Preliminary Regulatory Impact Analysis

SUPPLEMENTAL PRELIMINARY REGULATORY IMPACT ANALYSIS
FOR PROPOSED RULES ON:
“FOOD LABELING: REVISION OF THE NUTRITION AND
SUPPLEMENT FACTS LABELS”
AND
“FOOD LABELING: SERVING SIZES OF FOODS THAT CAN
REASONABLY BE CONSUMED AT ONE EATING OCCASION; DUALCOLUMN LABELING; UPDATING, MODIFYING, AND ESTABLISHING
CERTAIN REFERENCE AMOUNTS CUSTOMARILY CONSUMED;
SERVING SIZE FOR BREATH MINTS; AND TECHNICAL
AMENDMENTS”

DOCKET NO. FDA-2012-N-1210
DOCKET NO. FDA-2004-N-0258

REGULATORY FLEXIBILITY
UNFUNDED MANDATES
PAPERWORK REDUCTION
Page 1

Executive Summary
The Proposed Nutrition Facts and Supplement Facts Labels Rule (the Proposed NFL Rule)
amended our labeling regulations for conventional foods and dietary supplements to provide
updated nutrition information on the label to assist consumers in maintaining healthy dietary
practices. We are proposing revisions to the Proposed NFL Rule that would amend our labeling
regulations for conventional foods and dietary supplements. We are proposing text for the
footnote to be used on the Nutrition Facts label, and exemptions to the proposed footnote
requirement. We are also proposing that manufacturers declare, in addition to the absolute
amount of added sugars, the percent DV for added sugars on the Nutrition Facts and Supplement
Facts labels. The original Preliminary Regulatory Impact Analysis (original PRIA) captures the
costs associated with these changes; thus, this analysis only revises the benefits estimates. In
total, we estimate that these proposed rules will generate annualized costs of $0.2 billion (at both
3 and 7 percent discount rates) and annualized benefits of $2.1 billion (at 7 percent) and $2.3
billion (at 3 percent). This represents an annual increase in net benefits from the original PRIA’s
estimates of approximately $0.2 billion per year.

Page 2

Table of Contents
Analysis of Economic Impacts ....................................................................................................... 4 
I.

    Revisions to The Proposed Rules ..................................................................................... 5 

II. 

Need for Regulation ......................................................................................................... 6 

III. 

Revised Costs of the Proposed Rules ............................................................................... 7 

IV. 

Revised Benefits of the Proposed Rules .......................................................................... 7 

V. 

Regulatory Options .......................................................................................................... 9 

VI. 

Regulatory Flexibility Analysis ..................................................................................... 10 

VII.  Unfunded Mandates ....................................................................................................... 10 
VIII.    Paperwork Reduction Act of 1995 ................................................................................ 11 

Page 3

Analysis of Economic Impacts
The Food and Drug Administration (FDA or we) has examined the impacts of certain
nutrition labeling proposed rules under Executive Order 12866, Executive Order 13563, the
Regulatory Flexibility Act (5 U.S.C. 601-612), the Unfunded Mandates Reform Act of 1995
(Public Law 104-4), and The Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520). The
proposed rules are:
1. Title: Food Labeling: Revision of the Nutrition and Supplement Facts Labels.
(Docket No. FDA-2012-N-1210) (“Proposed NFL Rule”)
2. Title: Food Labeling: Serving Sizes of Foods That Can Reasonably Be Consumed At
One Eating Occasion; Dual-Column Labeling; Updating, Modifying, and Establishing
Certain Reference Amounts Customarily Consumed; Serving Size for Breath Mints;
and Technical Amendments (Docket No. FDA-2004-N-0258) (“Proposed Serving
Size Rule”)
Executive Orders 12866 and 13563 direct us 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). We published two proposed rules on
nutrition labeling in the Federal Register on March 3, 2014 (79 FR 11879; 79 FR 11989) but
developed one comprehensive Preliminary Regulatory Impact Analysis (PRIA) that presents the
benefits and costs of the two proposed nutrition labeling rules taken together. We believe that
the cumulative impact of the proposed rules on nutrition labeling, taken as a whole, represents a
significant regulatory action as defined by Executive Order 12866.

Page 4

The Regulatory Flexibility Act requires us to analyze regulatory options that would
minimize any significant impact of a rule on small entities. Additional costs per entity from the
proposed rules are small, but not negligible, and as a result we conclude that the proposed rules
on nutrition labeling, taken as a whole, would have a significant economic impact on a
substantial number of small entities.
Section 202(a) of the Unfunded Mandates Reform Act of 1995 requires that agencies
prepare a written statement, which includes an assessment of anticipated costs and benefits,
before proposing “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 $144 million, using the most current (2013) Implicit Price
Deflator for the Gross Domestic Product. We have determined that the proposed rules on
nutrition labeling, taken as a whole, meet this threshold.
I.

Revisions to The Proposed Rules
The Proposed NFL Rule would amend our labeling regulations for conventional foods

and dietary supplements to provide updated nutrition information on the label to assist
consumers in maintaining healthy dietary practices. The Proposed Serving Size Rule would
amend our regulations on serving sizes based on newer consumption data and other current
scientific evidence. A detailed listing of the changes associated with the proposed rules is
provided in the original PRIA (Ref. 1).
In a Supplemental Notice of Proposed Rulemaking, we are proposing revisions to the
Proposed NFL Rule that would amend our labeling regulations for conventional foods and
dietary supplements. We are proposing text for the footnote to use on the Nutrition Facts label

Page 5

and exemptions to the proposed footnote requirement. We are also proposing that manufacturers
declare, in addition to the absolute amount of added sugars, the percent DV for added sugars on
the Nutrition Facts and Supplement Facts labels. The original PRIA captures the costs and
benefits associated with the former changes, and the costs associated with the latter change.
Thus, only the latter change requires us to revise the original PRIA’s benefits estimates.
In this supplemental PRIA we discuss the impact of the mandatory added sugar percent
DV declaration and present the annualized costs and annualized benefits of the revised proposed
rules. For a detailed analysis of the provisions of the proposed rules that are not being revised,
refer back to the original PRIA for the proposed rules (Ref. 1).
Table 1 illustrates the annualized costs and annualized benefits of the previous proposed
rules and the revised proposed rules.
Table 1. Summary of Annualized Costs and Benefits Over 20 Years of Previous and Revised
Proposed Rules (in billions of 2011$)
Benefits

Costs

Net
Benefits

Annualized @ 3%
Annualized @ 7%

$2.0
$1.9

$0.2
$0.2

$1.8
$1.7

Annualized @ 3%
Annualized @ 7%

$2.3
$2.1

$0.2
$0.2

$2.1
$1.9

Previous Proposed Rules

Revised Proposed Rules

Notes: Compliance period is 24 months. Analysis assumes that the proposed rules will be enacted together. Costs
include relabeling and reformulation costs, which are one-time costs, as well as recordkeeping costs, which recur.
Recordkeeping costs, because of their recurring nature, differ by discount rate; however, such costs comprise a very
small percentage of total costs.

In the following sections, we discuss how the mandatory added sugar percent DV
declaration will impact the estimated costs and benefits of the proposed rules.
II.

Need for Regulation
See original PRIA.
Page 6

III.

Revised Costs of the Proposed Rules
The costs associated with the proposed revision to modify the footnote statement were

captured in the original PRIA.
The costs associated with the proposed revision to require manufacturers to declare the
percent DV for added sugars on the Nutrition Facts and Supplement Facts labels are implicitly
captured in the original PRIA, as such costs are subsumed under the minor label change costs
estimated in the original PRIA.
Thus, we have not revised our discussion of the costs of the proposed rules that appeared
in the original PRIA.
IV.

Revised Benefits of the Proposed Rules
The benefits associated with the proposed revision to modify the footnote statement were

captured in the original PRIA.
The benefits associated with the proposed revision to require manufacturers to declare the
percent DV for added sugars on the Nutrition Facts and Supplement Facts labels were not
captured in the original PRIA. This revision will affect the s1 parameter of the benefits model
used to capture the effect of the proposed rules relative to the 1993 rules that implemented
NLEA (the details associated with the original s1 calculation can be found on pp. 48 – 54 of the
original PRIA). More specifically, the requirement that manufacturers declare the percent DV
for added sugars on the Nutrition Facts and Supplement Facts labels increases the percentage of
the label content on products with a single-column label (SCL) changed by the proposed rules
from 33 percent to 38 percent. Consistent with our approach in the original PRIA, we assume
that the change in label content associated with SCL products is uniformly distributed between
16 percent and 60 percent, with a mean of 38 percent (= [16 + 60] / 2). This produces a revised
Page 7

mean s1 of 26.5 percent (= [0.65 x 0.38 x 0.88] + [0.65 x 0.25 x 0.29]). Further consistent with
our approach in the original PRIA, we assume that s1 is distributed uniformly between 0 and
0.265, with a mean of 0.133 (= [0 + 0.265] / 2). As a result of these changes, the primary
benefits estimates in Table 13 of the original PRIA, as well as the supporting benefits estimates
contained in Table 17 of the original PRIA, change slightly. These changes are illustrated below
in Tables 2 and 3, respectively. Table 2 presents the primary benefits estimates, based on the
willingness-to-pay (revealed preference) estimates in Abaluck (2011):
Table 2. Estimated Annualized Benefits from Proposed Nutrition Labeling Rules 2013-2032 (in
billions of 2011 dollars), Previous vs. Revised Proposed Rules
Benefits:
Previous Proposed Rules
WTPa

Revised Proposed Rules
WTPa

90% Confidence Interval
Lower Bound
Upper Bound

Discount Rate

Mean

3%
7%

$2.0
$1.9

$0.2
$0.2

$4.6
$4.2

3%
7%

$2.3
$2.1

$0.2
$0.2

$5.3
$4.8

Notes: Compliance Period = 24 months. Estimates reflect total U.S. population (children and adults).
[a] Based on Abaluck (2011) willingness-to-pay or revealed preference estimates.

As stated in the original PRIA, Abaluck (2011) generates his willingness-to-pay (revealed
preference) estimates from a data set that contains only women. Thus, Table 3 presents
supporting benefits estimates based on the willingness-to-pay (revealed preference) estimates in
Abaluck (2011), but applied only to women:
Table 3. Estimated Annualized Benefits from Proposed Nutrition Labeling Rules for Women
2013-2032 (in billions of 2011 dollars), Previous vs. Revised Proposed Rules
Benefits:
Previous Proposed Rules
WTPa

Discount Rate

Mean

3%
7%

$0.8
$0.8
Page 8

90% Confidence Interval
Lower Bound
Upper Bound

$0.1
$0.1

$1.9
$1.7

Revised Proposed Rules
WTPa

3%
7%

$1.0
$0.9

$0.1
$0.1

$2.2
$2.0

Notes: Compliance Period = 24 months.
[a] Based on Abaluck (2011) willingness-to-pay or revealed preference estimates.

V.

Regulatory Options
The regulatory options considered in the original PRIA remain the same (for a detailed

discussion of the regulatory options for the proposed rules, see the original PRIA). However, as
a result of the mandatory added sugar percent DV declaration, the benefits estimates contained in
Tables 26 and 27 of the original PRIA will change slightly. These changes are illustrated in
Tables 4 and 5 below. These tables provide a comparison of annualized benefits, costs, and net
benefits by regulatory option and by whether the rules are enacted together or separately, under
both the previous and revised proposed rules.
Table 4. Summary of Annualized Net Benefits by Regulatory Option 2013-2032 (in billions of
2011 dollars), Previous vs. Revised Proposed Rules, Rules Enacted Together
Discount
Net
Benefits Costs
Rate
Benefits

Option
Previous Proposed Rules
1 – No New Federal Regulatory Action
2 – Proposed Rules
3 – Proposed Rules – 3 Year Compliance Period
4 – Proposed Rules – 4 Year Compliance Period
5 – Proposed Rules – DV for Sodium of 1,500 mg or 1,900 mg

Revised Proposed Rules
1 – No New Federal Regulatory Action
2 – Proposed Rules
3 – Proposed Rules – 3 Year Compliance Period

Page 9

3%
7%
3%
7%
3%
7%
3%
7%
3%
7%

$0
$0
$2.0
$1.9
$2.0
$1.8
$2.0
$1.8
$2.0
$1.9

$0
$0
$0.2
$0.2
$0.1
$0.1
$0.04
$0.1
$0.2
$0.2

$0
$0
$1.8
$1.7
$1.9
$1.7
$2.0
$1.7
$1.8
$1.7

3%
7%
3%
7%
3%
7%

$0
$0
$2.3
$2.1
$2.3
$2.0

$0
$0
$0.2
$0.2
$0.1
$0.1

$0
$0
$2.1
$1.9
$2.2
$1.9

4 – Proposed Rules – 4 Year Compliance Period
5 – Proposed Rules – DV for Sodium of 1,500 mg or 1,900 mg

3%
7%
3%
7%

$2.2
$2.0
$2.3
$2.1

$0.04
$0.1
$0.2
$0.2

$2.2
$1.9
$2.1
$1.9

Notes: Costs include relabeling and reformulation costs, which are one-time costs, as well as recordkeeping costs,
which recur. Recordkeeping costs, because of their recurring nature, differ by discount rate; however, such costs
comprise a very small percentage of total costs.

Table 5. Summary of Annualized Net Benefits by Regulatory Option 2013-2032 (in billions of
2011 dollars), Previous vs. Revised Proposed Rules, Rules Enacted Separately
Discount
Net
Benefits Costs
Rate
Benefits

Option
Previous Proposed Rules
1 – No New Federal Regulatory Action
2 – Proposed Rules
3 – Proposed Rules – 3 Year Compliance Period
4 – Proposed Rules – 4 Year Compliance Period
5 – Proposed Rules – DV for Sodium of 1,500 mg or 1,900 mg

Revised Proposed Rules
1 – No New Federal Regulatory Action
2 – Proposed Rules
3 – Proposed Rules – 3 Year Compliance Period
4 – Proposed Rules – 4 Year Compliance Period
5 – Proposed Rules – DV for Sodium of 1,500 mg or 1,900 mg

3%
7%
3%
7%
3%
7%
3%
7%
3%
7%

$0
$0
$2.0
$1.9
$2.0
$1.8
$2.0
$1.8
$2.0
$1.9

$0
$0
$0.2
$0.3
$0.1
$0.2
$0.05
$0.1
$0.2
$0.3

$0
$0
$1.8
$1.6
$1.9
$1.6
$2.0
$1.7
$1.8
$1.6

3%
7%
3%
7%
3%
7%
3%
7%
3%
7%

$0
$0
$2.3
$2.1
$2.3
$2.0
$2.2
$2.0
$2.3
$2.1

$0
$0
$0.2
$0.3
$0.1
$0.2
$0.05
$0.1
$0.2
$0.3

$0
$0
$2.1
$1.8
$2.2
$1.8
$2.2
$1.9
$2.1
$1.8

Notes: Costs include relabeling and reformulation costs, which are one-time costs, as well as recordkeeping costs,
which recur. Recordkeeping costs, because of their recurring nature, differ by discount rate; however, such costs
comprise a very small percentage of total costs.

VI.

Regulatory Flexibility Analysis
See original PRIA.

VII.

Unfunded Mandates
See original PRIA.

Page 10

VIII. Paperwork Reduction Act of 1995

This supplemental notice of proposed rulemaking contains information collection
provisions that are subject to review by the Office of Management and Budget (OMB) under the
PRA (44 U.S.C. 3501-3520). As explained in the NFL/SFL proposed rule, we performed the
necessary analyses to examine the impacts of the proposed rule under Executive Order 12866,
Executive Order 13563, the Regulatory Flexibility Act (5 U.S.C.601-612), the Unfunded
Mandates Reform Act of 1995 (Pub. L. 104-4), and the PRA (44 U.S.C. 3501-3520). We
provided a preliminary regulatory analysis (PRIA) of the NFL/SFL proposed rule (see Ref. 187
of the NFL/SFL proposed rule) for public input (79 FR 11879 at 11959). A description of the
information collection provisions of the NFL/SFL proposed rule was given in the PRIA of the
NFL/SFL proposed rule with an estimate of the annual third-party disclosure burden. A
description of the information collection provisions of the supplemental notice of proposed
rulemaking is given in the Description section of this document with an estimate of the annual
third-party disclosure burden. Included in the estimate is the time for reviewing instructions,
searching existing data sources, gathering and maintaining the data needed, and completing and
reviewing each collection of information.
We invite comments on these topics: (1) Whether the proposed collection of information
is necessary for the proper performance of our functions, including whether the information will
have practical utility; (2) the accuracy of our estimate of the burden of the proposed collection of
information, including the validity of the methodology and assumptions used; (3) ways to
enhance the quality, utility, and clarity of the information to be collected; and (4) ways to
minimize the burden of the collection of information on respondents, including through the use

Page 11

of automated collection techniques, when appropriate, and other forms of information
technology.
Title: Revision of the Nutrition and Supplement Facts Labels and Serving Sizes of Foods That
Can Reasonably Be Consumed At One-Eating Occasion
Description: This supplemental notice of proposed rulemaking proposes two changes to the third
party disclosure requirements discussed in the analysis of the NFL/SFL proposed rule: a percent
DV labeling requirement as well as footnote requirements.
Description of Respondents: The likely respondents to this information collection are
manufacturers of retail food products marketed in the United States whose products contain (1) a
mixture of naturally occurring and added sugars or (2) a mixture of non-digestible carbohydrates
that do and do not meet the proposed definition of dietary fiber. The likely respondents to this
information collection also include manufacturers of retail food products marketed in the United
States whose products contain (1) mixtures of different forms of vitamin E or (2) both folate and
folic acid.
We estimate the burden of the information collection provisions of the supplemental
notice of proposed rulemaking as follows. After careful review of the burden estimate analysis
provided in the PRIA for the NFL/SFL proposed rule, we tentatively conclude that our previous
estimate of the burden hours has not changed meaningfully as a result of this supplemental notice
of proposed rulemaking. Thus, we have calculated no additional burden related to the proposed
percent DV labeling requirement for added sugars described in this supplemental notice of
proposed rulemaking.
With regard to the proposed footnote labeling requirements in this supplemental notice of
proposed rulemaking, we note that the text of the footnote statements would be supplied by FDA

Page 12

in the final regulation. We tentatively conclude that the proposed footnote provisions in this
supplemental notice of proposed rulemaking do not constitute a “collection of information”
under the PRA (44 U.S.C. 3501-3520). Rather, the proposed footnote provisions are a “public
disclosure of information originally supplied by the Federal government to the recipient for the
purpose of disclosure to the public” (5 CFR 1320.3(c)(2)). Thus, we have calculated no
additional burden related to the proposed footnote labeling requirements in this supplemental
notice of proposed rulemaking.
To ensure that comments on information collection are received, OMB recommends that
written comments be faxed to the Office of Information and Regulatory Affairs, OMB, Attn:
FDA Desk Officer, FAX: 202-395-7285, or emailed to oira_submission@omb.eop.gov. All
comments should be identified with the title, “Revision of the Nutrition and Supplement Facts
Labels and Serving Sizes of Foods That Can Reasonably Be Consumed At One-Eating
Occasion.”
In compliance with the PRA (44 U.S.C. 3407(d)), we have submitted the information
collection provisions of this proposed rule to OMB for review. These requirements will not be
effective until we obtain OMB approval. We will publish a notice concerning OMB approval of
these requirements in the Federal Register.

Page 13

Reference List
1. U.S. Food and Drug Administration. "Preliminary Regulatory Impact Analysis (PRIA) for
the Food Labeling: Revision of the Nutrition and Supplement Facts Labels Notice of
Proposed Rulemaking (Docket No. FDA-2012-N-1210) and Food Labeling: Serving Sizes
of Foods That Can Reasonably Be Consumed At One Eating Occasion; Dual-Column
Labeling; Updating, Modifying, and Establishing Certain Reference Amounts Customarily
Consumed; Serving Size for Breath Mints; and Technical Amendments Notice of Proposed
Rulemaking (Docket No. FDA-2004-N-0258)", 2014. Available at
http://www.regulations.gov/#!documentDetail;D=FDA-2012-N-1210-0002.

Page 14