The Texas Department of Health (department) adopts the repeal of §§229.191 - 229.208 and new §§229.541 - 229.554, 229.571 - 229.584, 229.601 - 229.614, and 229.631 - 229.644, concerning the regulation of food, drug, device, and cosmetic salvage establishments and brokers. Section 229.604 is adopted with changes to the proposed text as published in the August 9, 2002, issue of the Texas Register (27 TexReg 6983). The repeal of §§229.191 - 229.208 and new §§229.541 - 229.554, 229.571 - 229.584, 229.601 - 229.603, 229.605 - 229.614, 229.631 - 229.644 are adopted without changes to the proposed text, and the sections will not be republished.

The new sections establish minimum standards for the regulation of food, drug, device, and cosmetic salvage establishments and brokers in separate subchapters and are consistent with changes in the statutory provisions enacted as a result of Senate Bill 1080, passed during the 77th Texas Legislature (2001). Senate Bill 1080 amended the Health and Safety Code, §§431.008, 431.023, 431.048, 431.059, 432.003, 432.005, 432.011, 432.026, and 483.041. The new sections contain new language and incorporate language that was previously located in §§229.191 -229.208, which are being repealed.

Government Code §2001.039 requires that each state agency review and consider for readoption each rule adopted by the agency pursuant to the Government Code, Chapter 2001 (Administrative Procedures Act). These new sections have been reviewed and the department has determined that the reason for readopting the sections continues to exist; however the rules required revisions as described in this preamble.

The department published a Notice of Intention to Review §§229.191 - 229.208 in the Texas Register (27 TexReg 2084) on March 15, 2002. No comments were received by the department as a result of the publication of the notice.

No comments were received regarding the proposed repeal and new sections concerning the regulation of food, drug, and cosmetic salvage establishments and brokers. The comments received and addressed in this preamble are concerning the proposed sections for regulation of device salvage establishments and brokers.

The department is making the following changes in response to comments requesting clarification of the intent and requirements of the sections.

Change: Concerning determinations of functionality for previously used but not distressed devices, the department amended §229.604(d) in order to clarify the requirements for documenting such determinations. In addition, the department reorganized §229.604(d), by adding §229.604(e) to clarify the intent of the proposed subsection and who is responsible for functionality determinations, including the addition of licensed hospitals as an entity that may accept responsibility for making such determinations.

The following comments were received regarding the proposed new sections. Following each comment is the department's response and any resulting changes.

Comment: Concerning §229.602(b)(6), one commenter suggested that the paragraph referencing 21 Code of Federal Regulations (CFR), Part 820, Quality System Regulation, be deleted since it does not apply to salvagers of medical devices.

Response: The department disagrees with the commenter and believes the language is necessary in order to properly reference existing state and federal requirements for salvagers who also remanufacture medical devices as part of their business activities. No changes were made as a result of the comment.

Comment: Concerning the definition of "class I exempt device" in §229.603(6), one commenter suggested the definition be amended to exclude references to 21 CFR, §§820.180 and 820.198.

Response: The department disagrees with the commenter and believes the language is necessary in order for the definition to be consistent with the term as used by the U.S. Food and Drug Administration in referencing the national device classification system. No changes were made as a result of the comment.

Comment: Concerning the definition of "device manufacturer" in §229.603(14), one commenter suggested amending the definition to exempt those who refurbish or recondition a finished device.

Response: The department disagrees with the commenter in that the definition, as proposed, reflects the intent and scope assigned to device manufacturers by the statutory provisions under Health and Safety Code, Chapter 431. No changes were made as a result of the comment.

Comment: Concerning the definition of "distressed device" in §229.603(15)(B), one commenter objected that the language that refers to distressed devices which have been contaminated by filth or may have been rendered injurious to health is too subjective.

Response: The department disagrees with the commenter and believes the language is intentionally broad in order to conform to the intent and scope of the statutory language found in Health and Safety Code, Chapter 432. No changes were made as a result of the comment.

Comment: Concerning the definition of "distressed device" in §229.603(15)(C), one commenter suggested that the language be amended to include the words "contrary to the normal use of the device" in order to further clarify what are considered "abnormal environmental conditions."

Response: The department disagrees with the commenter and believes the language as proposed is sufficient to convey an understanding of abnormal conditions as they relate to a specific device. No changes were made as a result of the comment.

Comment: Concerning the definition of "distressed device" in §229.603(15)(D), one commenter objected to the language, indicating it was unclear who is responsible for the strength, purity, or quality of a device.

Response: The department disagrees with the commenter and believes the language as proposed is appropriate and consistent with the statutory language used to define the term. The manufacturer or initial distributor of a device is generally responsible for the purported strength, purity, or quality of a device introduced into commerce. No changes were made as a result of the comment.

Comment: Concerning the definition of "distressed device" in §229.603(15)(E), one commenter objected to the language, indicating it was too vague and requested the language be limited to exclude devices rendered unsafe or unsuitable for reasons other than those stated.

Response: The department disagrees with the commenter and believes the language as proposed is appropriate and consistent with the intent and scope of the statutory language used to define the term. No changes were made as a result of the comment.

Comment: Concerning the definition of "nonsalvageable device" in §229.603(23), one commenter asked who makes the determination of whether a device can be safely or practically reconditioned.

Response: The determination of whether a distressed device can be safely or practically reconditioned will in most cases be made by the salvage establishment or broker, with input where appropriate from any source having information relevant to the nature or cause of the distress. Other sources of information may include the original manufacturer or initial distributor of the device, the seller, salvager, or regulatory agency having jurisdiction. No changes were made as a result of the comment.

Comment: Concerning the definition of "quality audit" in §229.603(29), one commenter objected to the requirement for quality audits as excessive, stating that audits were appropriate for manufacturers but not refurbishers.

Response: The department disagrees with the commenter and believes that quality audits are necessary and appropriate for salvage establishments engaged in the reconditioning of class II or class III devices. The department recognizes the lower risk potential associated with reconditioning class I devices, and is therefore not requiring internal audits for firms that recondition class I devices. No changes were made as a result of the comment.

Comment: Concerning the definition of "reconditioning" in §229.603(30), one commenter asked how the department establishes appropriate processes or procedures for reconditioning if it lacks the expertise to determine whether a device is distressed.

Response: "Appropriate processes and procedures" is language referred to in the statutory definition for "reconditioning" and the department interprets those to be any processes and procedures used by a salvage establishment to effectively bring a device into compliance with the statute and these sections. The department, through its authority to inspect licensed salvagers, has the ability to determine whether salvagers adhere to department standards for reconditioning a device. No changes were made as a result of the comment.

Comment: Concerning the definition of "reconditioning" in §229.603(30), one commenter asked what was meant by "the standards of the department."

Response: "Standards of the department" used in the context of the statutory definition for "reconditioning" are interpreted to mean all minimum standards established in these sections that apply to the reconditioning of a device. No changes were made as a result of the comment.

Comment: Concerning the definition of "salvageable device" in §229.603(36), one commenter asked what was meant by "departmental standards" as it applies to the reconditioning of a device.

Response: In this case, "departmental standards" indicates all minimum standards established in these sections that apply to the reconditioning of a device. No changes were made as a result of the comment.

Comment: Concerning §229.604, one commenter requested that the department require hospitals, clinics, and medical schools to conform to regulations similar to those required of device salvagers in order to prevent the distribution of distressed devices to unlicensed salvagers.

Response: The department disagrees with the commenter and believes that the statute, Health and Safety Code, Chapter 432 provides no authority to the department to extend the applicability of these sections to hospitals, clinics, and medical schools, unless such entities engage in specific activities subject to licensure as salvage establishments or brokers. In addition, the department believes that existing enforcement provisions in the statute provide adequate legal remedies for salvagers who engage in business without licensing with the department. No changes were made as a result of the comment.

Comment: Concerning §229.604, four commenters requested that the department exempt hospitals from having to license as salvage establishments or brokers for the purchase or sale of distressed devices. The commenters believe that hospitals, by virtue of their compliance with the department's hospital licensure requirements, have sufficient safeguards in place to use, remediate, and operate distressed devices.

Response: The department disagrees with the commenters and believes that the statute, Health and Safety Code, Chapter 432 provides no authority to the department to offer an exemption specifically for hospitals that desire to buy or sell distressed devices. In addition, the department believes that existing hospital licensure requirements are inadequate to address the intent and scope of device salvaging activities to ensure distressed devices are handled in a manner to prevent unreasonable risk to patients and/or consumers. No changes were made as a result of the comments.

Comment: Concerning §229.604(a)(1), one commenter asked why manufacturers or distributors who recondition a device in the normal course of business are exempt from licensing under these sections.

Response: Manufacturers and distributors who recondition a device in the normal course of business are exempt from licensing under these sections pursuant to the exemption granted under the statutory authority of Health and Safety Code, Chapter 432. No changes were made as a result of the comment.

Comment: Concerning §229.604(d), twenty-one commenters believed that hospitals should not have to license as device salvage establishments or brokers in order to buy or sell used devices that are not distressed. These commenters generally believed that existing safeguards are in place at licensed hospitals to ensure that such devices meet acceptable quality requirements.

Response: The department agrees with the commenters and has modified the subsection by including a reference to "a qualified representative of a hospital licensed under Health and Safety Code, Chapter 241" when acknowledging who is capable of providing determinations of functionality. The changes before the comments in the preamble explain the new language.

Comment: Concerning §229.604(d), one commenter believed the language to be unclear as to whether the department was requiring one or more types of evidence in order to determine the functionality of a device.

Response: The department agrees with the commenter and has modified the rule by clarifying the language, including reorganization of the existing subsection into two subsections. The changes before the comments in the preamble explain the new language.

Comment: Concerning §229.604(d), one commenter stated that the subsection makes the determination that a device is considered a "distressed device" even if it is in need of routine maintenance.

Response: The department disagrees with the commenter and believes that routine servicing of a device is performed in order to prevent the device from becoming a "distressed device" as defined in these sections and Health and Safety Code, Chapter 432. No changes were made as a result of the comment.

Comment: Concerning §229.605(b), one commenter believed that the subsection is illegal in its entirety on the grounds that it violates federal laws governing interstate commerce. The commenter also believed that the subsection creates an unfair advantage to out-of-state salvagers who do not receive an inspection by the department.

Response: The department disagrees with the commenter and believes that the licensing of out-of-state salvage establishments and brokers who traffic in distressed devices within this state is consistent with the statutory intent of Health and Safety Code, Chapter 432, and allowable under federal law in order to protect the health and safety of the citizens of Texas. The department also disagrees with the commenter regarding the fairness of the subsection and believes that the language in §229.605(c) provides the department with an alternative method of verifying that an out-of-state licensee is in compliance with the requirements, absent an inspection performed by the department. No changes were made as a result of the comment.

Comment: Concerning §229.605(c), one commenter believed that no other jurisdiction would provide the department with reports upon request.

Response: The department disagrees with the commenter and believes that other jurisdictions have demonstrated in the past a willingness to cooperate with the department in determining the extent of compliance with these sections and the statutory requirements. The department continues to maintain a strong working relationship with local, state, and federal regulatory authorities in the performance of its duties as they relate to the distribution of distressed devices in interstate commerce. No changes were made as a result of the comment.

Comment: Concerning §§229.607, 229.608, and 229.609, one commenter believed that these sections as they relate to personnel, construction and maintenance of physical facilities, and sanitary facilities and controls should be deleted in their entirety since they are not applicable to device salvaging.

Response: The department disagrees with the commenter and believes that the sections are necessary in order to maintain acceptable levels of employee hygiene and sanitation in facilities that hold or recondition salvageable devices. Essential building requirements and sanitary controls will ensure that salvageable devices are not adversely affected by exposure to natural elements, environmental contaminants, pests, sewage, or refuse which might further contribute to the adulteration of the devices. No changes were made as a result of the comment.

Comment: Concerning §229.610(a)(1), one commenter questioned the need for a salvager to notify the department when engaging in certain salvaging activities. The commenter believed that the paragraph should be deleted in its entirety.

Response: The department disagrees with the commenter and believes that the paragraph is necessary to ensure that the department is promptly notified when salvagers intend to remove distressed devices from areas affected by natural disasters, accidents, power failure, or other emergencies. The salvaging of devices under these circumstances is considered by the department to pose a relatively high risk to consumers in that a greater potential for reuse of nonsalvageable devices has been associated with these situations. No changes were made as a result of the comment.

Comment: Concerning §229.610(a)(3), one commenter believed that the paragraph should be deleted in its entirety due to its excessive burden on salvage establishments and brokers.

Response: The department disagrees with the commenter and believes that the paragraph is necessary in order to control the interstate movement of severely distressed devices originating in Texas. Due to multiple regulatory jurisdictions involving coordination of communication and jurisdictional responsibilities, and the public health risks associated with mishandling these devices, it is imperative that the appropriate federal and state authorities be aware of the intended disposition of these devices. No changes were made as a result of the comment.

Comment: Concerning §229.610(b)(2), one commenter believed that the paragraph's reference to protecting devices from contamination is unwarranted.

Response: The department disagrees with the commenter and believes that the language is necessary to ensure that salvageable devices are handled in a manner that prevents contamination from occurring, regardless of whether the device will be further processed prior to distribution to the consumer. No changes were made as a result of the comment.

Comment: Concerning §§229.610(b)(2), 229.610(b)(3), and 229.610(c), one commenter believed that the references to protecting salvageable devices from contamination due to poisonous or toxic materials or from nonsalvageable devices is unwarranted.

Response: The department disagrees with the commenter and believes that the language is necessary to protect salvageable devices during all phases of storage and reconditioning from any source of contamination. No changes were made as a result of the comment.

Comment: Concerning §229.610(d)(3), one commenter questioned the department's ability to make a determination that a device was nonsalvageable and believed that the paragraph should be deleted in its entirety.