[Federal Register Volume 66, Number 200 (Tuesday, October 16, 2001)]
[Proposed Rules]
[Pages 52548-52551]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-25923]


 ========================================================================
 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. 66, No. 200 / Tuesday, October 16, 2001 / 
Proposed Rules  

[[Page 52548]]



DEPARTMENT OF AGRICULTURE

Food Safety and Inspection Service

9 CFR Parts 391, 590, and 592

[Docket No. 01-019P]
RIN 0583-AC89


Increases in Fees for Meat, Poultry, and Egg Products Inspection 
Services--Fiscal Year (FY) 2002

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 increases in fees reflect the national and locality pay 
raise for Federal employees (proposed 3.6 percent increase effective 
January 2002) and inflation. At this time, FSIS is not proposing to 
amend the fee for the Accredited Laboratory Program. To raise the fees 
for voluntary egg products inspection (base time) and overtime and 
holiday voluntary inspection activities, the Agency is proposing to add 
part 592 to the CFR for voluntary egg products inspection. At this 
time, FSIS is proposing only to include the fees in this new part. 
Further, the Agency is proposing to amend the heading of Subchapter I 
of Chapter III of the CFR by deleting the word ``Act'' so the heading 
reads ``Egg Products Inspection'' because voluntary inspection of egg 
products is performed under the Agricultural Marketing Act (AMA).

DATES: The Agency must receive comments by November 15, 2001.

ADDRESSES: Submit one original and two copies of written comments to 
FSIS Docket Clerk, Docket 00-019P, 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, except Federal holidays.

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 fees, contact Michael B. Zimmerer, 
Director, Financial Management Division, Office of Management, FSIS, 
U.S. Department of Agriculture, 5601 Sunnyside Avenue, Mail Drop 5262 
Beltsville, MD 20705, (301) 504-5885.

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 livestock and poultry slaughter at 
official establishments, and meat and poultry processing at official 
establishments and of egg products processing 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.) (AMA), 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 AMA, 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 1, 2001 to September 30, 2002, the Agency has identified 
increases in the costs of these nonmandatory inspection services due 
specifically to the national and locality pay raise for Federal 
employees (proposed 3.6 percent increase effective January 2002) and 
inflation.
    FSIS calculated the proposed fees by adding the projected increase 
in salaries and inflation for FY 2001 and FY 2002 to the actual cost of 
the services in FY 2000. The Agency calculated inflation to be 2.0% for 
FY 2001 and 2.0% for FY 2002. The Agency considered the costs that it 
will incur because of the pay raise in January 2002 and averaged its 
pay costs out over the entire FY 2002.
    FSIS did not use the fees currently charged as a base for 
calculating the proposed fees for FY 2002 because the current fees are 
based on estimates of costs to the Agency for FY 2001 and FY 2002. The 
Agency now knows the actual cost of inspection services for FY 2000 and 
used the actual costs in calculating the proposed fees.
    The current and proposed fees are listed by type of service in 
Table 1.

 Table 1.--Current and Proposed Fees--Per Hour Per Employee--By Type of
         Service Except for Voluntary Inspection of Egg Products
------------------------------------------------------------------------
                                                     Previous   Proposed
                      Service                          rate       rate
------------------------------------------------------------------------
Base time.........................................     $38.44     $42.64
Overtime & holiday................................      41.00      44.40

[[Page 52549]]

 
Laboratory........................................      60.04      68.32
------------------------------------------------------------------------

    The differing proposed 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 2000 cost........................................       $39.67
Inflation and salary increases.............................         2.95
Adjustment for divisibility by quarter hours...............          .02
                                                            ------------
    Total..................................................        42.64
------------------------------------------------------------------------
Overtime and Holiday Inspection Services...................
Actual FY 2000 cost........................................        41.32
Inflation and salary increases.............................         3.07
Adjustment for divisibility by quarter hours...............          .01
                                                            ------------
    Total..................................................        44.40
------------------------------------------------------------------------
Laboratory Services........................................
Actual FY 2000 cost........................................        63.59
Inflation and salary increases.............................         4.73
                                                            ------------
    Total..................................................        68.32
------------------------------------------------------------------------

    FSIS is also proposing to raise the fees for its voluntary 
inspection of egg products for base time, which are currently set forth 
in Sec. 55.510(b) of Title 7 of the Code of Federal Regulations (CFR), 
from $33.64 to $42.64 per hour per program employee and for overtime 
and holiday inspection which is currently set forth in section 
55.510(c) of Title 7 of the CFR from $35.52 to $44.40 per hour per 
program employee. The differing proposed fees for basetime services and 
for holidays and overtime services is due to the different amount that 
it costs FSIS to provide those services. These differences in cost stem 
from various factors, which include, the differing salary levels of the 
program employees who perform the services. These fees have not been 
changed in six years. Additionally, in conjunction with the proposed 
fee increase for the voluntary inspection of egg products, FSIS is 
proposing provisions which delineate what types of services would be 
considered to be overtime or holiday work.
    When the regulations governing the mandatory inspection of egg 
products were transferred to Title 9 of the Code of Federal Regulations 
(CFR) on December 31, 1998 (63 FR 72352), the regulations governing the 
voluntary inspection of egg products were not also transferred. FSIS, 
however, does perform voluntary inspection of egg products, and certain 
other products, under the AMA. The Agency is now proposing to add part 
592 to title 9 of the CFR which will contain the fees for basetime and 
overtime and holiday voluntary inspection of egg products, as well as 
an explanation of what services are considered to be overtime and 
holiday work. Further, the Agency is proposing to amend the heading of 
Subchapter I of Chapter III of the CFR by deleting the word ``Act'' so 
the heading will be ``Egg Products Inspection.''
    At this time, FSIS is only proposing to include the base time fee 
scheme and the overtime and holiday fee scheme for the voluntary 
inspection of egg products that is done on other than a continuous 
resident basis in Part 592 of Title 9 of the CFR. In a separate 
rulemaking, the Agency will propose to include other provisions of the 
voluntary egg products inspection regulations in title 9 of the CFR. 
FSIS will coordinate this effort with AMS.
    The Agency must recover the actual cost of voluntary inspection 
services covered by this rule. These fee increases are essential for 
the continued sound financial management of the Agency's costs. FSIS 
plans to make the final rule effective in October 2001. To 
expeditiously make this rulemaking effective so that the increased 
costs can be recovered in a timely fashion, and because the Agency has 
previously announced (65 FR 60093) 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 final 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 final 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 small 
entities.
    Small establishments and plants should not be affected adversely by 
the increases in fees because the new fee increases provided, in 
general, for reflect only a small increase in the costs currently borne 
by those entities that choose to use certain inspection services. 
Moreover, smaller establishments and plants are unlikely to use a 
significant amount of overtime and holiday inspection services. The 
inspection services for which fee increases are proposed are generally 
used by larger establishments and plants because of their larger 
production volume, the greater complexity and diversity of the products 
that they produce, and the need of their clients (large commercial or 
institutional establishments) for on-time delivery of large volumes of 
product.
    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 that they would realize from additional 
production.

Economic Effects

    As a result of the proposed fees, the Agency expects to collect an 
estimated $101 million in revenues for FY 2002, compared to $94 million 
under the current fee structure. The costs that industry would 
experience by the raise in fees are similar to other increases that the 
industry faces because of inflation and wage increases.
    The total volume of meat and poultry slaughtered under Federal 
inspection in 2000 was about 82 billion pounds (Livestock, Dairy, Meat, 
and Poultry Outlook Report, Economic Research Service, USDA, March 28, 
2001). The total volume of U.S. egg product production in 2000 was 
about 2.3 billion pounds (2001 Agriculture Statistics, USDA). The 
increase in cost per pound of product associated with the proposed fees 
increases is, in general, $.00008. 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 
proposed fee increases 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

[[Page 52550]]

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 in 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 
590.300 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 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.

9 CFR Part 592

    Eggs and egg products, Exports, Food labeling, Imports.


    For the reasons set forth in the preamble, 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 is $42.64 
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 is $44.40 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 is $68.32 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 $44.40.
    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 $44.40.
* * * * *

    6. Revise the heading of Subchapter I to read as follows:

SUBCHAPTER I--EGG PRODUCTS INSPECTION

    7. Add part 592 to Subchapter I to read as follows:

PART 592--VOLUNTARY INSPECTION OF EGG PRODUCTS

Sec.
592.1  Scope and Purpose.
592.2  Base time rate.
593.3  Overtime rate.
593.4  Holiday rate.


    Authority: 7 U.S.C. 1621-1627.


Sec. 592.1  Scope and Purpose.

    The fees that shall be charged for, and collected by the Food 
Safety and Inspection Service for the voluntary base time, overtime, 
and holiday time inspection services of egg products as provided by 
FSIS on other than a continuous resident basis shall be at the 
applicable rates and on the basis set forth in Secs. 592.2 through 
592.4 below, in lieu of that for such services set forth in 7 CFR Part 
55. The fees and charges for such services shall be paid by check, 
draft, or money order to the Food Safety and Inspection Service.


Sec. 592.2  Base time rate.

    The base time rate for voluntary inspection services of egg 
products is $42.64 per hour per program employee.


Sec. 592.3  Overtime rate.

    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

[[Page 52551]]

such overtime at an hourly rate of $44.40.


Sec. 592.4  Holiday rate.

    When an official plant requires voluntary 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 $44.40.
* * * * *

    Done at Washington, DC, on October 10, 2001.
Thomas J. Billy,
Administrator.
[FR Doc. 01-25923 Filed 10-15-01; 8:45 am]
BILLING CODE 3410-DM-P