[Federal Register Volume 74, Number 194 (Thursday, October 8, 2009)]
[Proposed Rules]
[Pages 51800-51806]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-24283]


 ========================================================================
 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. 74, No. 194 / Thursday, October 8, 2009 / 
Proposed Rules  

[[Page 51800]]


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DEPARTMENT OF AGRICULTURE

Food Safety and Inspection Service

9 CFR Parts 391, 590, and 592

[FDMS Docket Number FSIS-2006-0025]
RIN 0583-AD40


Changes in Fees for Meat, Poultry, and Egg Products Inspection 
Services

AGENCY: Food Safety and Inspection Service, USDA.

ACTION: Proposed rule.

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

SUMMMARY: The Food Safety and Inspection Service (FSIS) is proposing to 
amend its regulations to establish formulas for calculating the fees 
that it charges meat and poultry establishments, egg products plants, 
importers, and exporters for providing voluntary inspection, 
identification and certification services, overtime and holiday 
inspection services, and laboratory services. If the rule becomes 
effective, FSIS will calculate these fees based on the formulas. For 
future fiscal years, FSIS will calculate the fees on an annual basis 
and apply them at the start of the fiscal year. The Agency is also 
proposing to increase the codified flat annual fee for its Accredited 
Laboratory Program.

DATES: The Agency must receive comments by November 9, 2009.

ADDRESSES: FSIS invites interested persons to submit comments on this 
proposed rule. Comments may be submitted by either of the following 
methods:
     Federal eRulemaking Portal: This Web site provides the 
ability to type short comments directly into the comment field on this 
Web page or attach a file for lengthier comments. Go to http://www.regulations.gov. Follow the online instructions at that site for 
submitting comments.
     Mail, including floppy disks or CD-ROMs, and hand- or 
courier-delivered items: Send to Docket Clerk, U.S. Department of 
Agriculture (USDA), FSIS, Room 2-2127, George Washington Carver Center, 
5601 Sunnyside Avenue, Mailstop 5474, Beltsville, MD 20705-5474.
    Instructions: All items submitted by mail or electronic mail must 
include the Agency name and docket number FSIS-2006-0025. Comments 
received in response to this docket will be made available for public 
inspection and posted without change, including any personal 
information, to http://www.regulations.gov.
    Docket: For access to background documents or to comments received, 
go to the FSIS Docket Room at the address listed above between 8:30 
a.m. and 4:30 p.m., Monday through Friday.
    All comments submitted in response to this proposal, as well as 
background information used by FSIS in developing this document, will 
be available for public inspection in the FSIS Docket Room at the 
address listed above between 8:30 a.m. and 4:30 p.m., Monday through 
Friday.

FOR FURTHER INFORMATION CONTACT: For further information concerning 
policy issues contact Rachel Edelstein, Director, Policy Issuances 
Division, Office of Policy and Program Development, FSIS, U.S. 
Department of Agriculture, Room 6065 South Building, 1400 Independence 
Ave, SW., Washington, DC 20250-3700; telephone (202) 720-0399, fax 
(202) 690-0486.
    For further information concerning fees contact Deborah Patrick, 
Director, Budget Division, Office of Management, FSIS, U.S. Department 
of Agriculture, Room 2159 South Building, 1400 Independence Avenue, 
SW., Washington, DC 20250-3700; telephone (202) 720-2912, fax (202) 
720-5399.

SUPPLEMENTARY INFORMATION: 

Background

    The Federal Meat Inspection Act (FMIA) (21 U.S.C. 601 et seq.) and 
the Poultry Products Inspection Act (PPIA) (21 U.S.C. 451 et seq.) 
provide for mandatory Federal inspection of livestock and poultry 
slaughtered at official establishments and of meat and poultry 
processed at official establishments, respectively. The Egg Products 
Inspection Act (EPIA) (21 U.S.C. 1031 et seq.) provides for mandatory 
inspection of egg products processing at official plants. FSIS bears 
the cost of mandatory inspection provided during non-overtime and non-
holiday hours of operation. Official establishments and egg products 
plants pay for inspection services performed on holidays or on an 
overtime basis.
    Under the Agricultural Marketing Act of 1946 (AMA), 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. The AMA provides 
that FSIS may prescribe the collection of fees to recover the costs of 
the voluntary inspection, certification, and identification services it 
provides.
    Also under the AMA, FSIS 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. Again, the AMA provides that 
FSIS may collect fees to recover the costs of providing these services.
    FSIS also accredits non-Federal analytical laboratories under its 
Accredited Laboratory Program. Such accreditation allows laboratories 
to conduct analyses of official meat and poultry samples. The Food, 
Agriculture, Conservation, and Trade Act of 1990, as amended, mandates 
that laboratory accreditation fees cover the costs of the Accredited 
Laboratory Program. This same Act mandates an annual payment of an 
accreditation fee on the anniversary date of each accreditation.
    Historically, FSIS amended its regulations annually to change the 
fees it charges establishments for providing overtime and holiday 
inspection services; voluntary inspection, certification, and 
identification services; and laboratory services and accreditation. 
Because of the length of the rulemaking process, each year the fiscal 
year would partially elapse before the Agency could publish a final 
rule to amend its fees. As a result, the Agency was unable to recover 
the full cost of the services it provided, which represented a 
considerable fiscal loss to FSIS. In 2006, in an effort to address the 
delays that resulted from the rulemaking process, FSIS amended its 
regulations to provide for multiple annual fee

[[Page 51801]]

increases in one action (71 FR 2135). With the rulemaking to increase 
fees for 2006-2008, FSIS established criteria for determining the fee 
increases on a multi-year basis. While this solution enabled the Agency 
to collect an increased fee each year, estimates used to set out the 
annual rates were imprecise and may well have left the Agency 
collecting too little in fees to fully cover its costs. The difference 
between the established rate and current economic conditions will 
likely be small during the first year of a multi-year rule but could 
well become large during the later years.
    The Agency performed a cost analysis in 2008 (at the same time that 
the new fees analysis was performed) to determine whether the fees 
established were adequate to recover the costs that it incurred in 
providing these services. On the basis of this analysis, FSIS 
determined the necessary fees for FY 2010 and established the proposed 
formulas to determine the fees for FY 2010 and subsequent fiscal years.

Proposed Formulas

    With this rulemaking, FSIS is proposing to amend its regulations to 
codify formulas in 9 CFR parts 391, 590, and 592 that FSIS will use to 
calculate and apply annual fees starting with the effective date of 
this rule and for subsequent fiscal years. FSIS intends to announce the 
actual annual fees in Federal Register notices prior to the start of 
each fiscal year.
    Salary, hours, and all rates used in the formulas will be based on 
the prior fiscal year's actual costs and hours. In 9 CFR 391.2 and 
592.510, FSIS is proposing the following formula to calculate the base 
time rate per hour per program employee: Base Time Rate = Office of 
Field Operations (OFO) plus Office of International Affairs (OIA) 
inspection program personnel salaries paid divided by regular hours 
multiplied by the next year's percentage of cost of living increase 
(e.g., pay raise of 2.9% for \1/4\ of FY 2008 + 3.2% for \3/4\ of FY 
2008), plus the benefits rate, plus the travel and operating rate, plus 
the overhead rate, plus an allowance for bad debt.
    For the 2010 base time rate per hour per program employee, the 
calculation will look like this: [2008 Direct Pay divided by Total 
Direct Hours ($447,373,444/17,417,642)] = $25.69 * 2.175% (2009 Cost of 
Living) = $26.25 * 3.125% (2010 Cost of Living) = $27.07 + $6.83 
(benefits rate) + $16.55 (travel and operating rate) + $.91 (overhead 
rate) + $.02 (bad debt allowance rate)= $51.38 (rounded to $51.36; 
rounding is done to reflect billable quarters).
    In 9 CFR 391.3, 590.126 and, 592.520 and 592.530, FSIS is proposing 
to establish the following formulas for overtime and holiday rates per 
hour per program employee: Overtime = Salary component of Base Time 
Rate (OFO plus OIA inspection program personnel salaries paid divided 
by regular hours multiplied by the next year's percentage of cost of 
living increase) multiplied by 1.5 plus the benefits rate, plus the 
travel and operating rate, plus the overhead rate, plus an allowance 
for bad debt.
    For the 2010 overtime rate per hour per program employee, the 
calculation will look like this: $27.07 * 1.5 (Time and one half) = 
$40.60 + $6.83 + $16.55 + $.91 + $.02 = $64.91 (rounded to $64.88).
    Holiday Rate = Salary component of base time rate multiplied by 2, 
plus benefits rate, plus the travel and operating rate, plus the 
overhead rate, plus an allowance for bad debt.
    For the 2010 holiday rate per hour per program employee, the 
calculation will look like this: $27.07 * 2 (Double time) = $54.14 + 
$6.83 + $16.55 + $.91 + $.02 = $78.44.
    In 9 CFR 391.4, FSIS is proposing the following formula for the 
laboratory services rate per hour per program employee: Laboratory 
Salary Rate = Office of Public Health Science (OPHS) salaries paid 
divided by OPHS Hours worked, multiplied by the next calendar year's 
percentage cost of living increase, plus the benefits rate, plus the 
travel and operating rate, plus the overhead rate, plus an allowance 
for bad debt.
    For the 2010 holiday salary per hour per program employee, the 
calculation will look like this: [2008 Total OPHS Direct Pay/Total OPHS 
hours (21,312,832/550,424)] = $38.72 * 2.175% (2009 Cost of Living) = 
$39.56 * 3.125% (2010 Cost of Living) = $40.80 + $6.83 + $16.55 + $.91 
+ $.02 = $65.11 (rounded to $65.08).
    The formulas are based on the prior fiscal year's actual costs and 
cost of living increases and percentage of inflation factors from the 
economic assumptions in the Office of Management and Budget (OMB) 
Memorandum M-08-13, ``Update to Civilian Position Full Fringe Benefit 
Cost Factor, Federal Pay Raise Assumptions, and Inflation Factors used 
in OMB Circular A-76, Performance of Commercial Activities'' Memorandum 
M-08-13, dated March 11, 2008, which is available at the following 
link: http://www.whitehouse.gov/omb/assets/omb/memoranda/fy2008/m08-13.pdf. Rather than codify a reference to OMB Memorandum M-08-13 in the 
proposed rule, FSIS intends to use the economic factors in the memo for 
calculating the fees until new economic assumptions are issued in a new 
OMB Memorandum in the future.
    As is proposed in Sec. Sec.  391.2 and 592.510, FSIS intends to 
derive the components of proposed formulas, using previous fiscal year 
actual costs, as follows:
    Benefits Rate: Direct benefits costs multiplied by the next 
calendar year's percentage cost of living increase. Some examples of 
direct benefits are health insurance, retirement, life insurance, and 
Thrift Savings Plan (TSP) retirement basic and matching contributions.
    For the 2010 benefits rate per hour per program employee, the 
calculation will look like this: [2008 Direct Benefits/(Total Direct 
hours + Total OT hours + Total Holiday hours) ($130,744,894/
20,164,116)] = $6.48 * 2.175% (2009 Cost of Living) = $6.62 * 3.125% 
(2009 Cost of Living) = $6.83.
    Travel and Operating Rate: Total direct travel and operating costs 
multiplied by the percentage of inflation.
    For the 2010 travel and operating rate per hour per program 
employee, the calculation will look like this: [2008 Total Direct 
Travel and Operating Costs/(Total Direct hours + Total OT hours + Total 
Holiday hours) (17,489,892/20,164,116)] = $.87 * 2.00% (2009 Inflation) 
= $.89 * 2.00% (2010 Inflation) = $.91.
    Overhead Rate: All indirect costs plus the average information 
technology (IT) costs over the previous two years in the Public Health 
Data Communication Infrastructure System Fund plus the Office of 
Management Program cost in the Reimbursable and Voluntary Funds plus 
provision for the operating balance less any Greenbook costs (i.e., 
costs of USDA support services prorated to the service component for 
which fees are charged) that are not related to food inspection, 
divided by total direct hours (regular, overtime, and holiday) worked 
across all funds, multiplied by the percentage of inflation.
    For the 2010 the overhead rate per hour per program employee, the 
calculation will look like this: [2008 Total Overhead/(Total Direct 
hours + Total OT hours + Total Holiday hours) (320,820,057/20,164,116)] 
= $15.91 * 2.00% (2009 Inflation) = $16.23 * 2.00% (2010 Inflation) = 
$16.55.
    Allowance for Bad Debt Rate = Total allowance for bad debt (for 
plants and establishments that declare bankruptcy) divided by total 
direct hours (regular, overtime, and holiday) worked.
    For the 2010 allowance for bad debt rate per hour per program 
employee, the calculation will look like this: [2008

[[Page 51802]]

Total Bad Debt/Total Direct hours + Total OT hours + Total Holiday 
hours) ($325,481/20,164,116)] = $.02 (for 2009 and after).
    As is noted above, the proposed formulas reflect that the cost of 
providing inspection services includes both direct and overhead costs. 
Overhead costs include the cost of program and Agency activities that 
support the food inspection services provided by the industry. Overhead 
expenditures are allocated across the Agency for each direct hour of 
inspection. Direct costs include the cost of salaries, employee 
benefits, travel and operating costs. Because of improvements in 
accessing data from the accounting system, the Agency has been able to 
estimate the employee benefits ascribable to overtime work and has 
included these in the fee calculation.
    Section 10703 of the 2002 Farm Bill authorized the Secretary of 
Agriculture to set the hourly rate of compensation for FSIS employees 
exempt from the Fair Labor Standards Act (i.e., veterinarians) who work 
in establishments subject to the FMIA and PPIA at one and one-half 
times the employee's hourly rate of base pay. In FSIS's January 13, 
2006, final rule on fees, FSIS adjusted its overtime fees to reflect 
these costs. Previously, veterinarians were limited to the time and a 
half rate paid to employees at grade level GS-10, step 1. This proposed 
rule continues to provide overtime rates at one and one-half times the 
employee's hourly rate of base pay.
    In this rule, FSIS is proposing to differentiate the holiday rate 
from the overtime rate in future years in order to collect the full 
expenditure of providing services on holidays. FSIS inspectors are paid 
double time for holiday work, while the current overtime rate only 
accounts for time and a half. Therefore, FSIS is proposing a holiday 
rate of two times the employee's hourly rate of base pay.

Laboratory Accreditation Fee

    The Food, Agriculture, Conservation, and Trade Act of 1990, as 
amended, mandates that laboratory accreditation fees cover the costs of 
the Accredited Laboratory Program. This same Act mandates an annual 
payment of an accreditation fee on the anniversary date of each 
accreditation. Because these fees are fixed amounts and do not 
fluctuate with economic conditions, FSIS is not proposing a formula for 
these fees. FSIS will propose to change the codified laboratory 
accreditation fees through future rulemaking when necessary.
    FSIS needs to raise its fees for the Accredited Laboratory Program 
to cover its increased direct overhead costs, including those for 
salary increases, employee benefits, inflation, and bad debt and to 
maintain an adequate operating reserve. Furthermore, FSIS must maintain 
a ``carryover'' amount each year as a reserve and uses it to cover the 
contractual costs that the Accredited Laboratory Program must pay at 
the beginning of each fiscal year. The proposed increases are also 
necessary to cover salaries and other operating expenses during the 
first two to three months of the fiscal year. Less than 5% of the 
program's income is received during the first two months of a fiscal 
year. Approximately 75% of the program's income is received in late 
December and early January; the remainder of the program's income is 
distributed about evenly across the rest of the fiscal year. 
Maintaining an adequate reserve is therefore essential for the 
Accredited Laboratory Program to be fully functional during the first 
quarter of any fiscal year.
    FSIS is proposing to amend 9 CFR 391.5 to keep the laboratory 
accreditation fee at $4,500 for FY 2009, 2010, and 2011 and increase it 
to $5,000 for FY 2012 and FY 2013. These adjustments are necessary to 
recover FSIS costs for providing these accreditation services, 
including maintaining an adequate reserve. The amount of the 
accreditation fee each year is based on the number of expected new and 
renewal accreditations, the anticipated costs directly related to the 
accreditation process, and the estimated reserve from previous years. 
These fees are set based on FSIS's best projections of what it will 
cost the Agency to provide these services in fiscal years 2010 through 
2013.

Projected Fees

    The differing proposed fee increases for each type of service are 
the result of the different amounts that it costs FSIS to provide these 
four types of services. The differences in costs stem from various 
factors, including the different salary levels of the program employees 
who perform the services.
    In the Agency's analysis of projected costs, set forth in Table 2, 
the Agency has identified the bases for the fiscal year 2010 increases 
in the cost of voluntary base time inspection services, overtime and 
holiday inspection services, and laboratory services. FSIS calculated 
its projected increases in salaries and inflation in fiscal year 2010. 
The average pay raise for Federal employees in calendar year 2010, 
reflecting both a national cost of living increase and locality 
differentials, will be 2.9 percent for .25 of the fiscal year and 3.2 
percent for .75 of the fiscal year. Inflation for fiscal year 2010 is 
projected to be 2 percent.
    The estimates in the tables below are based on the Presidential 
Economic Assumptions for FY 2009 and the out years in the OMB 
Memorandum M-08-13. In Table 1, FSIS estimated fees for subsequent 
fiscal years based on previous fiscal year actual costs, projected 
inflation, and cost of living factors.
    The current and proposed fees are listed by type of service in 
Table 1.

[[Page 51803]]



Table 1--Current and New Fees (per Hour per Employee) by Type of Service
------------------------------------------------------------------------
                                                           Current rate
                         Service                            2008 & 2009
------------------------------------------------------------------------
Base time...............................................          $49.93
Overtime & holiday......................................           58.93
Laboratory..............................................           70.82
------------------------------------------------------------------------


 
 
 
----------------------------------------------------------------------------------------------------------------
                             Service                               Proposed rate  Projected rate  Projected rate
                                                                       2010            2011            2012
                                                                 -----------------------------------------------
                                                                      (estimates rounded to reflect billable
                                                                                     quarters)
----------------------------------------------------------------------------------------------------------------
Base Time.......................................................          $51.36          $52.84          $54.64
Overtime........................................................           64.88           66.84           68.84
Holiday.........................................................           78.44           80.84           83.32
Laboratory......................................................           65.08           67.04           69.08

    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 an 
estimated $51.36 per hour per program employee in fiscal year 2010, 
$52.84 per hour per program employee in fiscal year 2011, and $54.64 
per hour per program employee in fiscal year 2012.
    The overtime 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 an estimated $64.88 per hour per program employee in 
fiscal year 2010, $66.84 per hour per program employee in fiscal year 
2011, and $68.84 per hour per program employee in fiscal year 2012.
    The 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 an estimated hourly rate of $78.44 per hour per program 
employee in fiscal year 2010, $80.84 per hour per program employee in 
fiscal year 2011, and $83.82 per hour per program employee in fiscal 
year 2012.
    The rate for laboratory services provided pursuant to Sec. Sec.  
350.7, 351.9, 352.5, 354.101, 355.12, and 362.5 is an estimated $65.08 
per hour per program employee in fiscal year 2010, $67.04 per hour per 
program employee in fiscal year 2011, and $69.08 in fiscal year 2012.
    The projected fees for FY 2010, 2011, and 2012 may not be 
significantly different from current codified fees. Table 2 summarizes 
the calculations for the different types of services for 2010. See 
Table 3 for the proposed Laboratory Accreditation Fees.

                      Table 2--Calculations for the Different Types of Services for FY 2010
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                                                                                                     Projected
                                                                   Actual costs   Cost of living   salary costs
                                                                    per hour FY      allowance      per hour FY
                                                                       2009                            2010
----------------------------------------------------------------------------------------------------------------
Base Time:
    Actual 2009 Base Salary (Pay raise of 2.9% for .25 of FY +            $26.25          3.125%          $27.07
     3.2% for .75 of FY)........................................
    Benefits....................................................            6.62          3.125%            6.83
                                                                                       Inflation
    Overhead (Department, Agency, and Program, including IT                16.23            2.0%           16.55
     costs).....................................................
    Travel/Operating Costs......................................            0.89            2.0%            0.91
    Bad Debt Allowance..........................................            0.02  ..............            0.02
                                                                 -----------------------------------------------
        Total Projected Costs...................................  ..............  ..............           51.38
                                                                 -----------------------------------------------
Overtime........................................................           39.37          3.125%           40.60
Holiday Pay.....................................................           52.50          3.125%           54.14
Laboratory Fees.................................................           39.56          3.125%           40.80
----------------------------------------------------------------------------------------------------------------
* Similar benefits, overhead, travel/operating costs, and bad debt allowance for projected salary costs are also
  added to arrive to the totals shown in Table 1 for FY 2010 for overtime, holiday, and laboratory projected
  salary fees.


                        Table 3--Calculations for Accredited Laboratory Fees FY 2009-2013
----------------------------------------------------------------------------------------------------------------
                                                  Estimated   Proposed FY  Proposed FY  Proposed FY  Proposed FY
                                                   FY 2009        2010         2011         2012         2013
----------------------------------------------------------------------------------------------------------------
Estimated Income...............................     $364,500     $382,500     $382,500     $405,000     $425,000
Estimated Expenses.............................      386,230      423,863      438,453      444,886      456,464
New Accreditation Fee..........................        4,500        4,500        4,500        5,000        5,000
----------------------------------------------------------------------------------------------------------------


[[Page 51804]]

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 EO 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. The inspection services provided under these proposed 
fees are voluntary. Meat and poultry establishments and egg products 
plants requesting these services are likely to have calculated that the 
revenues generated from additional production will exceed the 
incremental costs of the services. Similarly, laboratories will 
determine whether the additional revenue for services that require 
accreditation will exceed the costs of becoming accredited.

Economic Effects of New Fees

    By proposing to codify formulas to calculate future increases in 
annual fees instead of proposing to codify actual fees, the Agency will 
streamline the rulemaking process to help ensure that the fee increases 
are effective at the beginning of each fiscal year. In subsequent 
years, food safety will be maintained at the establishments affected by 
this rule as the Agency provides the services. The increased fees will 
cover inflation and national and locality pay raises but will not 
support any new budgetary initiative. The costs that industry will 
experience by the raise in fees are similar to other increases that the 
industry will experience because of inflation and wage increases.
    The total volume of meat and poultry slaughtered under Federal 
inspection in 2007 was about 91 billion pounds (2007 Livestock, Dairy, 
Meat, and Poultry Outlook Report, Economic Research Service, USDA). The 
total volume in egg product production in 2007 was about 2.8 billion 
pounds (2007 National Agricultural Statistical Service, USDA). The 
increase in cost per pound of product associated with the new increased 
fees is, in general, $.0002. Even in competitive industries such as 
meat, poultry, and egg products, this amount of increase in costs would 
have an insignificant impact on profits and processes.
    Even though this increase in fees is negligible, the industry is 
likely to pass along a significant portion of the proposed fee 
increases to consumers because of the inelastic nature of the demand 
curve facing consumers. Research has shown that consumers are unlikely 
to reduce demand significantly for meat, poultry, and 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 for 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.
    As a result of the new Accredited Laboratory Program fees, the 
Agency expects to collect about $2 million over the next 5 years from 
85 laboratories, an average of $4,700 per entity per year.

Paperwork Reduction Act

    This rule does not contain any new information collection or record 
keeping requirements that are subject to the Office of Management and 
Budget (OMB) approval under the Paperwork Reduction Act, 44 U.S.C. 3501 
et seq.

E-Government Act

    FSIS and USDA are committed to achieving the purposes of the E-
Government Act (44 U.S.C. 3601, et seq.) by, among other things, 
promoting the use of the Internet and other information technologies 
and providing increased opportunities for citizen access to Government 
information and services, and for other purposes.

Executive Order 12988

    This proposed rule has been reviewed under Executive Order 12988, 
Civil Justice Reform. This proposed rule: (1) Has no retroactive 
effect; and (2) 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 may be made of the application of the provisions of the 
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 ensure that 
minorities, women, and persons with disabilities are aware of this 
notice, FSIS will announce it online through the FSIS Web page located 
at http://www.fsis.usda.gov/Regulations_&_Policies/2009_Proposed_Rules_Index/index.asp. FSIS will also make copies of this Federal 
Register publication available through the FSIS Constituent Update, 
which is used to provide information regarding FSIS policies, 
procedures, regulations, Federal Register notices, FSIS public 
meetings, and other types of information that could affect or would be 
of interest to constituents and stakeholders. The Update is 
communicated via Listserv, a free electronic mail subscription service 
for industry, trade and farm groups, consumer interest groups, allied 
health professionals, and other individuals who have asked to be 
included. The Update is also available on the FSIS Web page. Through 
the Listserv and Web page, FSIS is able to provide information to a 
much broader and more diverse audience. In addition, FSIS offers an e-
mail subscription service which provides automatic and customized 
access to selected food safety news and information. This service is 
available at http://www.fsis.usda.gov/news_and_events/email_subscription/. Options range from recalls to export information to 
regulations, directives and notices. Customers can add or delete 
subscriptions themselves, and have the option to password protect their 
accounts.

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. 138d; 7 U.S.C. 1622, 1627 and 2219al; 21 
U.S.C. 451 et seq.; 21 U.S.C 601-695;

    2. Section 391.2 is revised to read as follows:


Sec.  391.2  Base time rate.

    (a) For each fiscal year and based on the previous fiscal year's 
actual costs

[[Page 51805]]

and hours, FSIS calculates the base time rate for inspection services, 
per hour per program employee, provided pursuant to Sec. Sec.  350.7, 
351.8, 351.9, 352.5, 354.101, 355.12, and 362.5 using the following 
formula: Office of Field Operations plus Office of International 
Affairs inspection program personnel salaries paid divided by regular 
hours multiplied by the next year's percentage of cost of living 
increase, plus the benefits rate, plus the travel and operating rate, 
plus the overhead rate, plus an allowance for bad debt.
    (b) FSIS calculates the components of the base time rate, which are 
based on previous fiscal year's actual costs, using the following 
formulas:
    (1) Benefits Rate. Direct benefits costs multiplied by the next 
calendar year's percentage cost of living increase. Some examples of 
direct benefits are health insurance, retirement, life insurance, and 
Thrift Savings Plan (TSP) retirement basic and matching contributions.
    (2) Travel and Operating Rate. Total direct travel and operating 
costs multiplied by the percentage of inflation.
    (3) Overhead Rate. All indirect costs plus the average information 
technology (IT) costs over the previous two years in the Public Health 
Data Communication Infrastructure System Fund plus the Office of 
Management Program cost in the Reimbursable and Voluntary Funds less 
any Greenbook costs (i.e., costs of USDA support services prorated to 
the service component for which fees are charged) that are not related 
to food inspection, divided by total direct hours (regular, overtime, 
and holiday) worked across all funds, multiplied by the percentage of 
inflation.
    (4) Allowance for Bad Debt Rate. Total allowance for bad debt (for 
plants and establishments that declare bankruptcy) divided by total 
direct hours (regular, overtime, and holiday) worked.
    (c) The cost of living increases and percentage of inflation 
factors used in the formulas in this section are based on the Office of 
Management and Budget's Presidential Economic Assumptions.
    3. Section 391.3 is revised to read as follows:


Sec.  391.3  Overtime and holiday rate.

    For each fiscal year and based on the previous fiscal year's actual 
costs and hours, FSIS calculates the overtime and holiday rates, per 
hour per program employee, provided pursuant to Sec. Sec.  307.5, 
350.7, 351.8, 351.9, 352.5, 354.101, 355.12, 362.5, and 381.38 using 
the following formulas:
    (a) Overtime. Office of Field Operations plus Office of 
International Affairs inspection program personnel salaries paid 
divided by regular hours multiplied by the next year's percentage of 
cost of living increase multiplied by 1.5 plus the benefits rate, plus 
the travel and operating rate, plus the overhead rate, plus an 
allowance for bad debt.
    (b) Holiday Rate. Office of Field Operations plus Office of 
International Affairs inspection program personnel salaries paid 
divided by regular hours multiplied by the next year's percentage of 
cost of living increase multiplied by 2, plus benefits rate, plus the 
travel and operating rate, plus the overhead rate, plus an allowance 
for bad debt.
    (c) FSIS calculates the benefits rate, travel and operating rate, 
overhead rate, and allowance for bad debt using the formulas in Sec.  
391.2(b), and the cost of living increases and percentage of inflation 
factors in 391.2(c).
    4. Section 391.4 is revised to read as follows:


Sec.  391.4  Laboratory services rate.

    (a) For each fiscal year and based on the previous fiscal year's 
actual costs and hours, FSIS calculates the laboratory services rate, 
per hour per program employee, provided pursuant to Sec. Sec.  350.7, 
351.9, 352.5, 354.101, 355.12, and 362.5 will be calculated for future 
fiscal years using the following formula: Office of Public Health 
Science (OPHS) salaries paid divided by OPHS hours worked, multiplied 
by the next calendar year's percentage cost of living increase, plus 
the benefits rate, plus the travel and operating rate, plus the 
overhead rate, plus an allowance for bad debt.
    (b) FSIS calculates the benefits rate, the travel and operating 
rate, the overhead rate, and the allowance for bad debt using the 
formulas in 391.2(b), and the cost of living increases and percentage 
of inflation factors in 391.2(c).
    5. Paragraph (a) of Sec.  391.5 is revised to read as follows:


Sec.  391.5  Laboratory accreditation fee.

    (a) The annual fee for the initial accreditation and maintenance of 
accreditation provided pursuant to Sec.  439.5 shall be $4,500.00 for 
fiscal years 2010 and 2011; and $5,000.00 for fiscal years 2012 and 
2013.
* * * * *

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

    6. The authority citation for part 590 continues to read as 
follows:

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

    7. In Sec.  590.126, revise the second sentence to read as follows:


Sec.  590.126  Overtime inspection service.

    * * * The official plant must give reasonable advance notice to the 
inspector of any overtime service necessary and must pay for such 
overtime. For each fiscal year and based on previous fiscal year's 
actual costs and hours, FSIS calculates the overtime rate for 
inspection service, per hour per program employee, using the following 
formula: Office of Field Operations plus Office of International 
Affairs inspection program personnel salaries paid divided by regular 
hours multiplied by the next year's percentage of cost of living 
increase multiplied by 1.5 plus the benefits rate, plus the travel and 
operating rate, plus the overhead rate, plus an allowance for bad debt. 
FSIS calculates the benefits rate, travel and operating rate, overhead 
rate, and allowance for bad debt using the formulas in Sec.  592.510(b) 
and the cost of living increases and percentage of inflation factors in 
Sec.  592.510(c).
    8. In Sec.  590.128(a), revise the second sentence to read as 
follows:


Sec.  590.128  Holiday inspection service.

    (a) * * * 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 the hourly 
rate. For each fiscal year and based on the previous year's actual 
costs and hours, FSIS calculates the holiday rate for inspection 
service, per hour per program employee, using the following formula: 
Office of Field Operations plus Office of International Affairs 
inspection program personnel salaries paid divided by regular hours 
multiplied by the next year's percentage of cost of living increase 
multiplied by 2, plus benefits rate, plus the travel and operating 
rate, plus the overhead rate, plus an allowance for bad debt. FSIS 
calculates the benefits rate, travel and operating rate, overhead rate, 
and allowance for bad debt using the formulas in Sec.  592.510(b), and 
the cost of living increases and percentage of inflation factors in 
Sec.  592.510(c).
* * * * *

PART 592--VOLUNTARY INSPECTION OF EGG PRODUCTS

    9. The authority citation for part 592 continues to read as 
follows:

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

    10. Section 592.510 is revised to read as follows:

[[Page 51806]]

Sec.  592.510  Base time rate.

    (a) For each fiscal year and based on the previous fiscal year's 
actual costs and hours, FSIS calculates the base time rate for 
inspection services, per hour per program employee, using the following 
formula: Office of Field Operations plus Office of International 
Affairs inspection program personnel salaries paid divided by regular 
hours multiplied by the next year's percentage of cost of living 
increase, plus the benefits rate, plus the travel and operating rate, 
plus the overhead rate, plus an allowance for bad debt.
    (b) FSIS calculates the components of the base time rate (which are 
based on previous fiscal year's actual costs) using the following 
formulas:
    (1) Benefits Rate: Direct benefits costs multiplied by the next 
calendar year's percentage cost of living increase. Some examples of 
direct benefits are health insurance, retirement, life insurance, and 
Thrift Saving Plan (TSP) retirement basic and matching contributions.
    (2) Travel and Operating Rate: Total direct travel and operating 
costs multiplied by the percentage of inflation.
    (3) Overhead Rate: All indirect costs plus the average information 
technology (IT) costs over the previous two years in the Public Health 
Data Communication Infrastructure System Fund plus the Office of 
Management Program cost in the Reimbursable and Voluntary Funds less 
any Greenbook costs (i.e., costs of USDA support services prorated to 
the service component for which fees are charged) that are not related 
to food inspection, divided by total direct hours (regular, overtime, 
and holiday) worked across all funds, multiplied by the percentage of 
inflation.
    (4) Allowance for Bad Debt Rate: Total allowance for bad debt (for 
plants and establishments that declare bankruptcy) divided by total 
direct hours (regular, overtime, and holiday) worked.
    (c) The cost of living increases and percentage of inflation 
factors used in the formulas in this section are based on the Office of 
Management and Budget's Presidential Economic Assumptions.
    12. In Sec.  592.520, revise the second sentence to read as 
follows:


Sec.  592.520  Overtime rate.

    * * * The official plant must give reasonable advance notice to the 
inspector of any overtime service necessary. For each fiscal year and 
based on the previous fiscal year's actual costs and hours, FSIS 
calculates the overtime rate for inspection service, per hour per 
program employee, using the following formula: Office of Field 
Operations plus Office of International Affairs inspection program 
personnel salaries paid divided by regular hours multiplied by the next 
year's percentage of cost of living increase multiplied by 1.5 plus the 
benefits rate, plus the travel and operating rate, plus the overhead 
rate, plus an allowance for bad debt. FSIS calculates the benefits 
rate, travel and operating rate, overhead rate, and allowance for bad 
debt using the formulas in Sec.  592.510(b), and the cost of living 
increases and percentage of inflation factors in Sec.  592.510(b).
    13. In 592.530, revise the second sentence to read as follows:


Sec.  592.530  Holiday rate.

    * * * The official plant must, in advance of such holiday work, 
request that the inspector in charge furnish inspection service during 
such period and must pay the Agency for such holiday work at the hourly 
rate. For each fiscal year and based on the previous fiscal year's 
actual costs and hours, FSIS calculates the holiday rate for inspection 
service, per hour per program employee, using the following formula: 
Office of Field Operations plus Office of International Affairs 
inspection program personnel salaries paid divided by regular hours 
multiplied by the next year's percentage of cost of living increase 
multiplied by 2, plus benefits rate, plus the travel and operating 
rate, plus the overhead rate, plus an allowance for bad debt. FSIS 
calculates the benefits rate, travel and operating rate, overhead rate, 
and allowance for bad debt using the formulas in Sec.  592.510(b), and 
the cost of living increases and percentage of inflation factors in 
Sec.  592.510(b).

    Done in Washington, DC, on October 5, 2009.
Alfred V. Almanza,
Administrator.
[FR Doc. E9-24283 Filed 10-7-09; 8:45 am]
BILLING CODE 3410-DM-P