a. Definition of "Small Business." FDA is proposing to define the term "small business" to mean, for the purposes of part 507, a business employing fewer than 500 persons. The proposed limit of 500 employees would include all employees of the business rather than be limited to the employees at a particular facility. The Agency is proposing to establish the same definition for small business as that which has been established by the U.S. Small Business Administration under 13 CFR part 121 for most food manufacturers. This is also the same definition for small business the Agency used to define a small business in its juice HACCP regulation ( SEC 120.1(b)(1)). The definition of small business is relevant to two provisions in the proposed rule. It would affect which facilities qualify for the exemption in proposed SEC 507.5(e) for on-farm packing or holding, and the exemption in proposed SEC 507.5(f) for on-farm manufacturing/processing, of animal food by a small business if the only activities subject to section 418 of the FD&C Act are the specific low-risk activity/animal food combinations listed in those sections. It would also affect what the compliance date is for facilities that meet the definition.
Effect on Proposed SEC 507.5(e) and (f)
Under proposed SEC 507.5(e) a farm mixed-type facility that meets the definition of a small business and only conducts specific packing or holding activity/animal food combinations would be eligible for an exemption from subpart C. Similarly, under proposed SEC 507.5(f) a farm mixed-type facility that meets the definition of a small business and only conducts specific manufacturing/processing activity/animal food combinations would be eligible for an exemption from subpart C. Based on the Food Processing Sector Study, the Agency estimates that approximately 4,439 facilities would be part of a small business under the proposed definition and thus satisfy the size requirement of the exemption in proposed SEC 507.5(e) and proposed SEC 507.5(f). Of those facilities, the Agency estimates that approximately 188 would be co-located on farms. A subset of those facilities would qualify for the exemption from subpart C based on their manufacturing/processing and packing and holding activities.
Based on the Food Processing Sector Study the Agency estimates that businesses employing fewer than 500 employees produce approximately 18 percent (based on sales) of all manufactured food produced in the United States and 86.9 percent of all manufactured pet food and animal feed. As discussed in section VI, the compliance date for a small business would be 2 years after the date of publication of the final rule. Under this proposed definition, 4,439 facilities would be subject to this compliance date.
b. Definition of "Very Small Business." In addition to defining "small business," FDA is required to define "very small business." FDA has not reached a tentative conclusion on how best to define "very small business" for the purposes of this rule. Consequently, the Agency is proposing three possible definitions based on annual sales of animal food of $500,000, $1,000,000, or $2,500,000 and requesting comment on which of these three options to include in a final rule. The Food Processing Sector Study provided information for the development of the three proposed definitions (Ref. 16). The Agency requests comment on whether a dollar amount of sales that is more than, or less than, the $500,000, $1,000,000, or $2,500,000 dollar amounts it is proposing would be appropriate. The Agency also requests comment on how a particular dollar amount of sales would be in keeping with Congressional intent, i.e., in light of the provisions in section 418(l) of the FD&C Act regarding qualified facilities, including the statutory limitations on sales to qualified end-users.