[Federal Register Volume 65, Number 142 (Monday, July 24, 2000)]
[Proposed Rules]
[Pages 45545-45547]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-18567]


 ========================================================================
 Proposed Rules
                                                 Federal Register
 ________________________________________________________________________
 
 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
 
 ========================================================================
 

  Federal Register / Vol. 65, No. 142 / Monday, July 24, 2000 / 
Proposed Rules  

[[Page 45545]]



DEPARTMENT OF AGRICULTURE

Food Safety and Inspection Service

9 CFR Parts 391 and 590

[Docket No.00-025P]
RIN 0583-AC74


Increases in Fees for Meat, Poultry, and Egg Products Inspection 
Services--Fiscal Year (FY) 2001

AGENCY: Food Safety and Inspection Service, USDA.

ACTION: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: The Food Safety and Inspection Service (FSIS) is proposing to 
increase the fees that it charges meat and poultry establishments, egg 
products plants, importers, and exporters for providing voluntary 
inspection services, overtime and holiday inspection services, 
identification services, certification services, and laboratory 
services. These proposed increases in fees reflect the national and 
locality pay raise for Federal employees (proposed 3.7 percent 
effective January 2001) and inflation. The Agency is proposing to make 
the increases in fees effective October 8, 2000. At this time, FSIS is 
not proposing to amend the fee for the Accredited Laboratory Program.

DATES: The Agency must receive comments by August 23, 2000.

ADDRESSES: Submit one original and two copies of written comments to 
FSIS Docket Clerk, Docket #00-025P, U.S. Department of Agriculture, 
Food Safety and Inspection Service, Room 102, Cotton Annex, 300 12th 
Street, SW, Washington, DC 20250-3700. All comments submitted in 
response to this proposal will be available for public inspection in 
the Docket Clerk's Office between 8:30 a.m. and 4:30 p.m., Monday 
through Friday.

FOR FURTHER INFORMATION CONTACT: For information concerning policy 
issues, contact Daniel Engeljohn, Ph.D., Director, Regulations 
Development and Analysis Division, Office of Policy, Program 
Development, and Evaluation, FSIS, U.S. Department of Agriculture, Room 
112, Cotton Annex, 300 12th Street, SW., Washington, DC 20250-3700, 
(202) 720-5627, fax number (202) 690-0486.
    For information concerning fee development, contact Michael B. 
Zimmerer, Director, Financial Management Division, Office of 
Management, FSIS, U.S. Department of Agriculture, Room 2130-S, 1400 
Independence Avenue, SW., Washington, DC 20250-3700, (202) 720-3552.

SUPPLEMENTARY INFORMATION:

Background

    The Federal Meat Inspection Act (FMIA) (21 U.S.C. 601 et seq.), the 
Poultry Products Inspection Act (PPIA) (21 U.S.C. 451 et seq.), and the 
Egg Products Inspection Act (EPIA) (21 U.S.C. 1031 et seq.) provide for 
mandatory Federal inspection of meat and poultry slaughter and 
processing at official establishments and of egg products at official 
plants. FSIS bears the cost of mandatory inspection. Establishments and 
plants pay for inspection services performed on holidays or on an 
overtime basis.
    In addition, under the Agricultural Marketing Act of 1946, as 
amended (7 U.S.C. 1621 et seq.), FSIS provides a range of voluntary 
inspection, certification, and identification services to assist in the 
orderly marketing of various animal products and byproducts. These 
services include the certification of technical animal fats and the 
inspection of exotic animal products, such as antelope and elk. FSIS is 
required to recover the costs of voluntary inspection, certification, 
and identification services.
    Under the Agricultural Marketing Act of 1946, FSIS also provides 
certain voluntary laboratory services that establishments and others 
may request the Agency to perform. Laboratory services are provided for 
four types of analytic testing: microbiological testing, residue 
chemistry tests, food composition tests, and pathology testing. FSIS 
must recover these costs.
    Every year FSIS reviews the fees that it charges for providing 
overtime and holiday inspection services; voluntary inspection, 
identification, and certification services; and laboratory services. 
The Agency performs a cost analysis to determine whether the fees that 
it has established are adequate to recover the costs that it incurs in 
providing these services. In the Agency's analysis of projected costs 
for October 8, 2000 to September 30, 2001, the Agency has identified 
increases in the costs of these nonmandatory inspection services. The 
proposed increases in fees are attributable to cost escalation, 
specifically the national and locality pay raise for Federal employees 
(proposed 3.7 percent effective January 2001) and inflation.
    FSIS calculated the proposed fees by adding salaries and inflation 
for FY 2000 and FY 2001 to the actual cost of the services in FY 1999. 
The Agency calculated inflation to be 1.55% for FY 2000 and 1.90% for 
FY 2001. The Agency considered the costs that it will incur because of 
the pay raise in January 2001 and averaged its pay costs out over the 
entire FY 2001.
    FSIS did not use the fees currently charged as a base for 
calculating the proposed fees for FY 2001 because the current fees are 
based on estimates of costs to the Agency for FY 1999 and FY 2000. The 
Agency now knows the actual cost of inspection services for FY 1999 and 
used the actual costs in calculating the proposed fees.
    FSIS is exploring the possibility of proposing a three to five year 
plan of fee rate adjustments based on estimates of cost escalation.
    FSIS is proposing to amend 9 CFR 391.2 to increase the base time 
fee for providing meat and poultry voluntary inspection, 
identification, and certification services from $37.88 per hour per 
employee to $38.44 per hour per program employee. FSIS is also 
proposing to amend Secs. 391.3, 590.126, and 590.128(a) to increase the 
rate for providing meat, poultry, and egg products overtime and holiday 
inspection services from $39.76 per hour per employee to $41.00 per 
hour per employee. In addition, FSIS is proposing to amend Sec. 391.4 
to increase the rate for laboratory services from $58.52 per hour per 
employee to $60.04 per hour per employee. The current and proposed fees 
are listed by type of service in Table 1.

[[Page 45546]]



 Table 1.--Current and Proposed Fees--Per Hour Per Employee--By Type of
                                Service
------------------------------------------------------------------------
                                                      Current   Proposed
                      Service                          rate       rate
------------------------------------------------------------------------
Base time..........................................    $37.88     $38.44
Overtime & holiday.................................     39.76      41.00
Laboratory.........................................     58.52      60.04
------------------------------------------------------------------------

    The differing fee increase for each type of service is the result 
of the different amount that it costs FSIS to provide these three types 
of services. The differences in costs stem from various factors 
including different salary levels of the program employees who perform 
the services. See Table 2.

       Table 2.--Calculations for the Different Types of Services
------------------------------------------------------------------------
                           Base time
------------------------------------------------------------------------
Actual FY 1999 cost............................................   $35.52
Inflation and salary increases.................................     2.91
Adjustment for divisibility by quarter hours...................      .01
                                                                --------
    Total......................................................   $38.44
                                                                ========
Overtime and holiday inspection services:
  Actual FY 1999 cost..........................................   $37.88
  Inflation and salary increases...............................     3.10
  Adjustment for divisibility by quarter hours.................      .02
                                                                --------
    Total......................................................   $41.00
                                                                ========
Laboratory Services
  Actual FY 1999 cost..........................................   $55.50
  Inflation and salary increases...............................     4.54
    Total......................................................   $60.04
------------------------------------------------------------------------

    New fees for egg products overtime and holiday inspection services 
will become effective on July 30, 2000. However, FSIS is proposing a 
new fee because the Agency has moved to a FY basis for reviewing fees 
and is charging the same fee for meat, poultry, and egg products 
overtime and holiday inspection services. FSIS calculated the proposed 
fees based on the presumption that they would become effective at the 
start of FY 2001, October 8, 2000.
    To expeditiously move this rulemaking to recover the increase in 
costs, and because the Agency has previously announced (64 FR 61223) 
(65 FR 11486) that it would be reviewing these fees on a FY basis, the 
Administrator has determined that 30 days for public comment is 
sufficient.

Executive Order 12866 and Regulatory Flexibility Act

    Because this proposed rule has been determined to be not 
significant, the Office of Management and Budget (OMB) did not review 
it under Executive Order 12866.
    The Administrator, FSIS, has determined that this proposed rule 
would not have a significant economic impact, as defined by the 
Regulatory Flexibility Act (5 U.S.C. 601), on a substantial number of 
entities.
    Small establishments and plants should not be affected adversely by 
the proposed increases in fees because the proposed fee increases 
provided for reflect only a small increase in the costs currently borne 
by those entities that choose to use certain inspection services. These 
inspection services are generally sought by larger establishments and 
plants because of larger production volume, greater complexity and 
diversity in the products they produce, and the need for on-time 
delivery of large volumes of product by their clients--generally large 
commercial or institutional establishments.
    Moreover, smaller establishments and plants are unlikely to use a 
significant amount of overtime and holiday inspection services. 
Establishments and plants that seek FSIS services are likely to have 
calculated that the incremental costs of overtime and holiday 
inspection services would be less than the incremental expected 
benefits of additional revenues they would realize from additional 
production.

Economic Effects

    Under the proposed fees, the Agency expects to collect an estimated 
$106.2 million in revenues for FY 2001, compared to $103 million under 
the current fee structure.
    The costs that industry would experience by the proposed raise in 
fees are similar to other increases the industry faces due to inflation 
and wage increases.
    The total volume of meat and poultry slaughtered under Federal 
inspection in 1998 was about 81 billion pounds. The total volume of 
U.S. egg product production in 1998 was about 3.2 billion pounds. The 
increase in cost per pound of product associated with these proposed 
fees increases is $.00004. Even in competitive industries like meat, 
poultry, and egg products, this amount of increase in costs would have 
an insignificant impact on profits and prices.
    The industry is likely to pass through a significant portion of the 
fee increase to consumers because of the inelastic nature of the demand 
curve facing these firms. Research has shown that consumers are 
unlikely to reduce demand significantly for meat and poultry products, 
including egg products, when prices increase. Huang estimates that 
demand would fall by .36 percent for a one percent increase in price 
(Huang, Kao S., A Complete System of U.S. Demand for Food. USDA/ERS 
Technical Bulletin No. 1821, 1993, p.24). Because of the inelastic 
nature of demand and the competitive nature of the industry, individual 
firms are not likely to experience any change in market share to 
response to an increase in inspection fees.

Executive Order 12988

    This proposed rule has been reviewed under Executive Order 12988, 
Civil Justice Reform. This proposed rule: (1) Preempts State and local 
laws and regulations that are inconsistent with this rule; (2) has no 
retroactive effect; and (3) does not require administrative proceedings 
before parties may file suit in court challenging this rule. However, 
the administrative procedures specified in 9 CFR 306.5, 381.35, and 
590.320 through 590.370, respectively, must be exhausted before any 
judicial challenge of the application of the provisions of this 
proposed rule, if the challenge involves any decision of an FSIS 
employee relating to inspection services provided under the FMIA, PPIA, 
or EPIA.

Additional Public Notification

    Public awareness of all segments of rulemaking and policy 
development is important. Consequently, in an effort to better ensure 
that minorities, women, and persons with disabilities are aware of this 
proposed rule, FSIS will announce and provide copies of this Federal 
Register publication in the FSIS Constituent Update. FSIS provides a 
weekly FSIS Constituent Update via fax to over 300 organizations and 
individuals. In addition, the update is available on line through the 
FSIS web page located at http://www.fsis.usda.gov. The update is used 
to provide information regarding FSIS policies, procedures, 
regulations, Federal Register notices, FSIS public meetings, recalls, 
and any other types of information that could affect or would be of 
interest to our constituents/stakeholders. The constituent fax list 
consists of industry, trade, and farm groups, consumer interest groups, 
allied health professionals, scientific professionals, and other 
individuals that have requested to be included. Through these various 
channels, FSIS is able to provide information to a much broader, more 
diverse audience than would be otherwise possible. For more information 
or to be added to the constituent fax list, fax your request to

[[Page 45547]]

the Congressional and Public Affairs Office, at (202) 720-5704.

List of Subjects

9 CFR Part 391

    Fees and charges, Government employees, Meat inspection, Poultry 
products.

9 CFR Part 590

    Eggs and egg products, Exports, Food labeling, Imports.
    Accordingly, FSIS proposes to amend 9 CFR chapter III as follows:

PART 391--FEES AND CHARGES FOR INSPECTION AND LABORATORY 
ACCREDITATION

    1. The authority citation for part 391 continues to read as 
follows:

    Authority: 7 U.S.C. 138f; 7 U.S.C. 394, 1622 and 1624; 21 U.S.C. 
451 et. seq.; 21 U.S.C. 601-695; 7 CFR 2.18 and 2.53.

    2. Sections 391.2, 391.3, and 391.4 are revised to read as follows:


Sec. 391.2  Base time rate.

    The base time rate for inspection services provided pursuant to 
Secs. 350.7, 351.8, 351.9, 352.5, 354.101, 355.12, and 362.5 of this 
chapter is $38.44 per hour per program employee.


Sec. 391.3  Overtime and holiday rate.

    The overtime and holiday rate for inspection services provided 
pursuant to Secs. 307.5, 350.7, 351.8, 351.9, 352.5, 354.101, 355.12, 
362.5 and 381.38 of this chapter is $41.00 per hour per program 
employee.


Sec. 391.4  Laboratory services rate.

    The rate for laboratory services provided pursuant to Secs. 350.7, 
351.9, 352.5, 354.101, 355.12, and 362.5 of this chapter is $60.44 per 
hour per program employee.

PART 590--INSPECTION OF EGGS AND EGG PRODUCTS (EGG PRODUCTS 
INSPECTION ACT)

    3. The authority citation for Part 590 continues to read as 
follows:

    Authority: 21 U.S.C. 1031-1056.

    4. Section 590.126 is revised to read as follows:


Sec. 590.126  Overtime inspection service.

    When operations in an official plant require the services of 
inspection personnel beyond their regularly assigned tour of duty on 
any day or on a day outside the established schedule, such services are 
considered as overtime work. The official plant must give reasonable 
advance notice to the inspector of any overtime service necessary and 
must pay the Agency for such overtime at an hourly rate of $41.00.
    5. In Sec. 590.128, paragraph (a) is revised to read as follows:


Sec. 590.128  Holiday inspection service.

    (a) When an official plant requires inspection service on a holiday 
or a day designated in lieu of a holiday, such service is considered 
holiday work. The official plant must, in advance of such holiday work, 
request the inspector in charge to furnish inspection service during 
such period and must pay the Agency for such holiday work at an hourly 
rate of $41.00.
* * * * *

    Done at Washington, DC, on July 18, 2000.
Thomas J. Billy,
Administrator.
[FR Doc. 00-18567 Filed 7-21-00; 8:45 am]
BILLING CODE 3410-DM-P