[Federal Register Volume 67, Number 16 (Thursday, January 24, 2002)]
[Rules and Regulations]
[Pages 3428-3431]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-1751]



[[Page 3428]]

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DEPARTMENT OF AGRICULTURE

Food Safety and Inspection Service

9 CFR Parts 391, 590, and 592

[Docket No.01-019F]
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: Final rule.

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SUMMARY: The Food Safety and Inspection Service (FSIS) is increasing 
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 (the increase of 3.6 percent anticipated at the time 
of the proposal to be effective January 2002) and inflation. At this 
time, FSIS is not changing 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, done on 
other than a continuous resident basis, the Agency is adding Part 592 
to the CFR. At this time, FSIS is only including the voluntary egg 
products inspection fees in this new part. The Agency is also amending 
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 final rule is effective January 27, 2002.

FOR FURTHER INFORMATION CONTACT: For information concerning policy 
issues, contact Daniel Engeljohn, Ph.D., Director, Regulations and 
Directive Development Staff, 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 slaughtered at 
official establishments, meat and poultry processed at official 
establishments and egg products processed 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.
    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 inspection services due specifically to 
the national and locality pay raise for Federal employees (the increase 
of 3.6 percent anticipated at the time of the proposal to be effective 
January 2002) and inflation.
    FSIS calculated the new 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 new 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 new fees.
    The current and new fees are listed by type of service in Table 1.

    Table 1.--Current and New Fees--Per Hour Per Employee--By Type of
                                 Service
            [Except for voluntary inspection of egg products]
------------------------------------------------------------------------
                                                  Current
                    Service                         rate       New rate
------------------------------------------------------------------------
Base time.....................................       $38.44       $42.64
Overtime & holiday............................        41.00        44.40
Laboratory....................................        60.44        68.32
------------------------------------------------------------------------

    The differing new 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 In Table 1
------------------------------------------------------------------------
 
------------------------------------------------------------------------
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 raising 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

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to $42.64 per hour per program employee and for overtime and holiday 
inspection which is currently set forth in Sec. 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 holiday 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 new fee increase for 
the voluntary inspection of egg products, FSIS is adding provisions 
that delineate the types of services that 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 adding part 592 to 
Title 9 of the CFR which contains 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 amending 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 including in part 592 of Title 9 of the 
CFR 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 a separate rulemaking, the Agency will 
propose to include in Title 9 of the CFR other provisions of the 
voluntary inspection of egg products regulations. 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.

Proposed Rule and Comments

    On October 16, 2001, FSIS published a proposed rule (66 FR 52548) 
to increase the fees it charges for meat, poultry, and egg products 
voluntary, overtime, and holiday inspection services. The Agency 
provided 30 days for public comment, ending on November 11, 2001. FSIS 
received no comments on the proposed rule. The Agency believes that 
adequate notice has been given to affected parties. The Administrator 
has determined that these amendments should be effective less than 30 
days after publication in the Federal Register in order for FSIS to 
recover the costs of the services provided and reduce the possibility 
of monetary losses for the Agency. Therefore, the increases in fees 
will be effective January 27, 2002.

Summary of the Final Rule

    FSIS is amending 9 CFR 391.2 to increase the base time fee for 
providing meat and poultry voluntary inspection, identification, and 
certification services from $38.44 to $42.64 per hour per program 
employee. The Agency is also amending 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 $41.00 per hour 
per employee to $44.40 per hour per employee. Additionally, FSIS is 
amending Sec. 391.4 to increase the rate for laboratory services from 
$60.44 per hour per employee to $68.32 per hour per employee. Further, 
the Agency is adding part 592 to the CFR to increase the rate for the 
voluntary inspection of egg products for base time from $33.64 to 
$42.64 per hour per employee and for overtime and holiday inspection 
from $35.52 to $44.40 per hour per program employee. FSIS is also 
amending 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 AMA.

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 will 
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 for, in 
general, reflect only a small increase in the costs currently borne by 
those entities that choose to use the inspection services for which 
fees are being raised. Moreover, smaller establishments and plants are 
unlikely to use a significant amount of overtime and holiday inspection 
services. The inspection services that the fee increases effect 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 the Agency's services are 
likely to have calculated that the incremental costs of overtime and 
holiday inspection services will be less than the incremental expected 
benefits of additional revenues that they would realize from additional 
production.

Economic Effects

    As a result of the new 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 will 
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 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.

[[Page 3430]]

Executive Order 12988

    This final rule has been reviewed under Executive Order 12988, 
Civil Justice Reform. This final 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 
final 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, 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 is amending 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 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

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and must pay the Agency for such holiday work at an hourly rate of 
$44.40.

    Done at Washington, DC, on January 17, 2002.
Margaret O'K. Glavin,
Acting Administrator.
[FR Doc. 02-1751 Filed 1-23-02; 8:45 am]
BILLING CODE 3410-DM-P