[Federal Register: February 13, 1998 (Volume 63, Number 30)]

[Proposed Rules]               

[Page 7319-7322]

From the Federal Register Online via GPO Access [wais.access.gpo.gov]



Proposed Rules

                                                Federal Register


This section of the FEDERAL REGISTER contains notices to the public of 

the proposed issuance of rules and regulations. The purpose of these 

notices is to give interested persons an opportunity to participate in 

the rule making prior to the adoption of the final rules.


[[Page 7319]]




Food Safety and Inspection Service

9 CFR Parts 308, 318, and 381

[Docket No. 97-007N]


Notice of Policy Change; Elimination of Prior Approval for 

Proprietary Substances and Nonfood Compounds

AGENCY: Food Safety and Inspection Service, USDA.

ACTION: Notice of policy change; request for comments.


SUMMARY: The Food Safety and Inspection Service (FSIS) is revising its 

policy regarding Agency approval of nonfood compounds and proprietary 

substances prior to use in official meat and poultry establishments. 

The compounds and substances currently subject to prior approval 

include maintenance and operating chemicals (sanitizers, cleaning 

compounds, water treatments, lubricants, and pesticides) and 

proprietary food processing chemicals (branding inks, scalding agents, 

rendering agents, and denaturants). FSIS recently proposed to eliminate 

the sanitation regulations requiring prior approval of some of these 

compounds and substances (contained in 9 CFR Parts 308 and 381, Subpart 

H). FSIS now is announcing that it is eliminating the prior approval 

system for all-nonfood compounds and proprietary substances and 

specifically requests comment on alternatives to the current prior 

approval system.

DATES: Comments must be received on or before April 14, 1998.

ADDRESSES: Submit one original and two copies of written comments to 

FSIS Docket Clerk, Docket #97-007N, U.S. Department of Agriculture, 

Food Safety and Inspection Service, Room 102, Cotton Annex, 300 12 St., 

SW, Washington, DC 20250-3700. All comments submitted in response to 

this notice will be available for public inspection in the Docket 

Clerk's Office between 8:30 a.m. and 4:30 p.m., Monday through Friday.

FOR FURTHER INFORMATION CONTACT: Patricia F. Stolfa, Assistant Deputy 

Administrator, Regulations and Inspection Methods, Food Safety and 

Inspection Service, U.S. Department of Agriculture (202) 205-0699.



    FSIS is planning to discontinue approving nonfood compounds and 

proprietary substances prior to use in official meat and poultry 

products establishments. Nonfood compounds are compounds used in 

official establishments, but which are not expected to become 

components of their products. Nonfood compounds subject to prior 

approval by FSIS include cleaning compounds, compounds for laundry use, 

paint removers, sanitizers, hand washing compounds, pesticides, boiler 

and water treatments, lubricants, solvents, and sewer and drain 

cleaners. Proprietary substances are used in the preparation of 

products. They are considered proprietary because all of their 

ingredients are not identified, either on the containers by common or 

chemical name or by some other means. Proprietary substances subject to 

prior approval by FSIS include: marking agents, such as branding and 

tattoo inks; food processing substances, such as poultry and hog scald 

agents and tripe denuding agents; denaturants; substances to control 

foaming in soups, stews, rendered fats, and curing pickle; and 

substances for cleaning or treating feet or other edible parts.

    FSIS receives annually between 16,000 and 20,000 applications for 

approval of nonfood compounds and proprietary substances. It is 

important to note that many of these applications are requests for 

approval of formulation changes in or new use patterns for compounds 

and substances already approved for use in meat and poultry 

establishments. FSIS approves approximately 9,000 applications per year 

and rejects approximately 1,000. FSIS returns around 40 percent of the 

applications to applicants each year, for a variety of reasons: the 

application paperwork may not be complete; FSIS may request additional 

information, changes in chemical formulation, or revisions to the 

requested use patterns. FSIS annually publishes a list of the approved 

substances and compounds in FSIS Miscellaneous Publication No. 1419, 

``List of Proprietary Substances and Nonfood Compounds'' ( hereafter 

referred to as the List). This publication currently lists 

approximately 115,000 compound and substances produced by about 8,000 


    FSIS does not test the products submitted for approval but 

evaluates them based on information submitted by manufacturers and 

other information in the Agency's files, including chemical 

formulations and information on proposed uses and labeling. FSIS also 

consults with the Food and Drug Administration (FDA), the Environmental 

Protection Agency (EPA), and the Occupational Safety and Health 

Administration (OSHA) in regard to those Agencies' determinations 

concerning the safety and suitability of the compound for the requested 

use. Generally, FSIS consults with FDA regarding the status of the 

substance or compound as an FDA-approved direct or indirect food 

additive. Also, FSIS sometimes consults with FDA regarding nonfood 

compounds that have been reviewed as drugs, such as hand washing 

agents. FSIS generally consults with EPA concerning that Agency's 

review and registration of pesticides with labeling claims. FSIS may 

consult with OSHA if the intended use of the substance or compound 

raises worker health and safety concerns.

    FSIS's prior approval program obviously is somewhat redundant with 

those of the aforementioned agencies. However, the approval of these 

compounds prior to their intended use provides some assurance to meat 

and poultry processors that use of the compounds and substances will 

not result in the adulteration or contamination of food products, 

providing they are used properly. Prior approval has also ensured that 

certain compounds, such as sanitizers, meet minimum standards of 

effectiveness when used as directed. Consequently, as an additional 

unintended benefit of the prior approval program, the FSIS List has 

served as a marketing tool for chemical manufacturers and distributors; 

inclusion in the List immediately renders a nonfood compound or 

proprietary substance more marketable to meat and poultry processors.

[[Page 7320]]

    However, this prior approval program is inconsistent with the new 

food safety strategy and approach set forth in FSIS Docket No. 93-016F, 

``Pathogen Reduction; Hazard Analysis and Critical Control Point 

(HACCP) Systems'' (61 FR 38806). Under these new regulations, every 

official meat and poultry establishment will be required to develop and 

implement HACCP, a science-based process control system designed to 

improve the safety of meat and poultry products. Establishments will be 

responsible for developing and implementing HACCP plans incorporating 

the controls necessary and appropriate to produce safe meat and poultry 

products. Consequently, establishments, not FSIS, will be responsible 

for determining whether the nonfood compounds and proprietary 

substances they use are safe and effective.

    By terminating the prior approval program for nonfood compounds and 

proprietary substances and discontinuing publication of the List, FSIS 

will be able to redirect resources to better implement inspection under 

the HACCP regulations. FSIS will maintain, however, a small staff with 

expertise in nonfood compounds and proprietary substances. That staff 

will keep abreast of developments in this sector of chemical 

manufacturing, maintain liaison with outside organizations that have an 

interest in the area, and issue technical guidance, particularly to 

small meat and poultry plants, from time to time, as circumstances 


    FSIS will, of course, continue to require that meat and poultry 

products be neither adulterated nor misbranded through the misuse of 

proprietary additives and nonfood compounds. Enforcement activities in 

this regard will include, but are not limited to: organoleptic 

inspection of establishment premises and product; sampling for chemical 

residues as necessary; review of establishment records, including 

sanitation standard operating procedures, HACCP plans, and the use 

directions, pest control certifications, and other materials furnished 

to establishments by chemical manufacturers and suppliers; and requests 

for formulation information from chemical manufacturers themselves. In 

light of this, FSIS anticipates that establishments considering 

purchasing and using nonfood compounds and proprietary substances will 

demand formulation and other information from chemical manufacturers as 

part of their decision-making in the private marketplace. Manufacturers 

failing to provide such information could expect to lose their market 


    FSIS already has proposed to eliminate regulatory requirements for 

prior approval of certain nonfood compounds and proprietary substances 

in FSIS Docket No. 96-037P, ``Sanitation Requirements for Official Meat 

and Poultry Establishments'' (62 FR 45045; August 25, 1997). In that 

document, the Agency has proposed to clarify and consolidate the 

sanitation requirements for meat and poultry establishments, eliminate 

unnecessary differences between those regulations, make the existing 

sanitation regulations more compatible with the HACCP and sanitation 

Standard Operating Procedures (SOP) requirements, and convert command-

and-control requirements to performance standards. As part of this 

comprehensive revision, FSIS proposed to eliminate the sanitation 

regulations that require certain equipment, processes, and nonfood 

compounds be approved by FSIS prior to use in meat or poultry 

establishments (contained in 9 CFR parts 308 and 381, subpart H). 

Compounds and substances currently requiring prior approval under the 

sanitation regulations include pesticides used in meat establishments 

(Sec. 308.3 (h)); disinfectants for implements used in dressing 

diseased meat carcasses (Sec. 308.8 (b)); and germicides, insecticides, 

rodenticides, detergents, and wetting agents used in poultry 

establishments (Sec. 381.60).

Compliance with Executive Order 12866

    This action has been reviewed for compliance with Executive Order 

12866. As this action is determined to be significant for purposes of 

Executive Order 12866, the Office of Management and Budget has reviewed 

it. FSIS has estimated that the adoption of this action is likely to 

generate net social benefits.

    Executive Order 12866 requires identification and, if possible, 

quantification and monetization of incremental benefits and costs of 

this action. FSIS has identified two types of incremental benefits in 

the form of avoidance of costs that are currently being incurred by 

chemical manufacturers/distributors and by FSIS. These benefits are 

discussed below.

    First, the action would eliminate the requirement that the chemical 

manufacturers file applications and obtain approval for nonfood 

compounds and proprietary substances prior to use. As stated above, 

FSIS receives between 16,000 and 20,000 applications per year. The 

economic burden of requesting FSIS approval of nonfood compounds and 

proprietary substances includes the administrative, mailing, and labor 

costs associated with preparing the required Agency forms. FSIS 

estimates that it takes about 25 minutes to prepare each submission. 

Assuming an hourly earnings rate of $20-$25 for each person preparing 

requests for prior approval, the annual economic burden is between 

$150,000 and $187,000. The elimination of this burden associated with 

the adoption of the proposed action would, therefore, translate into an 

incremental benefit of $150,000 and $187,000.

    Second, FSIS incurs considerable costs in processing and approval 

or disapproval of the products. FSIS could re-allocate these resources 

to better implement the new HACCP requirements. One measure of this 

allocative efficiency is the amount of savings in administrative costs 

if FSIS were to eliminate the approval/disapproval program without 

redirecting resources to administration of the performance-based 

standards. The value of this allocative efficiency could not, however, 

be quantified because of uncertainty and unavailability of the required 

data. The required budgetary data overlap with the data for other 

regulatory functions of FSIS.

    To sum up, the value of incremental benefits of the proposed action 

could be monetized only partially and amounts to $150,000 to $187,000 

per year.

Social Costs

    The incremental benefits of the proposed action need be compared 

with the incremental social costs to obtain the net social benefit (if 

the benefits exceed the costs) or the net social cost (if the costs 

exceed the benefits). FSIS has identified two types of social costs. 

The first type of social cost is the additional marketing expense that 

would be incurred by the industry. Currently, the industry is not 

required to incur much of this expense, because, as noted earlier, 

inclusion of the industry's products in FSIS's List serves as a 

marketing tool. After FSIS discontinues publication of the List, the 

chemical industry might have to develop additional methods to advertise 

and publicize its products for marketing. These marketing expenditures 

would represent incremental costs to society. Ideally, these costs 

should be quantified and juxtaposed against the value of incremental 

benefits referred to above. Unfortunately, FSIS could not quantify 

these costs because currently the industry does not incur these costs 

so that the required data are not available.

[[Page 7321]]

    The second type of cost item is the expenditure on research 

required to develop and test nonfood compounds and proprietary 

substances that are demonstrably safe and effective. FSIS anticipates, 

however, that the elimination of the FSIS prior approval would not 

significantly change these costs. Chemical manufacturers will continue 

to be required to demonstrate the safety and efficacy of their products 

to FDA, EPA, and/or OSHA, as required. Because FDA, EPA, and OSHA will 

review the safety and efficacy of these compounds and substances in 

food processing environments, FSIS assumes that chemical manufacturers 

will continue to conduct the same sort of research to determine whether 

or not their products are safe and effective.

    Furthermore, FSIS expects that meat and poultry establishments will 

request, as a condition of purchase, that chemical manufacturers 

somehow certify the safety and efficacy of their products. 

Establishments will keep on file any information provided by chemical 

manufacturers (written approvals from other agencies, letters of 

guaranty, etc.) as part of sanitation SOP, HACCP, or other records. 

FSIS inspectors may ask to review such information if they have 

questions about the composition or use of nonfood compounds and 

proprietary substances. FSIS anticipates, therefore, that manufacturers 

will continue to conduct research on nonfood compounds and proprietary 

substances in order to demonstrate their safety and efficacy to meat 

and poultry establishments, as well as to Federal Agencies.

    It is acknowledged that the chemical manufacturing and distributing 

industry's costs of marketing would increase, but such an increase 

would bring about greater economic efficiency as it would internalize 

their costs by elimination of the external subsidy that was provided by 

FSIS. The industry's cost of research and development to demonstrate 

safety and efficacy of nonfood compounds and proprietary substances 

would not decrease because the industry would be required to continue 

this practice to comply with similar requirements by EPA, FDA or OSHA. 

Therefore, the only increase in the cost would be the additional 

expenditures on marketing the products. Moreover, this cost increase 

would be voluntary on the chemical manufacturers and distributors and 

would not be required by the proposed action.

    Conceptually, it is possible that the value of subsidy provided by 

FSIS by publishing the List is greater than the marketing cost to be 

incurred by the chemical manufacturers and distributors. This is 

because publication of the List increases the value of information 

provided to the public at large. Such a provision tends to encourage 

entry of newer firms into the meat and poultry industries to compete 

with the existing firms. The non-publication of the List would, 

therefore, reduce the value of this information and hence reduce the 

social benefit. In practice, we could not quantify or monetize the 

value of this information to the society at large because of non-

availability of data.

Net Social Benefits

    FSIS believes that the incremental costs of marketing would be less 

than the incremental benefits identified and monetized above. These 

benefits include the benefits to the industry in the form of savings 

from the expenses of avoiding the economic burden of mailing and filing 

the Agency forms. Furthermore, the internalization of marketing costs 

by the firms in the industry would bring about a more competitive 

industry where product prices would more accurately reflect the 

marginal costs of production. The current system of publishing the List 

is tantamount to subsidization of the industry by FSIS. This subsidy 

brings about inefficiencies in the industry. Adoption of the proposed 

action would remove this subsidy and bring about a more competitive and 

efficient industry. A competitive industry is more likely to bring 

about greater product innovations in the chemical industry to ensure 

safer meat and poultry products. Also, the transparency in the chemical 

industry where prices reflect marginal costs would enable the chemical 

industry to make more informed choices.

    To sum up, FSIS believes the incremental benefits are likely to 

exceed the incremental costs so that there are net social benefits 

associated with the proposed action. Also, the distribution burden of 

the incremental costs and benefits is not likely to be inequitable 

because, while the marketing costs for chemical manufacturers and 

distributors would increase, these businesses would also realize the 

benefits of reduced costs of filing forms required for approval of 

their products by FSIS.

Compliance with Regulatory Flexibility Act

    FSIS certifies that the proposed action will not bring about a 

significant economic impact on a substantial number of small entities 

in the chemical manufacturing and distribution industry. The costs of 

developing and testing their products would not increase because, as 

noted earlier, these firms already incur similar development and 

testing costs to comply with health and safety requirements of FDA, 

EPA, and OSHA. Furthermore, production and distribution of proprietary 

substances and nonfood compounds is such a small segment of total 

production of these firms that it is not listed separately as a 4-digit 

industry in the Standard Industrial Classification (SIC) Manual 

published by the Office of Management and Budget (1987). For example, 

some of the proprietary substances and nonfood compounds are grouped in 

SIC 2842 with over a dozen other products.

    FSIS also assures that there will not be any adverse economic 

impact on small meat and poultry plants as a result of discontinuation 

of publication of the List. This assurance is based on two reasons. As 

noted earlier, the manufacturers and distributors of proprietary 

substances and nonfood compounds will be required to continue their 

research and testing of their products to comply with FDA, EPA, and 

OSHA requirements. Small meat and poultry plants would also rely on 

documentation submitted by the chemical manufacturers and distributors 

to these agencies for meeting of their products. Also, in the long run, 

competition should ensure that chemical manufacturers and distributors 

maintain or improve the safety and efficacy features of their products 

so as to preserve or increase their market shares.

    There will be no adverse economic impact on small communities, 

cities, and municipalities because these entities are not engaged 

either in production or distribution of proprietary substances and 

nonfood compounds, or in the meat and poultry products.

Alternatives to the Proposed Action

No Action

    FSIS considered continuing the current prior approval program 

requirements, i.e., taking no action, but has decided against it 

because the prior approval requirements are inconsistent with HACCP, 

economically inefficient, and somewhat inequitable. The HACCP 

requirements clearly define industry's responsibility for the safety of 

meat and poultry products, but provide the industry with greater 

flexibility to innovate and to customize their processes to the nature 

and volume of their production. The current prior approval requirements 

are inconsistent with HACCP and economically inefficient because they 

are based on a ``command and control'' regulatory

[[Page 7322]]

system that often fails to provide incentives to entrepreneurs to 

innovate new products, processes, and technologies which can result in 

safer meat and poultry products. Also, as noted earlier, the 

incremental costs of continuing the current system are likely to exceed 

the incremental benefits. The existing program is inequitable because 

it imposes the same amount of administrative burden on small and large 

chemical manufacturers and distributors; the relative burden is greater 

on small plants because, unlike large size plants, they cannot spread 

the costs over a larger quantity of output.

User Fees

    FSIS considered the alternative of setting up a system of user fees 

charged to chemical manufacturers and distributors to cover the costs 

of approval or disapproval of the products. FSIS did not propose this 

alternative for several reasons. One is that the incremental costs of 

setting up such a system would probably exceed the incremental 

benefits. The incremental costs of this alternative would include the 

costs of setting up an administrative system of user charges for over 

100,000 proprietary substances and nonfood compounds. The user fees 

should recover the total costs of administration of the program. These 

costs cannot be identified, let alone quantified, making it virtually 

impossible to set up a structure of user fees.

    Alternatively, the user fees could be based on the value of 

benefits to the firms in the industry or to society at large. This 

approach would require quantification of the benefits. As noted above, 

only a small part of the benefits to chemical manufacturers and 

distributors could be quantified, so that this amount would fail to 

cover comprehensive costs of the program.

    Finally, FSIS did not propose this alternative because the Agency 

does not have legislative authority to levy user charges to recover the 

costs of such a program. Although the Agricultural Marketing Service 

(AMS) has authority to levy user fees, it is not responsible for 

ensuring the safety of meat, poultry, and egg products. The 

Agricultural Reorganization Act of 1994 (Public Law 103-354) 

consolidated food safety responsibility with respect to these products 

under FSIS. Therefore, AMS is unlikely to be suitable to administer a 

user fee-funded program with a food safety objective.

Prior Approval by Third Parties

    FSIS considered the feasibility of allowing industry recognized, 

non-government organizations or laboratories to test and certify 

nonfood compounds and proprietary substances for safety and efficacy. 

Chemical manufacturers could voluntarily submit samples of their 

products to third-party organizations, or qualified independent 

laboratories (e.g., Underwriters Laboratories) for testing and 

consequent approval or disapproval. The theoretical rationale for this 

option is that competing firms in compliance with the standards or 

exceeding them would have ample incentive to publicize the fact that 

their product(s) are approved by third party organizations and/or 

independent laboratories.

    However, FSIS sees several disadvantages to this alternative. 

First, there is the potential for conflict of interest. For example, a 

laboratory testing and approving nonfood compounds and proprietary 

substances for a particular chemical manufacturer could be testing 

other products for that same manufacturer; hence there could be a 

perception that, to maintain its business, it would readily approve the 

proprietary substances and nonfood compounds.

    Second, the complexity of the task of approving 16,000 to 20,000 

products per year would probably require numerous laboratories 

specializing in different substances; the economies of scale associated 

with a standardized testing and rating system would not be realized.

    Finally, the incremental costs of the approval/disapproval process 

to the laboratory or organization would likely exceed the incremental 

benefits of revenues from the fees earned by the laboratory 

organization, unless the fees were set so high that they covered the 

total costs plus a reasonable profit. If the fees were set too high, 

they could drive many small and marginal manufacturers and distributors 

of proprietary substances and nonfood compounds out of the market. Such 

an outcome would render this industry less competitive.

    Nevertheless, FSIS specifically requests comments on whether an 

industry-recognized, non-government organization or laboratory could 

provide prior approval or a similar service to chemical manufacturers 

and distributors of nonfood compounds and proprietary substances. It is 

possible that a centralized, technically expert, third party could play 

an effective role in facilitating the marketing and appropriate use of 

nonfood compounds and proprietary substances. Economic theory suggests 

that, where the primary users and beneficiaries of a Federal service 

are a relatively circumscribed group, that group should bear the cost 

of the service. Therefore, FSIS requests comments on whether prior 

approval should be provided by a non-government agency, what type of 

prior approval system that would be appropriate and feasible within a 

user fee system, and whether interest in obtaining such a service is 

sufficient to support its costs.


    In conclusion, FSIS is eliminating its prior approval program for 

nonfood compounds and proprietary substances. This prior approval 

program is somewhat redundant with the reviews performed by other 

Federal agencies and inconsistent with FSIS's HACCP regulations. FSIS 

is requesting comment on possible alternatives to its prior approval 

program for nonfood compounds and proprietary substances, including the 

feasibility of industry-recognized, non-government organizations or 

laboratories providing prior approval or similar services to chemical 

manufacturers .

    Done in Washington, DC, February 4, 1998.

Thomas J. Billy,

Administrator, Food Safety Inspection Service.

[FR Doc. 98-3725 Filed 2-12-98; 8:45 am]