[Federal Register: June 26, 2003 (Volume 68, Number 123)]
[Rules and Regulations]
[Page 37954-37957]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr26jn03-4]
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DEPARTMENT OF AGRICULTURE
Food Safety and Inspection Service
9 CFR Parts 391, 590, and 592
[Docket No. 02-034F]
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: Final rule.
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SUMMARY: The Food Safety and Inspection Service (FSIS) is amending its
regulations 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 raising 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 (4.1 percent increase effective January
2003) and inflation. FSIS is also decreasing the fee for laboratory
services because of greater efficiencies realized. The Agency is not
changing the annual fee it charges for the Accredited Laboratory
Program.
DATES: This final rule is effective on June 29, 2003.
FOR FURTHER INFORMATION CONTACT: For further information concerning
policy issues contact Lynn Dickey, Ph.D., Director, Regulations and
Directives Development Staff, Office of Policy and Program Development,
FSIS, U.S. Department of Agriculture, Room 112, Cotton Annex Building,
300 12th Street, SW., Washington, DC 20250-3700; telephone (202) 720-
5627, fax (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 egg products processing at official plants. FSIS
bears the cost of mandatory inspection that occurs during an
establishment or plant's regular hours of operation. 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.
Additionally, FSIS conducts an accreditation program for non-
Federal analytical laboratories who are qualified under the Accredited
Laboratory Program to conduct analyses of official meat and poultry
samples. The Food,
[[Page 37955]]
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 of the fees 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 providing voluntary base time inspection
services and overtime and holiday inspection services. FSIS has also
identified decreases in the costs of providing laboratory services
because of greater efficiencies. The Agency is not changing the annual
fee it charges for the Accredited Laboratory Program.
FSIS calculated the new fees for base time and overtime and holiday
inspection services 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 was 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 the 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 include the costs of 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 system, the Agency
has been able to estimate the employee benefits ascribable to overtime
work and include these in the fee calculation. These costs were
formerly only included in the base rate.
The previous and new fees are listed by type of service in Table 1.
Table 1.--Previous and New Fees--Per Hour Per Employee--By Type of
Service
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Previous New
Service rate rate
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Base time........................................... $42.64 $43.64
Overtime & holiday.................................. 44.40 50.04
Laboratory.......................................... 68.32 61.80
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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
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Base time Amount
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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
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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)
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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)
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Total................................................. 61.80
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The Agency must recover the actual cost of the services covered by
this final rule. These fee increases are essential for the continued
sound financial management of the Agency's costs. FSIS announced in its
February 26, 2003, proposed rule [68 FR 8858] the fee changes provided
for in this final 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
loses for the Agency. Therefore, the changes in fees will be effective
on June 29, 2003.
Proposed Rule and Comments
FSIS published a proposed rule [68 FR 8858] on February 26, 2003,
stating that it was proposing changing fees for inspection services for
CY 2003. The Agency provided for a thirty day comment period, ending
March 28, 2003. FSIS received two comments on the proposed rule; one
from a government employee and one from an industry group.
Comment: The Government commenter said that changes made in the
administration of the Accredited Laboratory Program have depleted the
surplus of funds in the Accredited Laboratory Program account.
Consequently, the Agency should not decrease the amount it charges for
the Accredited Laboratory Program.
Response: The Agency agrees with the comment and, therefore, will
not amend its regulations to decrease the fee charged Accredited
Laboratories.
The industry commenter raised several objections to raising fees
for voluntary inspection services.
Comment: Contrary to the Agency's assertion, the increase for
overtime and holiday inspection service is well beyond what the
industry would anticipate for inflation and wage increases.
Response: The increase in fees result from inflation and greater
salary costs that are not dissimilar to industry's. FSIS will now be
reimbursing veterinarians a full time and half over their base rate of
pay for holiday and overtime. This accounts in part for the size of the
increase for overtime and holiday pay. The change in holiday and
overtime pay for veterinarians was authorized by the 2002 Farm Bill.
Comment: FSIS has not considered the incremental cost per pound for
mandatory overtime and holiday inspection.
Response: FSIS has considered the incremental cost per pound and
acknowledges that it will differ from establishment to establishment,
depending upon how much overtime and holiday inspection they use, and
whether they use voluntary inspection services. This has been discussed
in the economic analysis.
[[Page 37956]]
Comment: More information is needed to fully assess the economic
impact of the proposed increases.
Response: The Agency believes it has presented adequate information
to explain the assessment of the economic impact of the fee increases.
Comment: Automatic fee increases for mandatory inspection eliminate
any pressure to optimize the use of limited inspection services.
Response: FSIS appropriations do not cover voluntary inspection
services or overtime and holiday inspection services. The Agency is
required by statute to recover the full cost of voluntary and overtime
and holiday inspection services.
Comment: FSIS should fulfill its goal of implementing risk-based
inspection and eliminate fees for overtime and holiday inspection.
Response: FSIS is moving toward a more risk-based allocation of
inspection resources. However, a risk-based inspection approach does
not mean the elimination of holiday and overtime inspection fees. These
fees are required by statute.
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.
Establishments and plants that seek FSIS 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 $119 million in revenues for 2003, compared to $101 million
under the previous 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 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 new 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
new 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 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 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,
public meetings, recalls, and any other types of information that could
affect or would be of interest to our constituents/stakeholders. The
constituent Listserv 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.
0
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
0
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.
0
2. Sections 391.2, 391.3, and 391.4, are revised to read as follows:
Sec.
391.2 Base time rate.
391.3 Overtime and holiday rate.
391.4 Laboratory service rate.
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
[[Page 37957]]
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.
PART 590--INSPECTION OF EGGS AND EGG PRODUCTS (EGG PRODUCTS
INSPECTION ACT)
0
3. The authority citation for Part 590 continues to read as follows:
Authority: 21 U.S.C. 1031-1056.
0
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 $50.04.
0
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 $50.04.
PART 592--VOLUNTARY INSPECTION OF EGG PRODUCTS
0
6. The authority citation for Part 592 continues to read as follows:
Authority: 7 U.S.C. 1621-1627.
0
7. Sections 592.2, 592.3, and 592.4 are revised to read as follows:
Sec.
592.2 Base time rate.
592.3 Overtime rate.
592.4 Holiday rate.
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: June 23, 2003.
Garry L. McKee,
Administrator.
[FR Doc. 03-16167 Filed 6-25-03; 8:45 am]