[Federal Register Volume 64, Number 78 (Friday, April 23, 1999)]
[Rules and Regulations]
[Pages 19865-19868]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-10239]
-----------------------------------------------------------------------
DEPARTMENT OF AGRICULTURE
Food Safety and Inspection Service
9 CFR Part 391
[Docket No. 98-052F]
RIN 0583-AC54
Fee Increase for Inspection Services
AGENCY: Food Safety and Inspection Service, USDA.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The Food Safety and Inspection Service (FSIS) is increasing
the fees charged to meat and poultry establishments, plants, importers,
and exporters for providing voluntary inspection, identification, and
certification services; laboratory services; and overtime and holiday
services. These fees are being increased in order to generate the
additional revenue that FSIS is required to recover. Despite increased
costs each year, these rates have not been adjusted since 1996.
FSIS is reducing the fee it charges for the Accredited Laboratory
program. The Agency's analysis has identified decreased operational
costs for this program. Accordingly, the Agency is reducing its fee.
DATES: Effective April 25, 1999.
[[Page 19866]]
FOR FURTHER INFORMATION CONTACT: Michael B. Zimmerer, Director,
Financial Management Division, Office of Management, Food Safety and
Inspection Service, U.S. Department of Agriculture, Washington, DC
20250-3700, (202) 720-3552.
SUPPLEMENTARY INFORMATION:
Background
The Federal Meat Inspection Act (FMIA) and the Poultry Products
Inspection Act (PPIA) provide for mandatory Federal inspection of the
slaughter of certain livestock and poultry and of the processing of
certain livestock and poultry products. The cost of this inspection
(excluding such inspection 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. 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. 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 which
establishments or others may request FSIS to perform. The cost of these
services, which are provided under the Agricultural Marketing Act of
1946, as amended (7 U.S.C. 1621 et seq.), 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 some pathology testing.
In 1998, FSIS reviewed the fees that it charged for providing
voluntary inspection, identification, and certification services;
laboratory services; and overtime and holiday services and performed a
cost analysis to determine whether the fees it established were
adequate to recover the costs that FSIS would incur in providing the
services. As reflected in the proposed rule published on March 4, 1999,
(64 FR 10402), FSIS has determined that the fees it currently charges
are not adequate to recover the costs of providing the services.
Comments submitted in response to the proposed rule questioned why
the base time fee for voluntary inspection, certification, and
identification services and the fee for overtime and holiday services
were being increased more than FSIS' projected increased FY 1999 costs
of 3.1% for Federal employees pay raises and 1.9% for inflation.
Comments submitted also questioned why the base time fee, the overtime
and holiday fee, and the laboratory service fee were not being raised
the same percentage.
FSIS has not raised the fees that it charges for providing
voluntary inspection, identification, and certification services,
overtime and holiday services, and laboratory services since December
1996 (61 FR 65459; 62 FR 6111). The cost of providing these services
has risen since that time. FSIS has been absorbing these increased
costs in various ways. FSIS cannot continue to absorb these increased
costs.
As discussed below in the Agency's response to comments, since the
1996 rate change, FSIS has experienced increased costs in providing
voluntary inspection, identification, and certification services;
laboratory services; and overtime and holiday services. These increased
costs are attributable to the national and locality pay raises given to
Federal employees each year, the increased travel and overhead costs
each year, and other factors such as higher-salaried personnel
certifying product during base time. These increased costs necessitate
a 12.53% increase in base time costs, a 9.12% increase in overtime and
holiday costs, and a 4.78% increase in laboratory services 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. As reflected in the response to comments, these differences
in costs stem from various factors including the differing salary
levels of the personnel who provide the services.
In its analysis of projected costs for FY 1999, FSIS has identified
a decrease in the cost of operating the Accredited Laboratory Program
(ALP). This projected decreased cost of $1,000 per accreditation is
based upon the difference in actual costs since the 1996 increase and
projected costs. The decreased cost of accreditation is the result of a
number of factors, including a projected decrease in accreditations
sought and maintained, as well as more efficient operating practices by
FSIS.
A full analysis of the economic impact of this rule was presented
in the proposed rule (64 FR 10402).
Proposed Rule and Comments
On March 4, 1999, FSIS published a proposed rule at 64 FR 10402 to
increase the fees that FSIS charges meat and poultry establishments,
plants, importers, and exporters for providing voluntary inspection,
identification, and certification services; laboratory services; and
overtime and holiday services. FSIS received 19 comments from the meat
and poultry industries. All commenters were opposed to the proposal,
objecting to the proposed fee increases for the affected inspection
services. The commenters' specific concerns and the Agency's responses
follow.
Comment: All commenters stated that the proposed raise of 12.53%
and 9.12% in fees, respectively for base time and overtime/holiday time
services, which appeared to be based upon an actual cost increase of
5.0% (3.1% for wages and 1.9% for overhead adjustments), was excessive.
Most of the commenters stated that they were opposed to any rate
increase in excess of 5.0%.
Response: The fee increases that FSIS proposed were not solely
based upon FSIS' projected increased FY 1999 costs of 3.1% for wages
and 1.9% for overhead. The last time FSIS increased reimbursable rates
was in December of 1996 (61 FR 65459). FSIS is required to recover all
of the costs associated with providing services in its voluntary
inspection programs (i.e. voluntary inspection, identification, and
certification services and overtime and holiday services). New rates
were not proposed in 1997 and 1998 because of major reorganizations
within the Agency and other factors, even though all Federal employees
received pay raises, and travel and overhead costs increased in each of
those years. This resulted in the industry being underbilled in each of
these years and the Agency not recovering the full costs it incurred in
operating its voluntary programs.
Since FY 1996, all Federal employees have received across the board
average salary increases as follows: January, 1997--3.0%; January,
1998--2.8%; and January, 1999--3.6%. The compounded annual effect of
all 3 years of salary increases total 9.7%. The compounded effect
calculates the increase in a given year on top of the previous years'
increases. That is, for every dollar earned by a Federal employee in
1996, he now is earning almost 10 cent more in 1999. Specifically, each
dollar earned by a Federal employee in 1996, because of salary raises,
increased to $1.03 in 1997 (a 3% increase), $1.06 in 1998 (a 2.8%
increase) and $1.10 in 1999 (a 3.6% increase).
Additionally, there were other factors that were taken into account
in determining the increased rate of 12.53% and 9.12% for base and
overtime/holiday time services, respectively, beyond the calculated
[[Page 19867]]
9.7% increased salary amount for Federal employees. For base time, an
additional 3.37% increase was added to the 9.16% compounded salary cost
increase (estimated in mid-1998) to provide for the fact that base time
services are performed by higher salaried employees doing certification
of product for exports, instead of lower salaried employees in previous
years, plus the projected inflated travel and overhead costs. The
proposed increase of 9.12% for overtime/holiday services is less than
the compounded effect of the 3 years of Federal pay raises (9.7%) by
the amount of .58% due to the fact that when the proposed rate
increases were originally calculated in mid-1998, the projected pay
increase for January 1999 was calculated at the anticipated 3.1%,
instead of the later approved actual raise of 3.6% that occurred.
Commenters were not opposed to the proposed increase cost for
laboratory services. The increase of 4.78% for laboratory service fees
is due to increased efficiencies in the laboratories, which in turn
keep down operating costs. Operating costs constitute a significant
portion of the fee for laboratory services. Operating costs have been
kept in check over the last three years.
The fees being finalized reflect the difference between the last
fee change in 1996 and projected costs incurred by FSIS for FY 1999. If
those fees were recalculated to reflect all actual costs through FY
1999, they would probably increase. However, the Agency has decided to
finalize the fee rates it proposed. It will make appropriate
adjustments in a new proposal it expects to publish in late 1999
regarding the fees that need to be charged for the inspection programs
it operates. This new proposal will reflect the Federal pay raise and
inflation rate for travel and overhead costs anticipated for January
2000, and any other relevant factors.
Comment: Two commenters stated that in the proposed rule, there is
an attempt to rationalize that small establishments would not be
affected adversely. Some commenters stated that the rule will have a
detrimental effect on small establishments trying to develop a growing
market. Additionally, some commenters stated that some small
establishments are not selling directly to consumers, but instead are
selling to food service or retail establishments. Therefore, these
commenters indicated that it was highly unlikely that the excessive
cost increases being proposed could be passed through, especially in
today's low inflation or even deflationary environment.
Response: FSIS does not have data on specific small establishments
that sell their products directly to food service or retail
establishments. Therefore, FSIS could not estimate the economic impact
of the proposed fee increase on small establishments who engaged in
this type of business, i.e., the potential impact of the increase in
prices on their sales or the price elasticity. Price elasticity is the
percentage change in demand for a product associated with a one percent
change in its price. FSIS relied on the overall elasticity of demand
for the product, i.e., responsiveness or sensitivity of demand to
changes in prices of the product sold by all establishments. FSIS would
welcome specific data on this issue for considering future adjustments.
However, it must be understood that FSIS is required to recover the
full costs of operating its voluntary programs.
Comment: Four commenters said that the increase in fees does not
take into consideration the cooperative certification programs of the
Agricultural Marketing Service, USDA, such as the Certified Angus Beef
or the Certified American Lamb program.
Response: The certification services provided by other agencies and
the rates that other agencies charge for the services that they provide
has no impact upon the fees charged by FSIS.
Comment: Some commenters raised issues about FSIS inspection
structure and the possible operation of HACCP plants outside normal
inspection hours without the requirement for overtime inspection.
Response: These issues are not within the scope of this rulemaking
and, thus, are not being addressed in this docket.
Accordingly, FSIS is amending Sec. 391.2 to increase the base time
rate for providing voluntary inspection, identification, and
certification services from $32.88 per hour, per program employee, to
$37.00 per hour, per program employee. FSIS is amending Sec. 391.3 to
increase the rate for providing overtime and holiday services from
$33.76 per hour, per program employee, to $36.84 per hour, per program
employee. FSIS is also amending Sec. 391.4 to increase the rate for
laboratory services from $48.56 per hour, per program employee to
$50.88 per hour, per program employee. Further, FSIS is amending
Sec. 391.5 to reduce the fee charged for accreditations and renewals
from $2,500 per accreditation, to $1,500 per accreditation per year.
To recover the increased costs in an expeditious manner, the
Administrator has determined that these amendments should be effective
on the first day of the pay period (Sunday) after publication of this
rule. Therefore, the effective date for this rule is April 25, 1999.
Executive Order 12866 and Regulatory Flexibility Act
This rule has been determined to be not significant and was not
reviewed by the Office of Management and Budget (OMB) under Executive
Order 12866. The fee increases for voluntary inspection,
identification, and certification services, laboratory services, and
overtime and holiday inspection services are the result of increases in
the salaries of Federal employees established by Congress under the
Federal Employees Pay Comparability Act of 1990. The increase also
includes projected increased travel costs and overhead costs due to
inflation, higher-salaried employees working more base time than
overtime, and various other factors.
The Administrator, Food Safety and Inspection Services, 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).
Executive Order 12988
This rule has been reviewed under Executive Order 12988, Civil
Justice Reform. This rule is not intended to have a retroactive effect.
States and local jurisdictions are preempted by the Federal Meat
Inspection Act (FMIA) and the Poultry Products Inspection Act (PPIA)
from imposing any marking, labeling, packaging, or ingredient
requirements on federally inspected livestock and poultry products that
are in addition to, or different than, those imposed under the FMIA and
PPIA. States and local jurisdictions may, however, exercise concurrent
jurisdiction over livestock and poultry products that are outside
official establishments for the purpose of preventing the distribution
of livestock and poultry products that are misbranded or adulterated
under the FMIA and PPIA, or, in the case of imported articles, that are
not at such an establishment, after their entry into the United States.
State or local laws, regulations, or policies are preempted by the
Agricultural Marketing Act of 1946, as amended, if they present
irreconcilable conflict with the provisions of this rule under the
Agricultural Marketing Act of 1946, as amended.
Administrative proceedings will not be required before parties may
file suit
[[Page 19868]]
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.
List of Subjects in 9 CFR Part 391
Fees and charges, Government employees, Meat inspection, Poultry
products.
For the reasons set out in the preamble, part 391 of title 9 of the
Code of Federal Regulations is amended as follows:
PART 391--FEES AND CHARGES FOR INSPECTION SERVICES 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, 391.4 and paragraph (a) in Sec. 391.5 are
revised to read as follows:
Sec. 391.2 Base time rate.
The base time rate for inspection services provided pursuant to
Secs. 350.7, 351.8, 351.9, 352.5, 354.101, 355.12, and 362.5 shall be
$37.00 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 $36.84 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 $50.88 per hour, per
program employee.
Sec. 391.5 Laboratory accreditation fees.
(a) The annual fee for the initial accreditation and maintenance of
accreditation provided pursuant to Secs. 318.21 and 381.153 shall be
$1,500 per accreditation.
* * * * *
Done in Washington, DC on: April 20, 1999.
Thomas J. Billy,
Administrator.
[FR Doc. 99-10239 Filed 4-20-99; 3:49 pm]
BILLING CODE 3410-DM-U
