of the act (21 U.S.C. 379e(e)) requires that fees 
necessary to provide, maintain, and equip an adequate color additive 
certification program be specified in agency regulations. As is 
evidenced by the deficit incurred during fiscal year 1993, the current 
fee schedule is insufficient to provide, equip, and maintain an 
adequate certification service. Therefore, an immediate increase is 
necessary. All cost estimates are described in the ``1993 Color 
Certification Fee Study.''A copy of this document is on file at the 
Dockets Management Branch (address above).
    The fee schedule for color additive certification is designed to 
cover all the costs involved in certifying batches of color additives. 
This includes both 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, and conducting research and establishment inspections. 
However, previous fees have not reflected all applicable overhead costs 
for the program. The new fee schedule reflects these overhead costs, 
including costs of management support provided by both PHS and DHHS, 
personnel costs for the unfunded liability portion of the Civil Service 
Retirement Fund, and ancillary costs of space, equipment, and supplies. 
The agency has concluded that it is necessary to include these costs in 
the calculation of the fees to ensure that the fees fully cover the 
costs of certification. The new fee schedule is consistent with costs 
included in the 1991 fee adjustment for certifying insulin (56 FR 
50248, October 4, 1991).
    The fee for straight colors including lakes is $.30 per pound (a 
$.05 per pound increase) with a minimum fee of $192. There are similar 
increases in fees for repacks of certified color additives and color 
additive mixtures. In addition, the fees will increase at a rate that 
is proportional to Federal salary increases, commencing with pay raises 
on or after January 1, 1996. This provision permits FDA to set initial 
fees lower than they would otherwise be set. Further fee adjustments 
based on increased FDA salary costs should permit revenues and expenses 
to remain in balance. Before FDA implements the further fee escalation 
provision, the agency plans to issue a final rule that will address any 
comments that may be submitted on this provision. Also, if the agency 
unexpectedly finds itself with substantial retained earnings after the 
fee escalation provision is finalized, the agency may make refunds 
available to color manufacturers as it has done in the past. The agency 
will publish a notice in the Federal Register when there is a fee 

II. Effective Date and Opportunity for Public Comment

    The agency is issuing this amendment as an interim rule effective 
December 29, 1994. The establishment of fees necessary to provide, 
equip, and maintain an adequate certification service for colors has 
been mandated by Congress under section 721(e) of the act. As 
certification services are provided to industry directly by FDA, the 
setting of a fee schedule to pay for these services is a matter 
particularly within the purview and expertise of the agency. The fees 
established by this regulation have been based on cost accounting 
methods using data compiled by the agency. The fees reflect the charges 
for overhead and unfunded liability of the Civil Service Retirement 
System. If the new fee schedule is not put in place soon, FDA will not 
be able to respond to the industry demands for color certification 
services as described above, with resulting delays and added costs to 
industry. Moreover, money to operate the color certification program is 
being drawn from retained earnings pending revision of the basis on 
which fees are calculated. For all of these reasons, under 5 U.S.C. 
553(b)(B) FDA finds that providing for notice and public comment prior 
to the establishment of these fees, and for revising the basis on which 
these fees are calculated, is contrary to the public interest.
    The agency believes, however, that it is appropriate to invite and 
consider public comments on these requirements. Therefore, under 
Sec. 10.40(e) (21 CFR 10.40(e)), interested persons may, on or before 
February 13, 1995, submit to the Dockets Management Branch (address 
above) written comments regarding this document. The agency will use 
any comments received to determine whether the interim rule should be 
modified. Two copies of any comments are to be submitted, except that 
individuals may submit one copy. Comments are to be identified with the 
docket number found in brackets in the heading of this document. 
Received comments may be seen in the Dockets Management Branch between 
9 a.m. and 4 p.m., Monday through Friday.

III. Analysis of Impacts

    FDA has examined the impacts of the proposed rule under Executive 
Order 12866 and the Regulatory Flexibility Act (Pub. L. 96-354). 
Executive Order 12866 directs agencies to assess all costs and benefits 
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). The agency believes that 
this proposed rule is consistent with the regulatory philosophy and 
principles identified in the Executive Order. In addition, the proposed 
rule is not a significant regulatory action as defined by the Executive 
Order and so is not subject to review under the Executive Order.
    The Regulatory Flexibility Act requires agencies to analyze 
regulatory options that would minimize any significant impact of a rule 
on small entities. The entire cost of this fee increase would be 
approximately $450,000 per year and would be distributed amongst 
approximately 40 companies who would pay an increased fee that is 
proportional to the number of pounds of color that they certify. The 
great majority of these costs will be borne by a few firms that have a 
dominate share of the market. Thus, the agency certifies that the 
proposed rule will not have a significant economic impact on a 
substantial number of small entities. Therefore, under the Regulatory 
Flexibility Act, no further analysis is required.

IV. Environmental Impact

    The agency has determined under 21 CFR 25.24(a)(8) 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 

List of Subjects in 21 CFR Part 80

    Color additives, Cosmetics, Drugs, Reporting and recordkeeping 
    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:


    1. The authority citation for 21 CFR part 80 continues to read as 

    Authority: Secs. 701, 721 of the Federal Food, Drug, and 
Cosmetic Act (21 U.S.C. 371, 379e).

    2. Section 80.10 is amended by revising paragraphs (a) and (b), by 
redesignating paragraphs (c) through (e) as (d) through (f), and by 
adding new paragraph (c) 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 (j)(2) shall be 30 cents per pound of the batch covered by such 
requests, but no such fee shall be less than $192.
    (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 (j)(4) shall be:
    (1) 100 pounds or less--$30.
    (2) Over 100 pounds but not over 1,000 pounds--$30 plus 6 cents for 
each pound over 100 pounds.
    (3) Over 1,000 pounds--$84 plus 2 cents for each pound over 1,000 
    (c) The fees established in paragraphs (a) and (b) of this section 
will increase as Federal salary costs increase, commencing with pay 
raises on or after January 1, 1996.
* * * * *

    Dated: September 26, 1994,
William K. Hubbard,
Interim Deputy Commissioner for Policy.
[FR Doc. 94-29381 Filed 11-28-94; 8:45 am]