Changes in Fees for Meat, Poultry, and Egg Products Inspection Services-Fiscal Years 2005-2008, 41635-41641 [05-14296]

Agencies

• DEPARTMENT OF AGRICULTURE
• Food Safety and Inspection Service

[Federal Register Volume 70, Number 138 (Wednesday, July 20, 2005)]
[Proposed Rules]
[Pages 41635-41641]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 05-14296]


========================================================================
Proposed Rules
                                                Federal Register
________________________________________________________________________

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.

========================================================================


Federal Register / Vol. 70, No. 138 / Wednesday, July 20, 2005 / 
Proposed Rules

[[Page 41635]]



DEPARTMENT OF AGRICULTURE

Food Safety and Inspection Service

9 CFR Parts 391, 590, and 592

[Docket No. 03-027P]
RIN 0583-AD12


Changes in Fees for Meat, Poultry, and Egg Products Inspection 
Services--Fiscal Years 2005-2008

AGENCY: Food Safety and Inspection Service, USDA.

ACTION: Proposed rule.

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

SUMMMARY: The Food Safety and Inspection Service (FSIS) is proposing to 
change the fees that it charges meat and poultry establishments, egg 
products plants, importers, and exporters for providing voluntary 
inspection, identification and certification services, overtime and 
holiday inspection services, and laboratory services. The Agency is 
proposing to raise these fees to reflect, among other factors, national 
and locality pay increases for Federal employees and inflation. In the 
past, FSIS has amended its regulations on an annual basis. With this 
proposed regulation, FSIS is providing for four annual fee increases. 
This will provide the meat, poultry and egg industry with more timely 
cost information and will streamline the Agency's rulemaking process. 
The Agency is also proposing to increase the annual fee for its 
Accredited Laboratory Program.

DATES: The Agency must receive comments before August 19, 2005.

ADDRESSES: FSIS invites interested persons to submit comments on this 
proposed rule. Comments may be submitted by any of the following 
methods:
     Mail, including floppy disks or CD-ROM's, and hand- or 
courier-delivered items: Send to Docket Clerk, U.S. Department of 
Agriculture, Food Safety and Inspection Service, 300 12th Street, SW, 
Room 102 Cotton Annex, Washington, DC 20250.
     Federal eRulemaking Portal: Go to https://
www.regulations.gov. Electronic mail: 
fsis.regulationscomments@fsis.usda.gov. Follow the online instructions 
at that site for submitting comments. All submissions received must 
include the Agency name and docket number 03-027P.
    All comments submitted in response to this proposal, as well as 
research and 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. The comments will also be posted on the Agency's 
Web site at http: //www.fsis.usda.gov/regulations/2005_Proposed_
Rules_ Index/.

FOR FURTHER INFORMATION CONTACT: For further information concerning 
policy issues contact Wanda Haxton, Program Analyst, Regulations and 
Petitions Policy Staff, Office of Policy, Program, and Employee 
Development, FSIS, U.S. Department of Agriculture, Room 112, Cotton 
Annex Building, 300 12th Street, SW, Washington, DC 20250-3700; 
telephone (202) 205-0299, fax (202) 690-0486.
    For further information concerning fees contact Deborah Patrick, 
Director, Budget Division, Office of Management, FSIS, U.S. Department 
of Agriculture, 2154 South Building, 1400 Independence Avenue, SW, 
Washington, DC 20250-3700; telephone (202) 720-3368, fax (202) 690-
4155.

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 meat and poultry processed 
at official establishments. The Egg Products Inspection Act (EPIA) (21 
U.S.C. 1031 et seq.) provides for mandatory inspection of egg products 
processed at official plants. FSIS provides mandatory inspection 
services at official establishments and plants, and bears the cost of 
mandatory inspection provided during non-overtime and non-holiday hours 
of operation. Establishments and plants pay for inspection services 
performed on holidays or on an overtime basis.
    The Agricultural Marketing Act of 1946 (AMA), as amended (7 U.S.C. 
1621 et seq.), authorizes the provision of a variety of voluntary 
services. FSIS provides a range of voluntary inspection, certification, 
and identification services under the AMA 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 the voluntary inspection, certification and 
identification services it provides.
    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 the costs 
of providing these services.
    FSIS also accredits non-Federal analytical laboratories under its 
Accredited Laboratory Program; such accreditation allows labs 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.
    Every year FSIS reviews the fees that it charges for providing 
overtime and holiday inspection services; voluntary inspection, 
identification and certification services; laboratory services and lab 
accreditation. 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 past, FSIS has amended 
its regulations on an annual basis to change the fees it charges. 
Because of the length of the rulemaking process, the fiscal year has 
partially elapsed by the time the Agency publishes a final rule to 
amend its fees. As a result, the Agency is unable to recover the full 
cost of voluntary inspection services, overtime and holiday inspection 
services,

[[Page 41636]]

laboratory services and laboratory accreditation fees in a timely 
manner.
    With this rulemaking, FSIS is proposing to amend its regulations to 
provide for four annual fee increases in one rulemaking action. The 
Agency will continue to perform a yearly cost analyses to determine 
whether the fees are adequate to recover its costs. If the Agency 
determines that the fees established for any one year need to be 
adjusted, the Agency will initiate another rulemaking to correct that 
fiscal year's fees and readjust future year's fees. In the Agency's 
analysis of projected costs, set forth in Tables 2 through 5, the 
agency has identified the bases for the increases in the cost of 
voluntary base time inspection services, overtime and holiday 
inspection services, and laboratory services for fiscal year 2005 
through fiscal year 2008.
    The Agency is proposing to increase the annual fee for participants 
in the Accredited Laboratory Program from the current $1500 to the 
figures listed in Table 6 because program costs have increased and will 
continue to increase and because previously accumulated funds that have 
been used to pay for program costs have decreased. The reasons for the 
increases in the lab accreditation fees are more fully discussed below 
in the section entitled ``Economic Effects of Inspection and Laboratory 
Service Fees''.
    FSIS calculated its projected increases in salaries and inflation 
in fiscal years 2005 through 2008. The average pay raise for Federal 
employees in 2004, which reflects both a national cost of living 
increase and locality differentials, was 4.1 percent effective January 
2004. The average combined national and locality pay raise is estimated 
to be 3.5% for fiscal year 2005 and 2.3% for fiscal years 2006, 2007, 
and 2008. Inflation for fiscal year 2005 is estimated to be 2.0%. 
Inflation for fiscal year 2006 is estimated to be 2.0%. Inflation for 
fiscal year 2007 is estimated to be 2.1%. Inflation for fiscal year 
2008 is estimated to be 2.1%. These estimates are based on the Office 
of Management and Budget's Presidential Economic Assumptions for FY 
2005 and the out years.
    The cost of providing inspection services includes both direct and 
overhead costs. Overhead costs include the cost of support activities 
such as program and agency overhead costs. Overhead expenditures are 
allocated across the agency for each direct hour of inspection. Direct 
costs include the cost of salaries, employee benefits, and travel. 
Because of improvements in accessing data from the accounting system, 
the Agency had 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) that work 
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 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.
    The current and proposed fees are listed by type of service in 
Table 1. The first increase, from the current rate to the proposed 2005 
rate, is larger than the subsequent increases because this is the first 
rate increase in 2 years. Therefore, it includes the increases in 
salaries and inflation that have occurred since the rate was last set 
in 2003.

                    Table 1.--Current and New Fees (Per Hour per Employee) by Type of Service
----------------------------------------------------------------------------------------------------------------
                                                   Current      Proposed     Proposed     Proposed     Proposed
                    Service                          rate      rate 2005    rate 2006    rate 2007    rate 2008
----------------------------------------------------------------------------------------------------------------
Base time......................................       $43.64       $46.78       $47.79       $48.84       $49.93
Overtime & holiday.............................        50.04        55.19        56.40        57.65        58.93
Laboratory.....................................        61.80        66.42        67.83        69.31        70.82
----------------------------------------------------------------------------------------------------------------

    The differing proposed fee increases for each type of service are 
the result of the different amounts that it costs FSIS to provide these 
three types of services. The differences in costs stem from various 
factors, including the different salary levels of the program employees 
who perform the services. See Table 2 through Table 5.

 Table 2.--Calculations for the Different Types of Services for FY 2005
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Base Time:
    Actual 2002 Salaries.....................................     $23.02
    2003 Pay Raise (4.1%) = Actual 2002 Salaries x 0.041.....       0.94
    Calendar 2004 Pay Raise (4.1%) paid in FY 2004 = (Actual        0.98
     2002 Salaries + 2003 Pay Raise) x 0.041.................
    FY 2005 Pay Adjustment = (Actual 2002 Salaries + 2003 Pay       0.65
     Raise + Calendar 2004 Pay Raise) x 0.035 x .075.........
    Benefits.................................................       6.58
    Travel and Operating Costs...............................       2.12
    Program Overhead.........................................       4.49
    Agency Overhead..........................................       7.06
    Allowance for Bad Debt...................................       0.45
    FY 2005 Inflation (2.0%) = [Current Rate ($43.64) +             0.49
     Adjustment for FY 2004 Inflation and Pay Increases
     ($1.76) - Actual 2002 Salaries ($23.02) + 2003 Pay Raise
     ($0.94) + Calendar 2004 Pay Raise ($0.98)] x 0.02.......
                                                              ----------
        Total................................................      46.78
Overtime and Holiday Inspection Services:
    Actual 2002 Salaries.....................................      30.72
    2003 Pay Raise (4.1%) = Actual 2002 Salaries x 0.041.....       1.26
    Calendar 2004 Pay Raise (4.1%) paid in FY 2004 = (Actual        1.31
     2002 Salaries + 2003 Pay Raise) x 0.041.................
    FY 2005 Pay Adjustment = (Actual 2002 Salaries + 2003 Pay       0.87
     Raise + Calendar 2004 Pay Raise) x 0.035 x 0.75.........
    Benefits.................................................       2.05
    Time and a Half..........................................       2.78
    Travel and Operating Costs...............................       2.12

[[Page 41637]]

 
    Program Overhead.........................................       5.32
    Agency Overhead..........................................       7.74
    Allowance for Bad Debt...................................       0.51
    FY 2005 Inflation (2.0%) = [Current Rate ($50.04) +             0.51
     Adjustment for FY 2004 Inflation and Pay Increases
     ($3.44) - Actual 2002 Salaries ($30.72) + 2003 Pay Raise
     ($1.26) + Calendar 2004 Pay Raise ($1.31)] x 0.02.......
                                                              ----------
        Total................................................      55.19
Laboratory Services:
    Actual 2002 Salaries.....................................      24.71
    2003 Pay Raise (4.1%) = Actual 2002 Salaries x 0.041.....       1.01
    Calendar 2004 Pay Raise (4.1%) paid in FY 2004 = (Actual        1.05
     2002 Salaries + 2003 Pay Raise) x 0.041.................
    FY 2005 Pay Adjustment = (Actual 2002 Salaries + 2003 Pay       0.70
     Raise + Calendar 2004 Pay Raise) x 0.035 x 0.75.........
    Benefits.................................................       6.72
    Travel and Operating Costs...............................       8.28
    Program Overhead.........................................      14.82
    Agency Overhead..........................................       7.64
    Allowance for Bad Debt...................................       0.65
    FY 2005 Inflation (2.0%) = [Current Rate ($61.80) +             0.84
     Adjustment for FY 2004 Inflation and Pay Increases
     ($2.82) - Actual 2002 Salaries ($24.71) + 2003 Pay Raise
     ($1.01) + Calendar 2004 Pay Raise ($1.05)] x 0.02.......
                                                              ----------
        Total................................................      66.42
------------------------------------------------------------------------


 Table 3.--Calculations for the Different Types of Services for FY 2006
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Base Time:
    FY 2005 Salaries = Actual 2002 Salaries ($23.02) + 2003       $25.59
     Pay Raise ($0.94) + Calendar 2004 Pay Raise ($0.98) +
     2005 Pay Adjustment ($0.65).............................
    FY 2006 Pay Adjustment = FY 2005 salaries x 0.023........       0.59
    Benefits.................................................       6.58
    Travel and Operating Costs...............................       2.12
    Program Overhead.........................................       4.49
    Agency Overhead..........................................       7.06
    Allowance for Bad Debt...................................       0.45
    FY 2005 Inflation........................................       0.49
    FY 2006 Inflation (2.0%) = [FY 2005 Base Time Rate              0.42
     ($46.78) - FY 2005 Salaries ($25.60)] x 0.02............
                                                              ----------
        Total................................................      47.79
Overtime and Holiday Inspection Services:
    FY 2005 Salaries = Actual 2002 Salaries ($30.72) + 2003        34.16
     Pay Raise ($1.26) + Calendar 2004 Pay Raise ($1.31) +
     2005 Pay Adjustment ($0.87).............................
    FY 2006 Pay Adjustment = FY 2005 salaries x 0.023........       0.79
    Benefits.................................................       2.05
    Time and a Half..........................................       2.78
    Travel and Operating Costs...............................       2.12
    Program Overhead.........................................       5.32
    Agency Overhead..........................................       7.74
    Allowance for Bad Debt...................................       0.51
    FY 2005 Inflation........................................       0.51
    FY 2006 Inflation (2.0%) = [FY 2005 Base Time Rate              0.42
     ($55.19) - FY 2005 Salaries ($34.16)] x 0.02............
                                                              ----------
        Total................................................      56.40
Laboratory Services:
    FY 2005 Salaries = Actual 2002 Salaries ($24.71) + 2003        27.47
     Pay Raise ($1.01) + Calendar 2004 Pay Raise ($1.05) +
     2005 Pay Adjustment ($0.70).............................
    FY 2006 Pay Adjustment = FY 2005 salaries x 0.023........       0.63
    Benefits.................................................       6.72
    Travel and Operating Costs...............................       8.28
    Program Overhead.........................................      14.82
    Agency Overhead..........................................       7.64
    Allowance for Bad Debt...................................       0.65
    FY 2005 Inflation........................................       0.84
    FY 2006 Inflation (2.0%) = [FY 2005 Base Time Rate              0.78
     ($66.42) - FY 2005 Salaries ($27.47)] x 0.02............
                                                              ----------
        Total................................................      67.83
------------------------------------------------------------------------


 Table 4.--Calculations for the Different Types of Services for FY 2007
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Base Time:
    FY 2006 Salaries = 2005 Salaries + 2006 Pay Adjustment...     $26.18
    FY 2007 Pay Adjustment = FY 2006 salaries x 0.023........       0.60
    Benefits.................................................       6.58
    Travel and Operating Costs...............................       2.12

[[Page 41638]]

 
    Program Overhead.........................................       4.49
    Agency Overhead..........................................       7.06
    Allowance for Bad Debt...................................       0.45
    FY 2005 Inflation........................................       0.49
    FY 2006 Inflation........................................       0.42
    FY 2007 Inflation (2.1%) = [FY 2006 Base Time Rate              0.45
     ($47.80) - FY 2006 Salaries ($26.18)] x 0.021...........
                                                              ----------
        Total................................................      48.84
Overtime and Holiday Inspection Services:
    FY 2006 Salaries = 2005 Salaries + 2006 Pay Adjustment...      34.95
    FY 2007 Pay Adjustment = FY 2006 salaries x 0.023........       0.80
    Benefits.................................................       2.05
    Time and a Half..........................................       2.78
    Travel and Operating Costs...............................       2.12
    Program Overhead.........................................       5.32
    Agency Overhead..........................................       7.74
    Allowance for Bad Debt...................................       0.51
    FY 2005 Inflation........................................       0.51
    FY 2006 Inflation........................................       0.42
    FY 2007 Inflation (2.1%) = [FY 2006 Base Time Rate              0.45
     ($56.40) - FY 2006 Salaries ($34.95)] x 0.021...........
                                                              ----------
        Total................................................      57.65
Laboratory Services:
    FY 2006 Salaries = 2005 Salaries + 2006 Pay Adjustment...      28.10
    FY 2007 Pay Adjustment = FY 2006 salaries x 0.023........       0.65
    Benefits.................................................       6.72
    Travel and Operating Costs...............................       8.28
    Program Overhead.........................................      14.82
    Agency Overhead..........................................       7.64
    Allowance for Bad Debt...................................       0.65
    FY 2005 Inflation........................................       0.84
    FY 2006 Inflation........................................       0.78
    FY 2007 Inflation (2.1%) = [FY 2006 Base Time Rate              0.83
     ($67.84) - FY 2006 Salaries ($28.11)] x 0.021...........
                                                              ----------
        Total................................................     $69.31
------------------------------------------------------------------------


 Table 5.--Calculations for the Different Types of Services for FY 2008
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Base Time:
    FY 2007 Salaries = 2006 Salaries + 2007 Pay Adjustment...     $26.79
    FY 2008 Pay Adjustment = FY 2007 salaries x 0.023........       0.62
    Benefits.................................................       6.58
    Travel and Operating Costs...............................       2.12
    Program Overead..........................................       4.49
    Agency Overhead..........................................       7.06
    Allowance for Bad Debt...................................       0.45
    FY 2005 Inflation........................................       0.48
    FY 2006 Inflation........................................       0.42
    FY 2007 Inflation........................................       0.45
    FY 2008 Inflation (2.1%) = [FY 2007 Base Time Rate              0.46
     ($48.84) - FY 2007 Salaries ($26.79)] x 0.021...........
                                                              ----------
        Total................................................      49.93
Overtime and Holiday Inspection Services:
    FY 2007 Salaries = 2006 Salaries + 2007 Pay Adjustment...      35.75
    FY 2008 Pay Adjustment = FY 2007 salaries x 0.023........       0.82
    Benefits.................................................       2.05
    Time and a Half..........................................       2.78
    Travel and Operating Costs...............................       2.12
    Program Overhead.........................................       5.32
    Agency Overhead..........................................       7.74
    Allowance for Bad Debt...................................       0.51
    FY 2005 Inflation........................................       0.51
    FY 2006 Inflation........................................       0.42
    FY 2007 Inflation........................................       0.45
    FY 2008 Inflation (2.1%) = [FY 2007 Base Time Rate              0.46
     ($57.65) - FY 2007 Salaries ($35.75)] x 0.021...........
                                                              ----------
        Total................................................      58.93
Laboratory Services:
    FY 2007 Salaries = 2006 Salaries + 2007 Pay Adjustment...      28.75
    FY 2008 Pay Adjustment = FY 2007 salaries x 0.023........       0.66
    Benefits.................................................       6.72
    Travel and Operating Costs...............................  .........
    Program Overhead.........................................      14.82

[[Page 41639]]

 
    Agency Overhead..........................................       7.64
    Allowance for Bad Debt...................................       0.65
    FY 2005 Inflation........................................       0.84
    FY 2006 Inflation........................................       0.78
    FY 2007 Inflation........................................       0.83
    FY 2008 Inflation (2.1%) = [FY 2007 Base Time Rate              0.85
     ($69.32) - FY 2007 Salaries ($28.76)] x 0.021...........
                                                              ----------
        Total................................................      70.82
------------------------------------------------------------------------


                       Table 6.--Calculations for Accredited Laboratory Fees FY 2005-2008
----------------------------------------------------------------------------------------------------------------
                                                              Proposed FY  Proposed FY  Proposed FY  Proposed FY
                                                                  2005         2006         2007         2008
----------------------------------------------------------------------------------------------------------------
Estimated Income............................................     $589,693     $747,440     $760,602     $751,658
Expense Estimates...........................................      594,653      751,838      757,344      748,341
New Accreditation Fee.......................................        4,000        5,200        5,400        5,600
----------------------------------------------------------------------------------------------------------------

    The Agency must recover the actual cost of voluntary inspection 
services covered by this proposed rule. These fee increases are 
essential for the continued sound financial management of the Agency's 
costs. FSIS plans to make the final rule effective as soon as possible. 
To expeditiously make this rulemaking effective so that the increased 
costs can be recovered in as timely a fashion as possible, and because 
the Agency has previously announced that it would be reviewing these 
fees on an annual basis, the Administrator has determined that 30 days 
for public comment is sufficient.

Executive Order 12866 and Regulatory Flexibility Act

    Because this 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. Establishments and 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 which require accreditation will exceed the costs 
of becoming accredited.

Economic Effects of Inspection and Laboratory Service Fees

    As a result of the new base time, holiday and overtime, and 
laboratory service fees, the Agency expects to collect an estimated 
$131 million, $136 million, $144 million, and $153 million in years 
2005, 2006, 2007, and 2008 respectively, or a total of $563 million 
over the next four years to cover the cost of voluntary certification, 
identification and inspection services, overtime and holiday inspection 
services, and laboratory services for meat and poultry. By proposing a 
4 year fee increase instead of a single year fee increase, the Agency 
is streamlining the rulemaking process to help ensure that the fee 
increases are effective at the beginning of each fiscal year. During 
the next four 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 would experience by the raise in fees are 
similar to other increases that the industry would experience because 
of inflation and wage increases.
    The total volume of meat and poultry slaughtered under Federal 
inspection in 2002 was about 85.7 billion pounds (Livestock, Dairy, 
Meat, and Poultry Outlook Report, Economic Research Service, USDA, July 
17, 2003). The increase in cost per pound of product associated with 
the proposed fee 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 
process.
    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 and poultry, 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 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.

Economic Effects of Accredited Laboratory Program

    As a result of the new Accredited Laboratory Program fees, the 
Agency expects to collect $589,693 in FY 2005, $747,440 in FY 2006, 
$760,602 in FY 2007, and $751,658 in FY 2008. The Accredited Laboratory 
Program is required to cover its operational costs through these fees. 
These adjustments are designed 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 best projections of 
what it will cost the Agency to provide these services in fiscal years 
2005 through 2008.
    The fee increases, beginning with a fiscal year 2005 increase of 
$2,500, are necessary because the level of the program's reserve 
surplus has decreased below a one-year operating-cost level. The large 
increase in estimated expenses from FY 2005 to FY 2006 is due to the 
contracting out of check samples previously done in-house. As a result, 
FSIS needs to raise the fees it charges to offset the amount it no 
longer

[[Page 41640]]

has from the reserve to carry out the program. FSIS also needs to raise 
its fees 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. FSIS believes that it needs 
a yearly reserve of approximately $250,000 to maintain the program's 
continuity. This amount of reserve funds is needed to cover the 
contractual costs that the Accredited Laboratory Program must pay at 
the beginning of each fiscal year, and 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 therefore is essential for 
the Accredited Laboratory Program to be fully functional during the 
first quarter of any fiscal year.
    FSIS anticipates that some laboratories will determine that it is 
not cost effective to maintain accreditation. As a result, revenue 
estimates assume a 10% reduction in the number of participants for each 
fiscal year. While lower participation reduces costs, the costs are 
spread over fewer laboratories. The fees, consequently, increase 
despite lower costs.

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.

Unfunded Mandate Analysis

    Title II of the Unfunded Mandate Reform Act of 1995 (UMRA), Pub. L. 
104-4, establishes requirements for Federal agencies to assess the 
effects of their regulatory actions on State, local, and tribal 
governments and the private sector. Under section 202 of UMRA, the 
Department generally must prepare a written statement, including a cost 
benefit analysis, for proposed and final rules with ``Federal 
mandates'' that may result in expenditures to State, local, or tribal 
governments, in the aggregate, or to the private sector, of $100 
million or more in any one year. When such a statement is needed for a 
rule, section 205 of UMRA generally requires the Department to identify 
and consider a reasonable number of regulatory alternatives and adopt 
the least costly, more cost-effective or least burdensome alternative 
that achieves the objectives of the rule.
    This rule contains no Federal mandates (under the regulatory 
provisions of Title II of the UMRA) that impose costs on State, local, 
or tribal governments or to the private sector of $100 million or more 
in any one year. Thus, this rule is not subject to the requirements of 
section 202 and 205 of UMRA.

Executive Order 12988

    This proposed rule has been reviewed under Executive Order 12988, 
Civil Justice Reform. This proposed rule: (1) Preempts State and local 
laws and regulations that are inconsistent with this rule; (2) has no 
retroactive effect; and (3) does not require administrative proceedings 
before parties may file suit in court challenging this rule. However, 
the administrative procedures specified in 9 CFR 306.5, 381.35, and 
590.300 through 590.370, respectively, must be exhausted before any 
judicial challenge 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 
proposed rule, FSIS will announce it online through the FSIS Web Page 
at https://www.fsis.usda.gov/Regulations_&_Policies/2005_
Proposed_Rules_Index/ index. asp.
    The Regulations.gov Website is the central online rulemaking portal 
of the United States government. It is being offered as a public 
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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 is revised to read as 
follows:

    Authority: 7 U.S.C. 138f; 7 U.S.C. 1622, 1627 and 2219a; 21 
U.S.C. 451 et seq.; 21 U.S.C. 601-695; 7 CFR 2.18 and 2.53. 2. 
Sections 391.2, 391.3 and 391.4 are revised to read as follows:


Sec.  391.2  Base time rate.

    The base time rate for inspection services provided pursuant to 
Sec. Sec.  350.7, 351.8, 351.9, 352.5, 354.101, 355.12, and 362.5 is 
$46.78 per hour per program employee in fiscal year 2005, $47.79 per 
hour per program employee in fiscal year 2006, $48.84 per hour per 
program

[[Page 41641]]

employee in fiscal year 2007, and $49.93 per hour per program employee 
in fiscal year 2008.


Sec.  391.3  Overtime and holiday rate.

    The overtime and holiday rate for inspection services provided 
pursuant to Sec. Sec.  307.5, 350.7, 351.8, 351.9, 352.5, 354.101, 
355.12, 362.5 and 381.38 is $55.19 per hour per program employee in 
fiscal year 2005, $56.40 per hour per program employee in fiscal year 
2006, $57.65 per hour per program employee in fiscal year 2007, and 
$58.93 per hour per program employee in fiscal year 2008.


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 $66.42 per hour per 
program employee in fiscal year 2005, $67.83 per hour per program 
employee in fiscal year 2006, $69.31 per hour per program employee in 
fiscal year 2007, and $70.82 per hour per program employee in fiscal 
year 2008. 3. In Sec.  391.5, paragraph (a) 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. Sec.  318.21 and 381.153 shall 
be $4,000.00 for fiscal year 2005; $5,200.00 for fiscal year 2006; 
$5,400.00 for fiscal year 2007; and $5,600.00 for fiscal year 2008.
* * * * *

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

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

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

    5. Section 590.126 is revised to read as follows:


Sec.  590.126  Overtime inspection service.

    When operations in an official plant require the services of 
inspection personnel beyond their regularly assigned tour of duty on 
any day or on a day outside the established schedule, such services are 
considered as overtime work. The official plant must give reasonable 
advance notice to the inspector of any overtime service necessary and 
must pay the Agency for such overtime at an hourly rate of $55.19 per 
hour per program employee in fiscal year 2005, $56.40 per hour per 
program employee in fiscal year 2006, $57.65 per hour per program 
employee in fiscal year 2007, and $58.93 per hour per program employee 
in fiscal year 2008.
    6. In Sec.  590.128, paragraph (a) is revised to read as follows:


Sec.  590.128  Holiday inspection service.

    (a) When an official plant requires inspection service on a holiday 
or a day designated in lieu of a holiday, such service is considered 
holiday work. The official plant must, in advance of such holiday work, 
request the inspector in charge to furnish inspection service during 
such period and must pay the Agency for such holiday work at an hourly 
rate of $55.19 per hour per program employee in fiscal year 2005, 
$56.40 per hour per program employee in fiscal year 2006, $57.65 per 
hour per program employee in fiscal year 2007, and $58.93 per hour per 
program employee in fiscal year 2008.
* * * * *

PART 592--VOLUNTARY INSPECTION OF EGG PRODUCTS

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

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

    8. Sections 592.510, 592.520 and 592.530 are revised to read as 
follows:


Sec.  592.510  Base time rate.

    The base time rate for voluntary inspection services for egg 
products is $46.78 per hour per program employee in fiscal year 2005, 
$47.79 per hour per program employee in fiscal year 2006, $48.84 per 
hour per program employee in fiscal year 2007, and $49.93 per hour per 
program employee in fiscal year 2008.


Sec.  592.520  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 inspection program personnel of any overtime 
service necessary and must pay the Agency for such overtime at an 
hourly rate of $55.07 per hour per program employee in fiscal year 
2005, $56.75 per hour per program employee in fiscal year 2006, $58.54 
per hour per program employee in fiscal year 2007, and $60.43 per hour 
per program employee in fiscal year 2008.


Sec.  592.530  Holiday rate.

    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 $55.07 per hour per program employee in fiscal year 2005, 
$56.75 per hour per program employee in fiscal year 2006, $58.54 per 
hour per program employee in fiscal year 2007, and $60.43 per hour per 
program employee in fiscal year 2008.

    Done in Washington, DC, on: July 15, 2005.
Barbara J. Masters,
Acting Administrator.
[FR Doc. 05-14296 Filed 7-19-05; 8:45 am]
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