[Federal Register Volume 64, Number 217 (Wednesday, November 10, 1999)]
[Proposed Rules]
[Pages 61223-61225]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-29418]
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DEPARTMENT OF AGRICULTURE
Food Safety and Inspection Service
9 CFR Part 391
[Docket No. 99-045P]
Fee Increase for Meat and Poultry Inspection Services
AGENCY: Food Safety and Inspection Service, USDA.
ACTION: Proposed rule.
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SUMMARY: The Food Safety and Inspection Service (FSIS) is proposing to
increase the fees FSIS charges meat and poultry establishments,
importers, and exporters for providing voluntary inspection services,
overtime and holiday inspection services, identification services,
certification services, and laboratory services. These fee increases
reflect the increased cost of inspection, the national and locality pay
raise for Federal employees (proposed 4.8 percent effective January
2000), the increased laboratory costs, and the applicable travel and
operating costs. FSIS is proposing to make the fee increases effective
January 2, 2000. At this time, FSIS is not proposing to amend the fee
for the Accredited Laboratory Program.
DATES: Comments must be received by December 10, 1999.
ADDRESSES: Submit one original and two copies of written comments to
FSIS Docket Clerk, Docket #99-045P, 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.
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, (202)
720-5627, fax number (202) 690-0486.
For information concerning fee development, contact Michael B.
Zimmerer, Director, Financial Management Division, Office of
Management, FSIS, U.S. Department of Agriculture, Room 2130-S, 1400
Independence Avenue, SW., Washington, DC 20250, (202) 720-3552.
SUPPLEMENTARY INFORMATION:
Background
The Federal Meat Inspection Act (FMIA) and the Poultry Products
Inspection Act (PPIA) provide for mandatory inspection by Federal
inspectors of meat and poultry slaughtered or processed at official
establishments. Such inspection is required to ensure the safety,
wholesomeness, and proper labeling of meat and poultry. The cost of
mandatory inspection (excluding such services performed on holidays or
on an overtime basis) is borne by FSIS.
In addition to mandatory inspection, FSIS provides a range of
voluntary inspection, certification, and identification services for
meat and poultry. Under the Agricultural Marketing Act of 1946, as
amended (7 U.S.C. 1621 et seq.), FSIS provides these services to assist
in the orderly marketing of various animal products and byproducts not
subject to the FMIA or the PPIA. These services include the
certification of technical animal fats and the inspection of exotic
animal products. FSIS is required to recover the costs of voluntary
inspection, certification, and identification services.
FSIS also provides certain voluntary laboratory services that
establishments or others may request FSIS to perform. The cost of these
services, which are provided under the Agricultural Marketing Act of
1946, must be recovered by FSIS. Laboratory services are provided for
four types of analytic testing. These are: microbiological testing,
residue chemistry tests, food composition tests, and pathology testing.
Each year, FSIS expects to review the fees that it charges for
providing overtime and holiday inspection services, voluntary
inspection, identification, and certification services, and laboratory
services, and to perform a cost analysis to determine whether the fees
it has established are adequate to recover the costs that it incurs in
providing the services. In its analysis of projected costs for January
1, 2000 to September 30, 2000, FSIS has identified increases in the
costs that it will incur. FSIS is not proposing an increase in the fees
for full calendar year 2000 because FSIS intends to propose a new fee
[[Page 61224]]
increase each Federal Fiscal Year (FY), i.e., the next fee increase
after this proposed one should be effective on October 1, 2000. The
proposed fee increases are attributable to the increased cost of
inspection, the national and locality pay raise for Federal employees
(proposed 4.8 percent effective January 2000), the increased laboratory
costs, and the applicable travel and operating costs.
Accordingly, FSIS is proposing to amend 9 CFR section 391.2 to
increase the base time fee for providing meat and poultry voluntary
inspection, identification, and certification services from $37.00 per
hour per program employee to $37.88 per hour per program employee (an
increase of 2.38%). FSIS is also proposing to amend Sec. 391.3 to
increase the rate for providing meat and poultry overtime and holiday
inspection services from $36.84 per hour per program employee to $39.76
per hour per program employee (an increase of 7.93%). Additionally,
FSIS is proposing to amend Sec. 391.4 to increase the rate for meat and
poultry laboratory services from $50.88 per hour per program employee
to $58.52 per hour per program employee (an increase of 15.02%). The
increase in base time and overtime and holiday time rates is
proportional to the salary increase and the inflation index rate
recommended by the Office of Management and Budget for overhead costs
(applicable travel and operating costs). The larger fee increase in
laboratory services relative to the other two fees is due to (1) an
increase in the direct costs of laboratory services and (2) a decrease
in the hours of activity. The lower the usage, the higher the fee,
because there are less hours over which to distribute the overhead
costs.
The differing fee increase for each type of service is the result
of the different amount it costs FSIS to provide these three types of
services. These differences in costs stem from various factors
including the differing salary levels of the personnel who provide the
services.
These fees and the proposed increase are reflected in Table 1.
Table 1.--Inspection Service Type and Current and Proposed Rates for 1/1/00 to 9/30/00
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Proposed Year Proposed
Service type Current rate $/ 2000 rate $/ increase $/
hour hour hour
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Base time....................................................... 37.00 37.88 .88
Overtime and Holiday............................................ 36.84 39.76 2.92
Laboratory...................................................... 50.88 58.52 7.64
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Beginning with the FY 2001, FSIS intends to propose adjustments in
its fees for voluntary and reimbursable inspections effective each
October 1. This approach will facilitate more consistent and timely
proposals to adjust fees, and will assist the Agency and affected
industry to plan for these fee adjustments.
Executive Order 12866 and Regulatory Flexibility Act
Because this proposed rule has been determined to be not
significant, it was not reviewed by the Office of Management and Budget
(OMB) under Executive Order 12866.
The Administrator, FSIS, has determined that this action will not
have a significant economic impact on a substantial number of small
entities as defined by the Regulatory Flexibility Act (5 U.S.C. 601).
The fee increases provided for in this document reflect a small
increase in the costs currently borne by those entities which elect to
utilize certain inspection services voluntarily. These voluntary
services are generally sought by larger establishments because of
larger production volume or because of greater complexity and diversity
in the products they produce; the small establishments do not seek
these services perhaps because they cannot afford them. Therefore, the
small establishments are not likely to be affected adversely by the
increases.
The extent of incremental adverse impact is estimated from the
proposed percentage increases in base time and overtime and holiday
rates. The increase in base time rate from $37.00/hour to $37.88/hour
amounts to 2.38 percent. The overtime and holiday services rate from
$36.84 to $39.76 amounts to 7.93 percent or about 8 percent. These
increases are consistent with similar increases in wages and overtime
rates in the private sector. For example, according to the Bureau of
Labor Statistics web site, the average wage, including overtime, in the
poultry slaughtering and processing industry (SIC 2015) increased by
about 5 percent (from $344.73 per week in July 1998 to $361.70 in July
1999). The average hourly wage, excluding the overtime rate, increased
by 4 percent during the same period. The increase in laboratory fees of
15.02 percent (from $50.88/hour to $58.52/hour) reflects an increase in
the direct cost of these services to FSIS, coupled with lower usage by
industry.
The economic impact of the increase in the fees on small businesses
in the meat and poultry industries would depend on the structure of
these industries. Data from the U.S. Bureau of the Census, Survey of
Industries, 1994, indicate that the meat industry is dominated by small
firms and establishments relative to the poultry industry. For example,
based on the U.S. Small Business Administration's (SBA) definition of
small business by the number of employees (fewer than 500), 96 percent
of 1,226 firms comprising the meat industry (SIC 2011) are small.
Similarly, 90 percent of individual meat establishments or plants in
this industry are small. In 1994, these small businesses accounted for
19 percent of total employment in this industry. Their share of payroll
was 18 percent of the total payroll of $2.777 billion and their
revenues were 16 percent of the total revenues of $55.814 billion. In
contrast, the poultry industry is comprised of relatively larger firms
and establishments. For example, 51 percent of 567 establishments in
this industry are large, according to the SBA definition. This industry
has 332 firms with 207,875 workers and a payroll of $3.5 billion. The
estimated revenue of this industry amounted to $27.111 billion in 1994.
FSIS believes that the small establishments in the meat and poultry
industry would not be affected adversely by the proposed increases in
the fees for four reasons. First, the fee increases are voluntary so
that the establishments do not have to seek the services of FSIS
inspector program personnel. Second, establishments that seek FSIS
services are likely to have calculated that the incremental costs of
voluntary inspection services would be less than the incremental
expected benefits of additional revenues they
[[Page 61225]]
would realize from additional production. Third, the industry is likely
to pass through the costs to consumers without significantly losing its
market because price elasticity of demand for meat and poultry is
inelastic. For example, Huang (1993) analyzed demand for meats and
other products containing meat and poultry. Huang concluded that the
price elasticity was -0.36, i.e., an increase in price of meat or
poultry products by one percent would be associated with a decrease in
its demand by only 0.36 percent. (Huang, Kao S., A Complete System of
U.S. Demand for Food. USDA/ERS Technical Bulletin No. 1821, 1993, p.
24). In short, consumers are unlikely to reduce their demand for meat
and poultry significantly when meat or poultry prices are increased by
a few pennies a pound. Finally, the supply of beef and poultry products
is likely to be very price elastic because, as noted above, there are
hundreds of firms in these industries. Any single producer cannot raise
the price of its products without losing its market share
significantly.
Executive Order 12988
This proposed rule has been reviewed by FSIS under Executive Order
12988, Civil Justice Reform. This 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 and 381.35 of
the FMIA and PPIA regulations, respectively, must be exhausted prior to
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 or
PPIA.
Additional Public Notification
Pursuant to Department Regulation 4300-4, ``Civil Rights Impact
Analysis,'' dated September 22, 1993, FSIS has considered the potential
civil rights impact of this proposed rule on minorities, women, and
persons with disabilities. FSIS anticipates that this proposed rule
will not have a negative or disproportionate impact on minorities,
women, or persons with disabilities. However, proposed rules generally
are designed to provide information and receive public comments on
issues that may lead to new or revised agency regulations or
instructions. Public involvement in all segments of rulemaking and
policy development are important. Consequently, in an effort to better
ensure that minorities, women, and persons with disabilities are aware
of this proposed rule and are informed about the mechanism for
providing their comments, FSIS will announce it and provide copies of
this Federal Register publication in the FSIS Constituent Update.
FSIS provides a weekly FSIS Constituent Update, which is
communicated via fax to over 300 organizations and individuals. In
addition, the update is available on line through the FSIS web page
located at http://www.fsis.usda.gov. The update is used to provide
information regarding FSIS policies, procedures, regulations, Federal
Register notices, FSIS public meetings, recalls, and any other types of
information that could affect or would be of interest to our
constituents/stakeholders. The constituent fax list consists of
industry, trade, and farm groups, consumer interest groups, allied
health professionals, scientific professionals, and other individuals
that have requested to be included. Through these various channels,
FSIS is able to provide information to a much broader, more diverse
audience. For more information and to be added to the constituent fax
list, fax your request to the Congressional and Public Affairs Office,
at (202) 720-5704.
Executive Order 12898, Environmental Justice
Currently, FSIS has no data on the number of minority-owned FMIA or
PPIA official establishments, nor can the Agency identify which FMIA or
PPIA official establishments are minority owned. The Agency is looking
into ways of collecting such data.
List of Subjects in 9 CFR Part 391
Fees and charges, Government employees, Meat inspection, Poultry
products.
PART 391--FEES AND CHARGES FOR INSPECTION AND LABORATORY SERVICES
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 proposed to be 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 shall be
$37.88 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 shall be $39.76 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 shall be $58.52 per hour per
program employee.
Done in Washington, DC on: November 5, 1999.
Thomas J. Billy,
Administrator.
[FR Doc. 99-29418 Filed 11-9-99; 8:45 am]
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