[Federal Register Volume 68, Number 38 (Wednesday, February 26, 2003)]
[Proposed Rules]
[Pages 8858-8860]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-4393]


 ========================================================================
 Proposed Rules
                                                 Federal Register
 ________________________________________________________________________
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 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.
 
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 

  Federal Register / Vol. 68, No. 38 / Wednesday, February 26, 2003 / 
Proposed Rules  

[[Page 8858]]



DEPARTMENT OF AGRICULTURE

Food Safety and Inspection Service

9 CFR Parts 391, 590, and 592

[Docket No. 02-034P]
RIN 0583-AC94


Changes in Fees for Meat, Poultry, and Egg Products Inspection 
Services--Calendar Year (CY) 2003

AGENCY: Food Safety and Inspection Service, USDA.

ACTION: Proposed rule.

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

SUMMARY: The Food Safety and Inspection Service (FSIS) is proposing to 
change 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. The Agency is proposing to raise the fees for voluntary base 
time and holiday and overtime inspection services. These increases in 
fees reflect, among other factors, the national and locality pay raise 
for Federal employees (proposed 4.1 percent increase effective January 
2003) and inflation. FSIS is also proposing to decrease the fee for 
laboratory services because of greater efficiencies realized. The 
Agency is also proposing to decrease the annual fee for the Accredited 
Laboratory Program from $1,500.00 to $1,000.00.

DATES: The Agency must receive comments by March 28, 2003.

ADDRESSES: Submit one original and two copies of written comments to 
FSIS Docket Clerk, Docket 02-034P, 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 Raymond M. Saunders, 
Director, Budget Division, Office of Management, FSIS, U.S. Department 
of Agriculture, 2158 South Building, 1400 Independence Avenue, SW, 
Washington, DC 20250-3700, (202) 720-3367, fax (202)690-4155.

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.
    Non-Federal analytical laboratories are qualified under the 
Accredited Laboratory Program to conduct analyses of official meat and 
poultry samples. The Food, Agriculture, Conservation, and Trade Act of 
1990, as amended, mandates laboratory accreditation fees that cover the 
costs of the Accredited Laboratory Program. The same Act mandates 
annual payment on the anniversary date of each accreditation.
    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 January 12, 2003 to January 10, 2004, the Agency has identified 
increases in the costs of voluntary base time inspection services and 
overtime and holiday inspection services. FSIS has also identified 
decreases in the costs of laboratory services because of greater 
efficiencies. The Agency is also proposing to decrease the annual fee 
for participants in the Accredited Laboratory Program from $1,500.00 to 
$1,000.00 because of a surplus of accumulated funds.
    FSIS calculated the proposed fees by adding the projected increase 
in salaries and inflation for 2003 to the actual cost of the services 
in 2002. The national and locality pay raise for Federal employees is 
proposed to be a 4.1 percent increase effective January 2003. The 
Agency calculated inflation to be 2.1% for 2003. Section 10703 of the 
2002 Farm bill authorizes the Secretary of Agriculture to set the 
hourly rate of compensation for FSIS employees exempt from Fair Labor 
Standards Act (i.e., veterinarians) working in establishments subject 
to the FMIA and PPIA at one and one-half times the employee's hourly 
rate of base pay. FSIS has adjusted the overtime fees to cover true 
time-and-a-half for all in-plant employees doing overtime work. 
Previously, veterinarians were limited to the time-and-a-half rate paid 
to employees at grade level GS-10, step 1. Finally, because of 
improvements in accessing data from the accounting

[[Page 8859]]

system, the Agency has been able to estimate the employee benefits 
ascribable to overtime work and included these in the fee calculation. 
These costs were formerly included in the base rate.
    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
------------------------------------------------------------------------
                                                      Previous  Proposed
                       Service                          rate      rate
------------------------------------------------------------------------
Base time...........................................    $42.64    $43.64
Overtime & holiday..................................     44.40     50.04
Laboratory..........................................     68.32     61.80
------------------------------------------------------------------------

    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 CY 2002 cost......................................    $22.54
    Pay raise (4.1%).........................................      0.92
    Benefits.................................................      6.10
    Travel, operating & lab costs, & inflation...............      2.26
    Program overhead.........................................      4.27
    Agency overhead..........................................      7.03
    Allowance for bad debt...................................      0.52
                                                              ----------
        Total................................................    $43.64
                                                              ==========
Overtime and Holiday Inspection Services:
     Actual CY 2002 cost.....................................     30.10
    Time & a half for veterinarians..........................      2.73
    Pay raise (4.1%).........................................      1.35
    Benefits.................................................      1.71
    Travel, operating & lab costs, & inflation...............      2.26
    Program overhead.........................................      4.27
    Agency overhead..........................................      7.03
    Allowance for bad debt...................................      0.60
    Adjustment for divisibility into quarter hours...........     (0.01)
                                                              ----------
        Total................................................     50.04
                                                              ==========
Laboratory Services:
    FY 2001 hourly salaries & benefits.......................     32.05
    Pay raises in 2002 & 2003................................      2.85
    Travel & operating costs for 2002 & 2003.................      5.72
    Program overhead.........................................     14.13
    Agency overhead..........................................      6.32
    Allowance for bad debt...................................      0.74
    Adjustment for divisibility by quarter hours.............     (0.01)
                                                              ----------
        Total................................................     61.80
------------------------------------------------------------------------

    The Agency must recover the actual cost of voluntary inspection 
services covered by this proposed 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 as soon as possible. 
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 an annual 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 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 
small entities.
    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 $119 million in revenues for 2003, compared to $101 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 2001 was about 83 billion pounds (Livestock, Dairy, Meat, 
and Poultry Outlook Report, Economic Research Service, USDA, August 15, 
2002). The total volume of U.S. egg product production in 2001 was 
about 2.319 billion pounds (2002 Agriculture Statistics, USDA). The 
increase in cost per pound of product associated with the proposed fees 
increases is, in general, $.0002. 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.

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 it and make copies of this Federal 
Register publication available through the FSIS Constituent Update. 
FSIS provides a weekly Constituent Update, which is communicated via 
Listserv, a free e-mail subscription service. 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 Listserv

[[Page 8860]]

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 the Listserv 
and web page, FSIS is able to provide information to a much broader, 
more diverse audience than would otherwise be possible.
    For more information contact the Congressional and Public Affairs 
Office, at (202) 720-9113. To be added to the free e-mail subscription 
service (Listserv) go to the ``Constituent Update'' page on the FSIS 
Web site at http://www.fsis.usda.gov/oa/update/update.htm. Click on the 
``Subscribe to the Constituent Update Listserv'' link, then fill out 
and submit the form.

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 
Sec. Sec.  350.7, 351.8, 351.9, 352.5, 354.101, 355.12, and 362.5 is 
$43.64 per hour per program employee.


Sec.  391.3  Overtime and holiday rate.

    The overtime and holiday rate for inspection services provided 
pursuant to Sec. Sec.  307.5, 350.7, 351.8, 351.9, 352.5, 354.101, 
355.12, 362.5 and 381.38 is $50.04 per hour per program employee.


Sec.  391.4  Laboratory services rate.

    The rate for laboratory services provided pursuant to Sec. Sec.  
350.7, 351.9, 352.5, 354.101, 355.12, and 362.5 is $61.80 per hour per 
program employee.
    3. In Sec.  391.5, paragraph (a) is revised to read as follows:


Sec.  391.5  Laboratory accreditation fees.

    (a) The annual fee for the initial accreditation and maintenance of 
accreditation provided pursuant to Sec. Sec.  318.21 and 381.153 shall 
be $1,000 per accreditation.
* * * * *

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

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

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

    5. 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 $50.04.
    6. 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 $50.04.
* * * * *

PART 592--VOLUNTARY INSPECTION OF EGG PRODUCTS

    7. The authority citation for Part 592 continues to read as 
follows:

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

    8. Sections 592.2, 592.3, and 592.4 are revised to read as follows:


Sec.  592.2  Base time rate.

    The base time rate for voluntary inspection services of egg 
products is $43.64 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 $50.04.


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 $50.04.

    Done at Washington, DC, on: February 20, 2003.
Linda M. Swacina,
Associate Administrator.
[FR Doc. 03-4393 Filed 2-25-03; 8:45 am]
BILLING CODE 3410-DM-P