The Executive Commissioner of the Health and Human Services Commission, on behalf of the Department of State Health Services (department), proposes new §229.661 concerning cottage food production operations.

BACKGROUND AND PURPOSE

The purpose of the new rule is to implement Senate Bill (SB) 81 of the 82nd Legislature, Regular Session, 2011, that amends Health and Safety Code, Chapter 437, relating to requirements for a cottage food production operation. The Executive Commissioner of the Health and Human Services Commission is directed in SB 81 to adopt a rule requiring a cottage food production operation to label all of the foods described in Health and Safety Code, §437.001(2-b)(A) that the operation sells to consumers.

A cottage food production operation allows an individual to operate out of the individual's home, who produces a baked good, a canned jam or jelly, or a dried herb or herb mix for sale at the person's home; has an annual gross income of $50,000 or less from the sale of foods; and sells the foods produced only directly to consumers.

SECTION-BY-SECTION SUMMARY

SB 81 states that a cottage food production operation is not a food service establishment for purposes of the Health and Safety Code, Chapter 437. This rule was developed under the authority of the Health Safety Code, §437.0193, which gives the Executive Commissioner rulemaking authority. The new rule provides definitions for cottage food production operations, labeling requirements, complaint database requirements, and sales location requirements.

New definitions in Health and Safety Code, §437.001, are added to incorporate terminology due to the enactment of SB 81 in §229.661(b).

The new definition of "baked good" in §229.661(b)(1) is added to specify the types of foods and products that are allowed to be produced by a cottage food production operation.

The new definition of "cottage food production operation" in §229.661(b)(2) is added to specify what types of food production methods can be performed in a residential setting.

Concerning §229.661(b)(3), the definition of "department" is added to specify the Department of State Health Services.

The new definition of "Executive Commissioner" in §229.661(b)(4) is added to specify the Executive Commissioner of the Health and Human Services Commission.

The new §229.661(b)(5) adds the definition of "food establishment" to specify types of food service operations that are considered to be a food establishment, which must comply with the Texas Food Establishment Rules and to specify that a "cottage food production operation" is not a food establishment.

The new definition of "herbs" in §229.661(b)(6) is added to specify that the use of herbs are for culinary purposes only.

The new definition of "home" in §229.661(b)(7) is added to specify the meaning of the term home as a primary residence.

Health and Safety Code, §437.0191, exempts cottage food production operations from being a food service establishment and the definition of "potentially hazardous food" is added to clarify the types of foods that are not allowed to be produced by a cottage food production operation in §229.661(b)(8).

The new §229.661(c) is added to specify the department's responsibilities in reference to complaints as stated in Health and Safety Code, §437.0192.

The new §229.661(d) is added to specify labeling requirements for food items produced by a cottage food production operation and that the department does not inspect a cottage food production operation in compliance with Health and Safety Code, §437.0193.

The new §229.661(e) is added to specify that foods produced by a cottage food production operation is prohibited from selling through the Internet in compliance with Health and Safety Code, §437.0194.

FISCAL NOTE

Susan E. Tennyson, Section Director, Environmental and Consumer Safety Section, has determined that for each year of the first five years that §229.661 is in effect, there will be a net loss in revenue of $4,813 due to a reduction in the collection of permit fees for retail food establishments that will become cottage food production operations, and a gain in revenue associated with permit fees issued to farmers market. There will be no other fiscal implications to the state or local governments as a result of enforcing and administering the section as proposed.

SMALL AND MICRO-BUSINESS IMPACT ANALYSIS

Ms. Tennyson has also determined that there will be no adverse economic impact on small businesses or micro-businesses required to comply with §229.661 as proposed. This is determined by interpretation of the rules that small businesses and micro-businesses are only required to label all foods produced by a cottage food production operation in order to comply with the section.

ECONOMIC COSTS TO PERSONS AND IMPACT ON LOCAL EMPLOYMENT

There are no anticipated economic costs to persons who are required to comply with the section as proposed. There is no anticipated negative impact on local employment.

PUBLIC BENEFIT

In addition, Ms. Tennyson has also determined that for each year of the first five years the section is in effect, the public will benefit from adoption of the section. The public benefit anticipated as the result of administering these sections is to ensure the public is aware that food produced by a cottage food production operation is not inspected by the department or a local health department.

REGULATORY ANALYSIS

The department has determined that this proposal is not a "major environmental rule" as defined by Government Code, §2001.0225. "Major environmental rule" is defined to mean a rule the specific intent of which is to protect the environment or reduce risk to human health from environmental exposure and that may adversely affect, in a material way, the economy, a sector of the economy, productivity, competition, jobs, the environment or the public health and safety of a state or a sector of the state.

TAKINGS IMPACT ASSESSMENT

The department has determined that the proposed new rule does not restrict or limit an owner's right to his or her property that would otherwise exist in the absence of government action and, therefore, does not constitute a taking under Government Code, §2007.043.

PUBLIC COMMENT

Comments on the proposed new rule may be submitted to Cheryl Wilson, Food Establishments Group, Policy, Standards and Quality Assurance Unit, Division of Regulatory Services, Environmental and Consumer Safety Section, Department of State Health Services, Mail Code 1987, P.O. Box 149347, Austin, Texas 78714-9347, (512) 834-6770, extension 2053, or by email to cheryl.wilson@dshs.state.tx.us. Comments will be accepted for 30 days following publication of the proposal in the Texas Register.

PUBLIC HEARING

A public hearing to receive comments on the proposal is scheduled for February 2, 2012, from 10:00 a.m. - 12:00 p.m., at the main campus of the Department of State Health Services, 1100 West 49th Street, Room K-100, Austin, Texas 78756. Please contact Cheryl Wilson at (512) 834-6770, extension 2053, or cheryl.wilson@dshs.state.tx.us if you have questions.

LEGAL CERTIFICATION

The Department of State Health Services General Counsel, Lisa Hernandez, certifies that the proposed new rule has been reviewed by legal counsel and found to be within the state agencies' authority to adopt.

STATUTORY AUTHORITY

The new rule is authorized under the Health and Safety Code, Chapter 437, which provides the Executive Commissioner of the Health and Human Services Commission with authority to adopt rules and guidelines relating to §437.0193, labeling requirements for cottage food production operations; and Government Code, §531.0055(e), and Health and Safety Code, §1001.075, which authorize the Executive Commissioner of the Health and Human Services Commission to adopt rules and policies necessary for the operation and provision of health and human services by the department and for the administration of Health and Safety Code, Chapter 1001.

The new rule affects Health and Safety Code, Chapters 437 and 1001; and Government Code, Chapter 531.