FDA requested from Congress a budget of $4.7 billion for fiscal year (“FY”) 2014, which covers the period from October 1, 2013 through September 30, 2014. That amount represents an increase of $200 million from the $4.5 billion requested for FY 2013.
According to FDA Commissioner Margaret Hamburg, M.D., FDA requires a larger budget because Congress expanded FDA’s responsibilities through new legislation, including the Food Safety Modernization Act (“FSMA”). She stated, “In the Food Safety Modernization Act . . . Congress has charged [FDA] with significant new responsibilities [including] moderniz[ing] this nation’s food safety system and . . . improve[ing] the safety of imported food . . .”
In its budget request, FDA proposed new user fees to help cover the costs associated with FSMA. Specifically, FDA proposed a new Food Import User Fee that would target activities associated with improvements to the import process, i.e., enhancing the safety protections for imported food and improving the efficiency and speed of FDA inspectors’ entry decisions. Small importers would be exempt from the fee, and large importers would pay a maximum charge.
FDA also proposed a new Food Facility Registration and Inspection Fee that is intended to modernize FDA’s inspection system. In particular, FDA would like to use monies raised from the fee to adopt preventative controls, train personnel in the new prevention standards, and develop ways to educate and inform industry. The agency would also like to support improvements in food and feed safety science and risk analysis. The Facility Registration and Inspection Fee is distinct from the re-inspection fee that is already in place to cover reinspection-related costs when an initial FDA inspection found food safety problems.
FDA claims that the Food Importer User Fee will raise approximately $166 million in fiscal year 2014, and the Food Facility Registration and Inspection Fee would generate approximately $59 million. Congress, however, must approve FDA’s budget, including proposed user fees.
It is unknown what the rate for user fees will be in FY 2014 because FDA does not publish the fee schedule until 60 days before the start of each fiscal year. The user fee rates for FY 2014 will likely be similar to the current FSMA user fee rates, which are $221/hr if no foreign travel is required and $289/hr if foreign travel is required. FY 2013 user fees under FSMA are collected for domestic and foreign facility reinspections, and failure to comply with recall orders, and certain importer reinspections.
The food industry is likely to oppose the adoption of the new Food Import User Fee and Food Facility Registration and Inspection Fee. These new fees have the potential to impose severe economic hardship on firms, particularly those struggling from the most recent economic downturn. FDA previously indicated a willingness to consider reducing past FSMA user fees for small businesses that will suffer severe economic hardship as a result of such fees. Hopefully it will do the same for FY 2014 FSMA user fees. The last thing small firms, organic producers, and dietary supplement companies need is new taxes in the form of user fees.