New Formulas for Calculating the Basetime, Overtime, Holiday, and Laboratory Services Rates; Rate Changes Based on the Formulas; and Increased Fees for the Accredited Laboratory Program., 20220-20229 [2011-8699]
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Federal Register / Vol. 76, No. 70 / Tuesday, April 12, 2011 / Rules and Regulations
Authority: 7 U.S.C. 499a–499t.
2. In § 46.46, paragraph (e)(2) is
revised, paragraphs (e)(3) and (4) are
redesignated as paragraphs (e)(4) and
(5), and a new paragraph (e)(3) is added
as follows:
■
§ 46.46
Statutory trust.
*
*
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(e) * * *
(2) The maximum time for payment
for a shipment to which a seller,
supplier, or agent can agree, prior to the
transaction, and still be eligible for
benefits under the trust is 30 days after
receipt and acceptance of the
commodities as defined in § 46.2(dd)
and paragraph (a)(1) of this section.
(3) If there is a default in payment as
defined in § 46.46(a)(3), the seller,
supplier, or agent who has met the
eligibility requirements of paragraphs
(e)(1) and (2) of this section will not
forfeit eligibility under the trust by
agreeing in any manner to a schedule for
payment of the past due amount or by
accepting a partial payment.
*
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*
*
Dated: April 5, 2011.
Ellen King,
Acting Administrator, Agricultural Marketing
Service.
[FR Doc. 2011–8718 Filed 4–11–11; 8:45 am]
BILLING CODE 3410–02–P
Background
DEPARTMENT OF AGRICULTURE
Food Safety and Inspection Service
9 CFR Parts 391, 590, and 592
[FDMS Docket Number FSIS–2006–0025]
RIN 0583–AD40
New Formulas for Calculating the
Basetime, Overtime, Holiday, and
Laboratory Services Rates; Rate
Changes Based on the Formulas; and
Increased Fees for the Accredited
Laboratory Program.
Food Safety and Inspection
Service, USDA.
ACTION: Final rule.
AGENCY:
The Food Safety and
Inspection Service (FSIS) is amending
its regulations to establish formulas for
calculating the rates that it charges meat
and poultry establishments, egg
products plants, and importers and
exporters for providing voluntary,
overtime, and holiday inspection, and
identification, certification, and
laboratory services. The 2011 basetime,
overtime, holiday, and laboratory
services rates in this final rule will be
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SUMMARY:
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applied on the effective date. For future
years, FSIS will use the formulas
established to calculate the annual rates.
FSIS will publish the rates annually in
Federal Register notices prior to the
start of each calendar year and will
apply them on the first FSIS pay period
at the beginning of the calendar year.
The Agency is also increasing the
codified flat annual fee for its
Accredited Laboratory Program for FY
2012 and FY 2013.
DATES: This final rule is effective May
22, 2011.
FOR FURTHER INFORMATION CONTACT: For
further information concerning policy
issues contact Rachel Edelstein,
Director, Policy Issuances Division,
Office of Policy and Program
Development, FSIS, U.S. Department of
Agriculture, Room 6065 South Building,
1400 Independence Ave., SW.,
Washington, DC 20250–3700; telephone
(202) 720–0399, fax (202) 690–0486.
For further information concerning
fees contact Michele Torrusio, Director,
Budget Division, Office of Management,
FSIS, U.S. Department of Agriculture,
Room 2159 South Building, 1400
Independence Avenue, SW.,
Washington, DC 20250–3700; telephone
(202) 720–8700, fax (202) 690–4155.
SUPPLEMENTARY INFORMATION:
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The Federal Meat Inspection Act
(FMIA) (21 U.S.C. 601 et seq.) and the
Poultry Products Inspection Act (PPIA)
(21 U.S.C. 451 et seq.) provide for
mandatory Federal inspection of
livestock and poultry slaughtered at
official establishments and of meat and
poultry processed at official
establishments. 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 bears the cost of mandatory
inspection provided during nonovertime and non-holiday hours of
operation. Official establishments and
official egg products plants pay for
inspection services performed on
holidays or on an overtime basis.
Under the Agricultural Marketing Act
of 1946 (AMA), as amended (7 U.S.C.
1621 et seq.), FSIS provides a range of
voluntary inspection, certification, and
identification services to assist in the
orderly marketing of various animal
products and byproducts. These
services include the certification of
technical animal fats and the inspection
of exotic animal products, such as
antelope and elk products. The AMA
provides that FSIS may assess and
collect fees to recover the costs of the
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voluntary inspection, certification, and
identification services it provides.
Also under the AMA, FSIS provides
certain voluntary laboratory services
that establishments and others may
request the Agency to perform.
Laboratory services are provided for
four types of analytic testing:
Microbiological testing, residue
chemistry tests, food composition tests,
and pathology testing. Again, the AMA
provides that FSIS may collect fees to
recover the costs of providing these
services.
FSIS also accredits non-Federal
analytical laboratories under its
Accredited Laboratory Program. Such
accreditation allows laboratories to
conduct analyses of official meat and
poultry samples. The Food, Agriculture,
Conservation, and Trade Act of 1990, as
amended, mandates that laboratory
accreditation fees cover the costs of the
Accredited Laboratory Program. This
same Act mandates an annual payment
of an accreditation fee on the
anniversary date of each accreditation.
Proposed Rule
On October 8, 2009, FSIS published a
proposed rule to amend its regulations
to establish formulas for calculating the
rates it charges meat and poultry
establishments, egg products plants, and
importers and exporters for providing
voluntary, overtime, and holiday
inspection, and identification,
certification, and laboratory services (74
FR 51800). FSIS also proposed to keep
the annual fee for its Accredited
Laboratory Program at $4,500 for FY
2009, 2010 and 2011, and increase it to
$5,000 for FY 2012 and FY 2013 (74 FR
51802).
As FSIS explained in the proposed
rule, historically, the Agency amended
its regulations annually to change the
rates and fees. However, because the
rulemaking process is lengthy, the fiscal
year repeatedly would partially elapse
before the Agency could publish a final
rule to amend its rates and fees. As a
result, the Agency was unable to recover
the full cost of the services it provided.
To address the delays in recovering
the cost of services, in January 2006,
FSIS amended its regulations to provide
for multiple annual rate and fee
increases in one action (71 FR 2135).
With this rulemaking, the rates and fees
for 2006–2008 were increased and FSIS
established criteria for determining the
rate and fee increases on a multi-year
basis. While this solution enabled the
Agency to increase rates and fees each
year, estimates used to establish the
annual rates and fees were imprecise
and have left the Agency collecting too
little, and thus, not fully recovering its
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costs. Because of the duration of the
rulemaking process, rate increases have
not been available until approximately
three-fourths of the way into the fiscal
year. This has resulted in a considerable
monetary loss for FSIS.
In 2009, the Agency performed a cost
analysis using actual FY 2008 data. On
the basis of that analysis, the October
2009 proposed rule set forth the various
rates FSIS projected it needed to charge
in order to recover its costs. FSIS
developed proposed formulas in
consultation with a private accounting
firm to determine the rates for FY 2010
and future years. FSIS also proposed
raising its fees for the Accredited
Laboratory Program to cover its
increased direct overhead costs,
including salary increases, employee
benefits, inflation, and bad debt, and to
maintain an adequate operating reserve.
Final Rule
In this final rule, FSIS is amending its
regulations to codify, with
modifications, the proposed formulas
for calculating and establishing the rates
for basetime, overtime, holiday, and
laboratory services set forth in the
proposed rule. FSIS has also made
changes to the proposed regulatory text
to correct inadvertent inconsistencies in
terminology. For example, the preamble
to the proposed rule referred to ‘‘fees’’
for the basetime, overtime, holiday, and
laboratory services rates. In this
preamble, FSIS is consistently using the
term ‘‘rate’’ for the basetime, overtime,
holiday, and laboratory services rates,
and ‘‘fee’’ for the laboratory accreditation
fee.
In the proposed rule, the Agency
stated that the basetime, overtime,
holiday, and laboratory services rates
would be determined ‘‘For each fiscal
year and based on previous fiscal year’s
actual costs and hours’’ (proposed 9 CFR
391.2(a), 391.3, 391.4(a), 590.126,
590.128, 592.510(a), 592.520, 592.530).
Because of the time necessary to obtain
previous fiscal year data and to
calculate the formulas, in this final rule
FSIS is specifying that the rates will be
determined for each calendar year, as
opposed to for ‘‘each fiscal year,’’ based
on the previous fiscal year’s (ending on
September 30) actual costs and hours
data, except for the cost of living and
inflation percentages. FSIS is also
specifying that the cost of living and
inflation percentages included in the
formulas will be based on economic
assumptions for the calendar year in
which the rates will apply.
The proposed provisions for the
‘‘overhead rate’’ (9 CFR 391.2(b)(3) and
592.510(b)(3)) stated that the rate is
based on the ‘‘average information
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technology (IT) costs from the previous
two years in the Public Health Data
Communication Infrastructure System
Fund.’’ The Agency proposed the two
year average because of excessively high
2007 IT costs. However, in this final
rule, to maintain consistency with the
timeframes used in the other rate
calculations, the Agency is amending 9
CFR 391.2(b)(3) and 592.510(b)(3) to
refer to the ‘‘information technology
costs from the previous fiscal year.’’ In
addition, the preamble discussion of the
overhead rate stated that the rate
included ‘‘provision for the operating
balance’’. This language was not
included in the proposed codified text.
This final rule corrects the codified text
to include the addition of the provision
for the operating balance.
The proposed regulatory text for the
‘‘benefits’’ and ‘‘travel and operating
rates’’ (9 CFR 391.2(b)(1) and (2), and
592.510(b)(1) and (2)) did not specify
that the applicable costs would be
divided by the applicable hours. The
proposed regulatory text did not clearly
state that the percentage of the cost of
living increase (for the basetime,
overtime, holiday, laboratory services,
and benefits rate) and the percentage of
inflation (for the travel and operating
and overhead rates) adjustments are
added to the quotients of pay divided by
hours in the rate formulas. However,
FSIS did provide examples in the
preamble which indicated that costs
would be divided by the hours, and
demonstrated how the percent of cost of
living and inflation are calculated, then
added in the formulas to determine the
appropriate rates. In this final rule, the
regulatory text has been modified to
clearly state that applicable costs would
be divided by applicable hours and the
cost of living and inflation percentage
adjustments are added to the quotients
in the formulas to determine the rates.
The proposed rule’s discussion of the
‘‘Proposed Formulas’’ (FR 74 51801) and
the codified text (9 CFR 391.2(a),
391.3(a) and (b), 391.4(a), 590.126,
590.128, 592.510(a), 592.520, and
592.530) used the terms ‘‘regular hours’’
and ‘‘hours worked’’ interchangeably. In
this final rule, the Agency is amending
the codified text to use consistently the
term ‘‘regular hours.’’ The term ‘‘regular
hours’’ refers to the hours during regular
working time (not including holiday or
overtime hours) that are associated with
on-site food product inspection.
In addition, the proposed rule’s
preamble (74 FR 51801) and codified
text included the term ‘‘salaries paid’’ (9
CFR 391.2(a), 391.3(a) and (b), 391.4(a),
590.126, 590.128, 592.510(a), 592.520,
and 592.530). In this final rule, for
clarity, the term ‘‘salaries paid’’ is being
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replaced by ‘‘regular direct pay’’ because
this is the pay for ‘‘regular hours.’’
FSIS intends to announce future
annual rate changes, using the formulas
in this final rule, in Federal Register
notices approximately 30 days prior to
the start of each new calendar year. FSIS
will apply the new rates at the start of
the first FSIS pay period each new
calendar year. The 2011 rates in this
final rule will be applied starting May
22, 2011, the first pay period 30 days
after the publication of the rule.
This final rule adopts the proposed
fees for the accredited laboratory
program. FSIS will propose changes to
the laboratory accreditation fees in
future rulemakings when necessary.
Recalculated Rates
The rates published in the October
2009 proposed rule were calculated
using the best data and economic
analyses available at the time. These
rates were based upon actual FY 2008
data. The proposed rule stated that the
rates would be based on the previous
year’s actual costs and hours. Fiscal
Year 2010 ended on September 30,
2010, and the Agency’s FY 2010 actual
cost data are now available. In addition,
since the publication of the proposed
rule, the Office of Management and
Budget (OMB) released updated
projected economic assumptions,
‘‘Analytical Perspectives, Budget of the
United States Government, Fiscal Year
2011.’’ The economic assumptions in the
‘‘Economic and Budget Analyses’’
section, https://www.whitehouse.gov/
sites/default/files/omb/budget/fy2011/
assets/econ_analyses.pdf include the
projected overall average civilian
Federal pay raises and locality pay
adjustments for future calendar years.
Therefore, the rates for 2011 in this
final rule have been recalculated based
on the previous fiscal year costs and
hours (FY 2010), the calendar year
percentage of cost of living increase and
inflation (calendar year 2011), and, as
discussed above, the IT costs from the
previous fiscal year (FY 2010). Table 1
lists the recalculated 2011 rates and the
projected 2012 rates, Table 2 lists the
rates FSIS currently assesses, and Table
3 lists the rates from the October 2009
proposed rule.
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Federal Register / Vol. 76, No. 70 / Tuesday, April 12, 2011 / Rules and Regulations
TABLE 1—2011 ADJUSTED RATE (PER
HOUR PER EMPLOYEE) BY TYPE OF
SERVICE
2011 rate
(estimates
rounded to
reflect
billable
quarters)
Service
Basetime ...........
Overtime ...........
$53.92
67.52
TABLE 1—2011 ADJUSTED RATE (PER
HOUR PER EMPLOYEE) BY TYPE OF
SERVICE—Continued
Projected
2012 rate
(estimates
rounded to
reflect
billable
quarters)
2011 rate
(estimates
rounded to
reflect
billable
quarters)
Service
$54.68
68.64
Holiday ..............
Laboratory .........
$81.08
67.08
Projected
2012 rate
(estimates
rounded to
reflect
billable
quarters)
TABLE 2—CURRENT RATES (PER
HOUR PER EMPLOYEE) BY TYPE OF
SERVICE
Service
Current rate
Basetime ...................................
Overtime & holiday ...................
Laboratory .................................
$49.93
58.93
70.82
$82.28
68.04
TABLE 3—OCTOBER 2009 PROPOSED RATES (PER HOUR PER EMPLOYEE) BY TYPE OF SERVICE
Estimates rounded to reflect billable
quarters
Service
2010 rate
Basetime ..................................................................................................................................................
Overtime ..................................................................................................................................................
Holiday .....................................................................................................................................................
Laboratory ................................................................................................................................................
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The ‘‘travel and operating rate’’ and
the ‘‘overhead rate’’ used in the proposed
rule calculations were inadvertently
transposed. In this final rule, the
Agency has corrected this error in all of
the preamble calculations below that
include ‘‘travel and operating rate’’ or
‘‘overhead rate.’’
Formulas for the Basetime, Overtime,
Holiday, and Laboratory Services Rates
FSIS is amending its regulations to
provide the following formulas for the
basetime, overtime, holiday, and
laboratory services rates. The rates
provided in Table 1, ‘‘2011 ADJUSTED
RATE (PER HOUR PER EMPLOYEE) BY
TYPE OF SERVICE’’ are based on
calculations using unrounded numbers
for the components, e.g., benefits, travel
and operating, and overhead. The
calculations provided below are for
illustration and the components of the
rates may not appear to be rounded
correctly. However, the final rates are
rounded correctly. In addition, all of the
final rates have been rounded to make
the amount divisible by the quarter hour
(15 minutes). Fifteen minutes is the
minimum charge for the services
covered by these rates.
FSIS is amending 9 CFR 391.2 and
592.510 to establish the following
formula to calculate the basetime rate
per hour per program employee:
Basetime Rate = The quotient of
dividing the Office of Field Operations
(OFO) plus Office of International
Affairs (OIA) inspection program
personnel’s previous fiscal year’s
regular direct pay by the previous fiscal
year’s regular hours, plus the quotient
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multiplied by the calendar year’s
percentage of cost of living increase,
plus the benefits rate, plus the travel
and operating rate, plus the overhead
rate, plus the allowance for bad debt
rate.
The calculation for the 2011 basetime
rate per hour per program employee is:
[FY 2010 OFO and OIA Regular Direct
Pay divided by the previous fiscal year’s
Regular Hours ($406,663,564/
15,164,875)] = $26.82 + ($26.82 * 1.4%
(calendar year 2011 Cost of Living
Increase)) = $27.20 + $8.30 (benefits
rate) + $.89 (travel and operating rate) +
$17.52 (overhead rate) + $.01 (bad debt
allowance rate) = $53.92.
Following the discussion of the
‘‘Laboratory Services Rate’’ is an
explanation of how the benefits rate,
travel and operating rate, overhead rate,
and bad debt allowance rate were
calculated.
FSIS is amending 9 CFR 391.3,
590.126, 590.128, 592.520, and 592.530,
to establish the following formulas for
overtime and holiday rates per hour per
program employee:
Overtime Rate = The quotient of
dividing the Office of Field Operations
(OFO) plus Office of International
Affairs (OIA) inspection program
personnel’s previous fiscal year’s
regular direct pay by the previous fiscal
year’s regular hours, plus the quotient
multiplied by the calendar year’s
percentage of cost of living increase,
multiplied by 1.5, plus the benefits rate,
plus the travel and operating rate, plus
the overhead rate, plus the allowance
for bad debt rate.
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$51.36
64.88
78.44
65.08
Projected
rate 2011
$52.84
66.84
80.84
67.04
Projected
rate 2012
$54.64
68.84
83.32
69.08
The calculation for the 2011 overtime
rate per hour per program employee is:
[FY 2010 OFO and OIA Regular Direct
Pay divided by previous fiscal year’s
Regular Hours ($406,663,564/
15,164,875)] = $26.82 + ($26.82 * 1.4%
(calendar year 2011 Cost of Living
Increase)) = $27.20 * 1.5 = $40.79 +
$8.30 (benefits rate) + $.89 (travel and
operating rate) + $17.52 (overhead rate)
+ $.01 (bad debt allowance rate) =
$67.52.
Holiday Rate = The quotient of
dividing the Office of Field Operations
(OFO) plus Office of International
Affairs (OIA) inspection program
personnel’s previous fiscal year’s
regular direct pay by the previous fiscal
year’s regular hours, plus the quotient
multiplied by the calendar year’s
percentage of cost of living increase,
multiplied by 2, plus the benefits rate,
plus the travel and operating rate, plus
the overhead rate, plus the allowance
for bad debt rate.
The calculation for the 2011 holiday
rate per hour per program employee
calculation is:
[FY 2010 OFO and OIA Regular Direct
Pay divided by Regular Hours
($406,663,564/15,164,875)] = $26.82 +
($26.82 * 1.4% (calendar year 2011 Cost
of Living Increase)) = $27.20 * 2 =
$54.39 + $8.30 (benefits rate) + $.89
(travel and operating rate) + $17.52
(overhead rate) + $.01 (bad debt
allowance rate) = $81.11 (rounded to
$81.08).
FSIS is amending 9 CFR 391.4, to
establish the following formula for the
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laboratory services rate per hour per
program employee:
Laboratory Services Rate = The
quotient of dividing the Office of Public
Health Science (OPHS) previous fiscal
year’s regular direct pay by the OPHS
previous fiscal year’s regular hours, plus
the quotient multiplied by the calendar
year’s percentage cost of living increase,
plus the benefits rate, plus the travel
and operating rate, plus the overhead
rate, plus the allowance for bad debt
rate.
The calculation for the 2011
laboratory services rate per hour per
program employee is:
[FY 2010 OPHS Regular Direct Pay/
OPHS Regular hours ($21,012,082/
527,975)] = $39.80 + ($39.80 * 1.4%
(calendar year 2011 Cost of Living
Increase)) = $40.36 + $8.30 (benefits
rate) + $.89 (travel and operating rate) +
$17.52 (overhead rate) + $.01 (bad debt
allowance rate) = $67.08.
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Formulas for the Benefits, Travel and
Operating, Overhead, and Allowance
for Bad Debt Rates
FSIS is amending 391.2 and 592.510
to provide the formulas for calculating
the Benefits, Travel and Operating,
Overhead, and Allowance for Bad Debt
Rates. These rates are components of the
basetime, overtime, holiday, and
laboratory services rates formulas.
Benefits Rate: The quotient of
dividing the previous fiscal year’s direct
benefits costs by the previous fiscal
year’s total hours (regular, overtime, and
holiday), plus the quotient multiplied
by the calendar year’s percentage cost of
living increase. Some examples of direct
benefits are health insurance,
retirement, life insurance, and Thrift
Savings Plan basic and matching
contributions.
The calculation for the 2011 benefits
rate per hour per program employee is:
[FY 2010 Direct Benefits/(Total Regular
hours + Total Overtime hours + Total
Holiday hours) ($140,660,995/
17,171,053)] = $8.19 + ($8.19 * 1.4%
(calendar year 2011 Cost of Living
Increase) = $8.30.
Travel and Operating Rate: The
quotient of dividing the previous fiscal
year’s total direct travel and operating
costs by the previous fiscal year’s total
hours (regular, overtime, and holiday),
plus the quotient multiplied by the
calendar year’s percentage of inflation.
The calculation for the 2011 travel
and operating rate per hour per program
employee is:
[FY 2010 Total Direct Travel and
Operating Costs/(Total Regular hours +
Total Overtime hours + Total Holiday
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hours) ($15,090,489/17,171,053)] = $.88
+ ($.88 * 1.2% (2011 Inflation) = $.89.
Overhead Rate: The quotient of
dividing the previous fiscal year’s
indirect costs plus the previous fiscal
year’s information technology (IT) costs
in the Public Health Data
Communication Infrastructure System
Fund plus the previous fiscal year’s
Office of Management Program cost in
the Reimbursable and Voluntary Funds
plus the provision for the operating
balance less any Greenbook costs (i.e.,
costs of USDA support services prorated
to the service component for which fees
are charged) that are not related to food
inspection by the previous fiscal year’s
total hours (regular, overtime, and
holiday) worked across all funds, plus
the quotient multiplied by the calendar
year’s percentage of inflation.
The calculation for the 2011 overhead
rate per hour per program employee is:
[FY 2010 Total Overhead/(Total Regular
hours + Total Overtime hours + Total
Holiday hours) ($337,861,367/
19,521,571)] = $17.31 + ($17.31 * 1.2%
(2011 Inflation) = $17.52.
Allowance for Bad Debt Rate =
Previous fiscal year’s total allowance for
bad debt (for example, debt owed that
is not paid in full by plants and
establishments that declare bankruptcy)
divided by previous fiscal year’s total
hours (regular, overtime, and holiday)
worked.
The 2011 calculation for bad debt rate
per hour per program employee is:
[FY 2010 Total Bad Debt/(Total Regular
hours + Total Overtime hours + Total
Holiday hours) = ($222,481/19,521,571)]
= $.01.
Laboratory Accreditation Fee
Consistent with the proposed rule,
FSIS is also amending 9 CFR 391.5 to
keep the laboratory accreditation fee at
$4,500.00 for fiscal year 2011 and to
increase it to $5,000.00 beginning in
fiscal year 2012. FSIS will propose
changes to the laboratory accreditation
fees through future rulemakings when
necessary.
As discussed in the proposed rule (74
FR 51802), FSIS needs to raise the fee
for this program to cover its increased
direct overhead costs, including those
for salary increases, employee benefits,
inflation, and bad debt, and to maintain
an adequate operating reserve.
Furthermore, FSIS must maintain a
‘‘carryover’’ amount each year as a
reserve to cover the contractual costs
that the Accredited Laboratory Program
must pay at the beginning of each fiscal
year. The increases are also necessary to
cover salaries and other operating
expenses during the first two to three
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20223
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
received about evenly across the rest of
the fiscal year. Maintaining an adequate
reserve is therefore essential for the
Accredited Laboratory Program to be
fully functional during the first quarter
of any fiscal year.
Responses to Comments
FSIS received seven comments in
response to the proposed rule. The
commenters included meat trade
associations, private citizens, and a
meat processor.
Most commenters acknowledged that
codified formulas in the regulations for
these rates would afford the Agency the
ability to raise rates based on pay
increases for Federal employees and
inflation.
Comments: One comment from a meat
processor expressed concern that the
first-year overtime rate increase is above
the rate of inflation and above the wage
based increase in the commenter’s
geographical area. Another comment
from a trade association expressed
concern that the overtime rate for the
first year is approximately a 10%
increase.
Response: The existing basetime,
overtime, holiday, and laboratory
services rates have not increased for
more than three years, since October 1,
2007. FSIS developed the current
overtime rate in 2005, using an
estimated Annual General Increase
(AGI) of 2.3% per year for 2006–2008.
The actual AGI during 2006–2008
averaged 2.9%. The Agency absorbed
the difference between the projected
and actual increase, including the costs
of benefits that have increased at an
average of 4.6% each year. In addition,
the rates established in the 2006 final
rule are still being used in calendar year
2010. The higher rates are necessary
because of increased salary costs across
several years and current overhead
costs.
Comments: One meat processor and
two trade associations opposed the
methodology of adding travel, benefits,
overhead, and bad debt costs to the
overtime and holiday inspection rates
and stated that the proposed formulas
were not clear.
Response: The methodology of adding
travel, benefits, overhead and bad debts
costs to overtime and holiday inspection
rates has been used to establish the rates
for previous years. FSIS has always been
reimbursed by industry for the salary
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and overhead costs for both overtime
work and work on Federal holidays.
Contrary to one commenter’s concern,
the calculations do not multiply travel,
benefits, overhead, and bad debt costs
by 1.5 and 2.0 for overtime and holiday
rates, respectively. As illustrated in the
calculations, these costs are added to
the adjusted salary amounts for
overtime and holiday pay.
The Agency contracted with a large
world-wide accounting firm to ensure
that the methodology for the fee
calculations was sound and without
flaws. The accounting firm’s analysis of
the methodology was performed in
accordance with the ‘‘Standards for
Consulting Services,’’ established by the
American Institute of Certified Public
Accountants. Consistent with the
proposed rule, the final rule specifies all
cost components used to calculate the
rates. In this final rule, the Agency has
clarified and made consistent the
terminology used in the proposal.
Comments: One trade association
encouraged the Agency to acknowledge
the impact that the holiday rate change
would have on small and very small
meat processors. Another trade
association expressed concern that the
overtime fee increase would
disproportionately affect small and
medium sized businesses that are not
able to run two shifts but rely on
overtime to meet consumer demand.
Response: Overtime and holiday
inspection services are generally sought
by the 370 large establishments and
plants that have a large production
volume of approximately 162,500,000
pounds of product per year. These
establishments have greater complexity
and diversity in the products they
produce than the 5,140 small and very
small Federal establishments whose low
production volume averages 1,400,000
pounds of product per year.1
Establishments or plants with lower
production volume are unlikely to use
a significant amount of overtime and
holiday inspection services, except on
those occasions when demand exceeds
supply for their products. In addition,
the costs that industry would incur as
a result of the increase in rates are
similar to other increases that the
industry faces because of inflation and
wage increases.
Comments: One meat processor
opposed the holiday inspection service
1 Establishment numbers obtained from USDA
FSIS Performance Based Inspection System (PBIS)
and represent all Federal & Talmadge-Aiken (State
excluded), Active & Inactive (Withdrawn excluded)
establishments. Volume data obtained from USDA
FSIS PBIS, the Animal Disposition Reporting
System, and USDA Economic Research Service
Food Availability (Per Capital) Data System.
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rate because establishments do not
recognize the same holidays as the
Federal government.
Response: FSIS follows the schedule
of Federal holidays identified by the
Office of Personnel Management, as
well as any additional Federal holidays
authorized by the President. FSIS has no
authority to mandate which days will be
‘‘holidays’’ for establishments or plants.
When an establishment chooses to
remain open and requires reimbursable
inspection services from FSIS on a
Federal holiday, then FSIS must pay its
inspection workforce accordingly. FSIS
inspectors are paid double time for
holiday work. Therefore, consistent
with the proposed rule, the final rule
provides a holiday rate of two times the
employee’s hourly rate of base pay.
Comments: Three trade associations
expressed concern regarding how the
Agency assesses overtime inspection
rates. They contend that, because
establishments are required to operate
under Hazard Analysis Critical Control
Point (HACCP) systems, processing
establishments should be able to freely
operate at any appropriate time, with
FSIS providing a level of inspection to
fit accordingly. The commenters believe
this would negate the need for overtime
inspection.
Response: This rule establishes the
rate for overtime inspection service. The
commenters’ concern relates to a
separate issue that is whether HACCP
systems in plants should permit plants
to freely operate at any time without
being assessed ‘‘overtime fees.’’ Sections
9 CFR 307.4(c), 381.37(c), and 590.124
provide that official establishments
shall be provided inspection service,
without charge, for up to 8 consecutive
hours per shift during the workweek.
The regulations also provide that the
workweek is 5 consecutive days.
Inspection service provided outside of
these bounds is, by definition, overtime
service.
Comment: One trade association
questioned the 30-day comment period
for the proposed rule and stated that the
comment period should have been
longer.
Response: The Agency must recover
the actual cost of these inspection
services for its continued sound
financial management. To expeditiously
solicit comments on the proposed rule
and make the rulemaking effective so
that FSIS’s costs can be recovered as
quickly as possible, the Administrator
determined that 30 days for public
comment was sufficient. A 30-day
comment period is not uncommon
when the Agency needs timely
responses. For example, the July 2005
proposed rule ‘‘Changes in Fees for
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Meat, Poultry, and Egg Products
Inspection Services Fiscal Years 2005–
2008,’’ solicited comments within 30
days (70 FR 41635).
Executive Order 12866 and Final
Regulatory Flexibility Act
This final rule was reviewed by the
Office of Management and Budget under
Executive Order 12866 and was
determined to be significant. The
proposed rule was determined to be not
significant.
This final rule establishes the
formulas FSIS will use to calculate the
rates that it charges meat and poultry
establishments, egg products plants, and
importers and exporters for providing
voluntary inspection, identification and
certification services, overtime and
holiday inspection services, and
laboratory services. This final rule also
increases the annual fee that FSIS
assesses for its Accredited Laboratory
Program for FY 2012 and FY 2013. This
rule is necessary to ensure that FSIS
recovers its cost of providing these
voluntary inspection and laboratory
accreditation services.
Economic Effects of New Fees
By codifying formulas to calculate
future annual rates, the Agency will
streamline the rulemaking process to
help ensure that the new rates are
effective at the beginning of each
calendar year. The rates will be
determined for each calendar year,
based on the previous fiscal year’s
(ending on September 30) actual costs
and hours data, and the upcoming year’s
projected cost of living and inflation
percentages. The new rates will be
adjusted to reflect inflation and federal
pay raises but will not support any new
budgetary initiatives. If rates increase,
the costs that industry will experience
are similar to other increases that the
industry will experience because of
inflation and wage increases.
The total volume of meat and poultry
slaughtered under Federal inspection in
2009 was about 90.9 billion pounds
(2009–8 Livestock, Dairy, Meat, and
Poultry Outlook Report, Economic
Research Service, USDA). The total
volume in egg product production in
2009 was about 2.6 billion pounds (2009
National Agricultural Statistical Service,
USDA). The increase in cost per pound
of product associated with the new rates
is, in general, $.002. Even in
competitive industries such as meat,
poultry, and egg products, this amount
of increase in costs would have an
insignificant impact on profits and
processes.
Even though the increases in the
basetime, overtime, and holiday rates
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are negligible, the industry is likely to
pass along a significant portion of the
rate increases to consumers because of
the inelastic nature of the demand curve
facing consumers. Research has shown
that consumers are unlikely to reduce
demand significantly for meat, poultry,
and egg products when prices increase.
Huang estimates that quantity
demanded of meat, poultry, and egg
products 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.
Table 4 (below) represents the
revenues the Agency collected in FY
2009 and FY 2010, and the projected
revenues for FY 2011 and FY 2011. For
basetime, overtime, holiday, and
laboratory services, the Agency
collected $146.5 million in FY 2009 and
$148.9 million in FY 2010, and based on
the new rate structure, is projecting to
collect $164.2 million in FY 2011, and
$171.9 million in FY 2012.
20225
For the Accredited Laboratory
Program, the Agency collected $317,250
in FY 2009 and $293,000 in FY 2010.
The fee will increase from $4,500 (the
current rate) to $5,000 per entity in FY
2012. The Agency expects to collect
approximately $270,000 in FY 2011,
and $300,000 in FY 2012.
The total revenue amounts for the
basetime, overtime, holiday, and
laboratory services rates with the
Accredited Lab Fees for FY 2009 and FY
2010 (actual amounts), and FY 2011 and
FY 2012 (projected amounts) are shown
in Table 4 (below).
TABLE 4—TOTAL AMOUNT COLLECTED BY THE AGENCY
Actual FY 2009
amounts
Service
Basetime Rate .................................................................................
Overtime (OT)/Holiday Rate(H) 2 .....................................................
Projected FY
2011 amounts
based on rate
increase
January 1, 2011
Actual FY 2010
amounts
Projected
FY2012 amounts
based on rate
increase
January 1, 2012
$ 6,900,000
131,100,000
(OT)
10,900,000 (H)
N/A
N/A
178
293,000
$ 7,409,000
N/A
$ 7,629,000
N/A
Overtime Rate ..................................................................................
Holiday Rate ....................................................................................
Laboratory Services Rate ................................................................
Accredited Lab Fee .........................................................................
$ 7,300,000
126,400,000
(OT)
12,800,000 (H)
N/A
N/A
530
317,250
145,536,000
11,250,000
500
270,000
149,025,000
15,222,000
500
300,000
Grand Total ...............................................................................
146,817,780
149,193,178
164,465,500
172,176,500
Final Regulatory Flexibility Analysis
The FSIS Administrator certifies that,
for the purposes ofthe Regulatory
Flexibility Act (5 U.S.C. 601–602), the
final rule will not have a significant
impact on a substantial number of small
entities in the United States. As
explained further below, while this
action will affect a substantial number
of small entities, the action will likely
not have a significant effect on these
small entities.
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Objective of the Final Rule
The changes in this final rule will
affect those entities in the United States
that slaughter or process meat, poultry,
and egg products for consumption.
There are about 2,320 small federally
inspected establishments (with more
than 10 but less than 500 employees)
and 2,720 very small establishments
(with fewer than 10 employees) based
on HACCP Classification. Therefore, a
total of 5,040 small and very small
establishments (or 83 percent of the
establishments) could be possibly
affected by this rule. These small and
very small establishments are
categorized in the following North
2 Overtime and Holiday Rates were the same for
FY 2009 and 2010.
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American Industry Classification
System (NAICS) codes: 311611—Animal
(except Poultry) Slaughtering; 311612—
Meat Processed from Carcasses;
311613—Rendering and Meat
Byproduct Processing; 311615–Poultry
Processing; and 311999—All other
Miscellaneous Food Manufacturing (Egg
products). These codes can be found in
The U.S. Small Business Administration
Table of Small Business Size Standards
Matched to the NAICS 3 as modified by
the Office of Management and Budget in
2007(effective August 22, 2008). The
size threshold for these industries is 500
employees. All establishments that have
500 or fewer employees are considered
small.
These small and very small
establishments like the 1,031 large
establishments would incur the rates
from 2011–2012 and in perpetuity only
if they incur voluntary inspection,
overtime and holiday inspection
services, identification and certification
services, or laboratory services.
3 The size standards are for the most part
expressed in either millions of dollars or number
of employees. A size standard is the largest that a
business can be and still qualify as a small business
for Federal Government programs.
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Significant Alternatives Considered
Alternative 1: Amend the regulations
to publish the basetime, overtime,
holiday, and laboratory services rates
and laboratory accreditation fees on a
multiple year basis (current approach).
Under this alternative, the Agency
would continue to publish proposed
and final rules to establish rates and fees
for multiple consecutive years.
However, the projected rates and fees
are based on economic factors, such as
inflation and cost of living, and other
factors such as employee benefits and
travel and operating costs, that change
on a yearly basis. While this solution
has enabled the Agency to increase rates
and fees on a multiple year basis, the
estimates used to establish the annual
rates and fees were imprecise and have
left the Agency collecting too little, and
thus, not fully recovering its costs.
Therefore, the Agency rejects this
alternative because it would continue to
create unnecessary uncertainty and
inflexibility to update fees based on
economic conditions.
Alternative 2: Amend the regulations
to update the rates and fees on an
annual basis.
Under this alternative, the Agency
would amend its regulations annually to
update the rates and fees using current
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data and economic factors. This
alternative was used prior to the current
approach of establishing the rates and
fees on a multiple year basis
(Alternative 1). However, because the
rulemaking process is lengthy, the fiscal
year repeatedly elapsed before the
Agency could publish the final rule to
amend the rates and fees. As a result,
the Agency was unable to recover its
full costs. This action would be the least
costly to small entities because they
would not pay the adjusted rates and
fees until they were published, which
would in effect cause a shortfall in the
Agency’s budget. Therefore, the Agency
rejects this alternative.
Alternative 3: Establish formulas for
calculating rates and publish the rates in
a Federal Register Notice prior to the
start of the calendar year.
Under this alternative, FSIS would
establish formulas for calculating rates
that it charges for basetime, overtime,
holiday, and laboratory services, and
publish the rates annually in a Federal
Register Notice prior to the start of each
calendar year. The Agency would
continue to publish the laboratory
accreditation fees on an as needed basis.
This action would enable the Agency to
recover its costs for providing voluntary
inspection, overtime and holiday
inspection services, identification and
certification services, and laboratory
services on a yearly basis, and would
notify small entities of the new rates
prior to the beginning of the calendar
year, so that the entities can budget for
these new fees. Therefore, the Agency
has selected this alternative.
Estimating the Impact on Small and
Very Small Entities
As discussed in the Economic Effects
of New Fees section, in 2009, there was
a total volume of 90.9 billion pounds
slaughtered of meat and poultry and 2.6
billion pounds of egg products
processed. According to the FSIS
Animal Disposition Reporting System,
in 2009 the 5,040 small and very small
Federal establishments’ production
volume averaged 1,400,000 pounds of
product per year, or a total of 7.1 billion
pounds per year or approximately 7
percent of the total production.
In FY 2009, there were a total of
146,000 hours charged from voluntary
inspection (basetime) service, 2.1
million hours charged from
reimbursable overtime, 218,000 hours
charged from holiday inspection
services, and 7 hours charged for
laboratory services.4 There are not
enough data to definitively determine
4 There
are estimated to be no small entities
applying for laboratory services.
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the number of these hours that were
incurred by small and very small
entities, and therefore their direct cost
as a result of this rule. However, if we
used the 7 percent from the total
production and apply it to the hours,
small and very small entities would
incur 147,000 hours out of 2.1 million
hours of reimbursable overtime and
15,300 hours of holiday inspection
services, and at a rate of $58.93, per
hour (2009 rate), the total cost will be
$9.6 million ((15,300 + 147,000)*
$58.93), compared to $127 million for
large entities.
For the voluntary inspection
(basetime), if we used the 7 percent
from the total production and apply it
to the hours, small and very small
entities would incur 10,200 hours out of
146,000 hours and at a rate of $49.93,
the total cost would be $510,000 dollars
compared to $6.8 million for the large
entities. Dividing the total cost of $10.1
million ($9.6 million plus $510,000) by
5,040 small and very small entities
would incur a cost of an average of
$2,000 per small and very small entity.
Likewise, if we apply the 2011 rates,
the 5,040 small and very small entities
would incur a cost of $10.5 million
(155,800 hours * $67.52) for overtime,
$787,000 (9,712 hours * $81.08) for
holiday, and $528,000 (9,800 hours *
$53.92) for voluntary services
(basetime). The total cost incurred by
small and very small entities for the
2011 year would be $11.8 million ($10.5
million plus $787,000 plus $528,000) or
$2,341 ($11.8 million/5,040 entities) per
entity.
Comparing the average cost of $2,000
per small and very small entity (2009)
to $2,341 per entity (2011 rate), the total
increase in fees and impact of the final
rule on small and very small entities
would be about $341 per entity.
The Accredited Laboratory program
has a total of 60 labs 5 participating, of
which an estimated 40 labs are
considered small. The Accredited Lab
fee for each lab will increase by $500,
from $4,500 in FY 2011 to $5,000 in FY
2012. This fee is necessary to have a
carry over amount each year as a reserve
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. Without this
fee, the Agency would not have enough
funds to cover the cost incurred during
this period. The laboratory fee is a
mandatory cost of doing business with
5 Four of the labs are the states of Illinois, Iowa,
Louisiana, and Minnesota Department of
Agriculture Laboratories.
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FSIS and without the FSIS accreditation
the labs would not be permitted to
analyze official meat and poultry
samples for establishments. These small
entities would likely recover this cost by
passing it along to the establishments,
who pay for their services.
Therefore, the Agency believes that
the final rule will not have a significant
economic impact on a substantial
number of small entities, whether
establishments or laboratories.
Paperwork Reduction Act
This rule does not contain any new
information collection or record keeping
requirements that are subject to the
Office of Management and Budget
(OMB) approval under the Paperwork
Reduction Act, 44 U.S.C. 3501 et seq.
E-Government Act
FSIS and USDA are committed to
achieving the purposes of the
E-Government Act (44 U.S.C. 3601, et
seq.) by, among other things, promoting
the use of the Internet and other
information technologies and providing
increased opportunities for citizen
access to Government information and
services, and for other purposes.
Executive Order 12988
This rule has been reviewed under
Executive Order 12988, Civil Justice
Reform. This rule: (1) Has no retroactive
effect; and (2) does not require
administrative proceedings before
parties may file suit in court challenging
this rule. However, the administrative
procedures specified in 9 CFR 306.5,
381.35, and 590.300 through 590.370,
respectively, must be exhausted before
any judicial challenge may be made of
the application of the provisions of the
final rule, if the challenge involves any
decision of an FSIS employee relating to
inspection services provided under the
FMIA, PPIA, or EPIA.
Executive Order 13175
This final rule has been reviewed in
accordance with the requirements of
Executive Order 13175, Consultation
and Coordination with Indian Tribal
Governments. The review reveals that
this regulation will not have substantial
and direct effects on Tribal governments
and will not have significant Tribal
implications.
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 rule, FSIS will announce it online
through the FSIS Web page located at
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https://www.fsis.usda.gov/regulations_&_
policies/Federal_Register_Publications_
&_Related_Documents/index.asp.
FSIS will also make copies of this
Federal Register publication available
through the FSIS Constituent Update,
which is used to provide information
regarding FSIS policies, procedures,
regulations, Federal Register notices,
FSIS public meetings, and other types of
information that could affect or would
be of interest to constituents and
stakeholders. The Update is
communicated via Listserv, a free
electronic mail subscription service for
industry, trade and farm groups,
consumer interest groups, allied health
professionals, and other individuals
who have asked to be included. The
Update is also available on the FSIS
Web page. Through the Listserv and
Web page, FSIS is able to provide
information to a much broader and more
diverse audience. In addition, FSIS
offers an e-mail subscription service
which provides automatic and
customized access to selected food
safety news and information. This
service is available at https://
www.fsis.usda.gov/News_&_Events/
Email_Subscription/.
Options range from recalls to export
information to regulations, directives
and notices. Customers can add or
delete subscriptions themselves, and
have the option to password protect
their accounts.
USDA Nondiscrimination Statement
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The U.S. Department of Agriculture
(USDA) prohibits discrimination in all
its programs and activities on the basis
of race, color, national origin, gender,
religion, age, disability, political beliefs,
sexual orientation, and marital or family
status. (Not all prohibited bases apply to
all programs.)
Persons with disabilities who require
alternative means for communication of
program information (Braille, large
print, audiotape, etc.) should contact
USDA’s Target Center at 202–720–2600
(voice and TTY).
To file a written complaint of
discrimination, write USDA, Office of
the Assistant Secretary for Civil Rights,
1400 Independence Avenue, SW.,
Washington, DC 20250–9410 or call
202–720–5964 (voice and TTY). USDA
is an equal opportunity provider and
employer.
List of Subjects
9 CFR Part 391
Fees and charges, Government
employees, Meat inspection, Poultry
products.
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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 is amending 9 CFR
Chapter III as follows:
PART 391—FEES AND CHARGES FOR
INSPECTION AND LABORATORY
ACCREDITATION
1. The authority citation for part 391
continues to read as follows:
■
Authority: 7 U.S.C. 138d; 7 U.S.C. 1622,
1627 and 2219a 21 U.S.C. 451 et seq.; 21
U.S.C. 601–695;
2. Section 391.2 is revised to read as
follows:
■
§ 391.2
Basetime rate.
(a) For each calendar year, FSIS will
calculate the basetime rate for
inspection services, per hour per
program employee, provided pursuant
to §§ 350.7, 351.8, 351.9, 352.5, 354.101,
355.12, and 362.5 of this chapter, using
the following formula: The quotient of
dividing the Office of Field Operations
plus Office of International Affairs
inspection program personnel’s
previous fiscal year’s regular direct pay
by the previous fiscal year’s regular
hours, plus the quotient multiplied by
the calendar year’s percentage of cost of
living increase, plus the benefits rate,
plus the travel and operating rate, plus
the overhead rate, plus the allowance
for bad debt rate.
(b) FSIS will calculate the benefits,
travel and operating, overhead, and
allowance for bad debt rate components
of the basetime rate, using the following
formulas:
(1) Benefits rate. The quotient of
dividing the previous fiscal year’s direct
benefits costs by the previous fiscal
year’s total hours (regular, overtime, and
holiday), plus the quotient multiplied
by the calendar year’s percentage cost of
living increase. Some examples of direct
benefits are health insurance,
retirement, life insurance, and Thrift
Savings Plan basic and matching
contributions.
(2) Travel and operating rate. The
quotient of dividing the previous fiscal
year’s total direct travel and operating
costs by the previous fiscal year’s total
hours (regular, overtime, and holiday),
plus the quotient multiplied by the
calendar year’s percentage of inflation.
(3) Overhead rate. The quotient of
dividing the previous fiscal year’s
indirect costs plus the previous fiscal
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20227
year’s information technology (IT) costs
in the Public Health Data
Communication Infrastructure System
Fund plus the previous fiscal year’s
Office of Management Program cost in
the Reimbursable and Voluntary Funds
plus the provision for the operating
balance less any Greenbook costs (i.e.,
costs of USDA support services prorated
to the service component for which the
fees are charged) that are not related to
food inspection, by the previous fiscal
year’s total hours (regular, overtime, and
holiday) worked across all funds, plus
the quotient multiplied by the calendar
year’s percentage of inflation.
(4) Allowance for bad debt rate.
Previous fiscal year’s allowance for bad
debt (for example, debt owed that is not
paid in full by plants and
establishments that declare bankruptcy)
divided by the previous fiscal year’s
total hours (regular, overtime, and
holiday) worked.
(c) The calendar year’s cost of living
increases and percentage of inflation
factors used in the formulas in this
section are based on the Office of
Management and Budget’s Presidential
Economic Assumptions.
■ 3. Section 391.3 is revised to read as
follows:
§ 391.3
Overtime and holiday rates.
For each calendar year, FSIS will
calculate the overtime and holiday rates,
per hour per program employee,
provided pursuant to §§ 307.5, 350.7,
351.8, 351.9, 352.5, 354.101, 355.12,
362.5, and 381.38 of this chapter, using
the following formulas:
(a) Overtime rate. The quotient of
dividing the Office of Field Operations
plus Office of International Affairs
inspection program personnel’s
previous fiscal year’s regular direct pay
by the previous fiscal year’s regular
hours, plus the quotient multiplied by
the calendar year’s percentage of cost of
living increase, multiplied by 1.5, plus
the benefits rate, plus the travel and
operating rate, plus the overhead rate,
plus the allowance for bad debt rate.
(b) Holiday rate. The quotient of
dividing the Office of Field Operations
plus Office of International Affairs
inspection program personnel’s
previous fiscal year’s regular direct pay
by the previous fiscal year’s regular
hours, plus the quotient multiplied by
the calendar year’s percentage of cost of
living increase, multiplied by 2, plus the
benefits rate, plus the travel and
operating rate, plus the overhead rate,
plus the allowance for bad debt rate.
(c) FSIS will calculate the benefits
rate, the travel and operating rate, the
overhead rate, and the allowance for bad
debt rate using the formulas set forth in
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§ 391.2(b), and the cost of living
increases and percentage of inflation
factors set forth in § 391.2(c).
■ 4. Section 391.4 is revised to read as
follows:
§ 391.4
Laboratory services rate.
(a) For each calendar year, FSIS will
calculate the laboratory services rate,
per hour per program employee,
provided pursuant to §§ 350.7, 351.9,
352.5, 354.101, 355.12, and 362.5 of this
chapter, using the following formula:
The quotient of dividing the Office of
Public Health Science (OPHS) previous
fiscal year’s regular direct pay by OPHS
previous fiscal year’s regular hours, plus
the quotient multiplied by the calendar
year’s percentage cost of living increase,
plus the benefits rate, plus the travel
and operating rate, plus the overhead
rate, plus the allowance for bad debt
rate.
(b) FSIS will calculate the benefits
rate, the travel and operating rate, the
overhead rate, and the allowance for bad
debt rate using the formulas set forth in
§ 391.2(b), and the cost of living
increases and percentage of inflation
factors set forth in § 391.2(c).
■ 5. Paragraph (a) of § 391.5 is revised
to read as follows:
§ 391.5
Laboratory accreditation fee.
(a) The annual fee for the initial
accreditation and maintenance of
accreditation provided pursuant to
§ 439.5 of this chapter shall be $4,500.00
for fiscal year 2011; and $5,000.00 for
fiscal years 2012 and 2013.
*
*
*
*
*
PART 590—INSPECTION OF EGGS
AND EGG PRODUCTS (EGG
PRODUCTS INSPECTION ACT)
6. The authority citation for part 590
continues to read as follows:
■
Authority: 21 U.S.C. 1031–1056.
7. In § 590.126, remove the second
sentence and add three sentences in its
place to read as follows:
■
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§ 590.126
percentage of cost of living increase,
multiplied by 1.5, plus the benefits rate,
plus the travel and operating rate, plus
the overhead rate, plus the allowance
for bad debt rate. FSIS calculates the
benefits rate, the travel and operating
rate, the overhead rate, and the
allowance for bad debt rate using the
formulas set forth in § 592.510(b) and
the cost of living increases and
percentage of inflation factors set forth
in § 592.510(c) of this chapter.
■ 8. In § 590.128(a), remove the second
sentence and add three sentences in its
place to read as follows:
§ 590.128
PART 592—VOLUNTARY INSPECTION
OF EGG PRODUCTS
9. The authority citation for part 592
continues to read as follows:
■
Overtime inspection service.
* * * The official plant must give
reasonable advance notice to the
inspector of any overtime service
necessary and must pay for such
overtime. For each calendar year, FSIS
will calculate the overtime rate for
inspection service, per hour per
program employee, using the following
formula: The quotient of dividing the
Office of Field Operations plus Office of
International Affairs inspection program
personnel’s previous fiscal year’s
regular direct pay by the previous fiscal
year’s regular hours, plus the quotient
multiplied by the calendar year’s
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Holiday inspection service.
(a) * * * The official plant must, in
advance of such holiday work, request
the inspector in charge to furnish
inspection service during such period
and must pay the Agency for such
holiday work at the hourly rate. For
each calendar year, FSIS calculates the
holiday rate for inspection service, per
hour per program employee, using the
following formula: The quotient of
dividing the Office of Field Operations
plus Office of International Affairs
inspection program personnel’s
previous fiscal year’s regular direct pay
by the previous fiscal year’s regular
hours, plus the quotient multiplied by
the calendar year’s percentage of cost of
living increase, multiplied by 2, plus the
benefits rate, plus the travel and
operating rate, plus the overhead rate,
plus the allowance for bad debt rate.
FSIS will calculate the benefits rate, the
travel and operating rate, the overhead
rate, and the allowance for bad debt rate
using the formulas set forth in
§ 592.510(b), and the cost of living
increases and percentage of inflation
factors set forth in § 592.510(c) of this
chapter.
*
*
*
*
*
Authority: 7 U.S.C. 1621–1627.
10. Section 592.510 is revised to read
as follows:
■
§ 592.510
Basetime rate.
(a) For each calendar year, FSIS will
calculate the basetime rate for
inspection services, per hour per
program employee, using the following
formula: The quotient of dividing the
Office of Field Operations plus Office of
International Affairs inspection program
personnel’s previous fiscal year’s
regular direct pay by the previous fiscal
year’s regular hours, plus the quotient
multiplied by the calendar year’s
PO 00000
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Fmt 4700
Sfmt 4700
percentage of cost of living increase,
plus the benefits rate, plus the travel
and operating rate, plus the overhead
rate, plus the allowance for bad debt
rate.
(b) FSIS will calculate the benefits,
travel and operating, overhead, and
allowance for bad debt rate components
of the basetime rate, using the following
formulas:
(1) Benefits rate. The quotient of
dividing the previous fiscal year’s direct
benefits costs by the previous fiscal
year’s total hours (regular, overtime, and
holiday), plus the quotient multiplied
by the calendar year’s percentage cost of
living increase. Some examples of direct
benefits are health insurance,
retirement, life insurance, and Thrift
Savings Plan basic and matching
contributions.
(2) Travel and operating rate. The
quotient of dividing the previous fiscal
year’s total direct travel and operating
costs by the previous fiscal year’s total
hours (regular, overtime, and holiday),
plus the quotient multiplied by the
calendar year’s percentage of inflation.
(3) Overhead rate. The quotient of
dividing the previous fiscal year’s
indirect costs plus the previous fiscal
year’s information technology (IT) costs
in the Public Health Data
Communication Infrastructure System
Fund plus the previous fiscal year’s
Office of Management Program cost in
the Reimbursable and Voluntary Funds
plus the provision for the operating
balance less any Greenbook costs (i.e.,
costs of USDA support services prorated
to the service component for which fees
are charged) that are not related to food
inspection, by the previous fiscal year’s
total hours (regular, overtime, and
holiday) worked across all funds, plus
the quotient multiplied by the calendar
year’s percentage of inflation.
(4) Allowance for bad debt rate.
Previous fiscal year’s allowance for bad
debt (for example, debt owed that is not
paid in full by plants and
establishments that declare bankruptcy)
divided by the previous fiscal year’s
total hours (regular, overtime, and
holiday) worked.
(c) The calendar year’s cost of living
increases and percentage of inflation
factors used in the formulas in this
section are based on the Office of
Management and Budget’s Presidential
Economic Assumptions.
■ 11. In § 592.520, remove the second
sentence and add three sentences in its
place to read as follows:
§ 592.520
Overtime rate.
* * * The official plant must give
reasonable advance notice to the
inspector of any overtime service
E:\FR\FM\12APR1.SGM
12APR1
Federal Register / Vol. 76, No. 70 / Tuesday, April 12, 2011 / Rules and Regulations
necessary. For each calendar year, FSIS
will calculate the overtime rate for
inspection service, per hour per
program employee, using the following
formula: The quotient of dividing the
Office of Field Operations plus Office of
International Affairs inspection program
personnel’s previous fiscal year’s
regular direct pay by previous fiscal
year’s regular hours, plus the quotient
multiplied by the calendar year’s
percentage of cost of living increase
multiplied by 1.5, plus the benefits rate,
plus the travel and operating rate, plus
the overhead rate, plus the allowance
for bad debt rate. FSIS calculates the
benefits rate, the travel and operating
rate, the overhead rate, and the
allowance for bad debt using the
formulas set forth in § 592.510(b), and
the cost of living increases and
percentage of inflation factors set forth
in § 592.510(c).
12. In § 592.530, remove the second
sentence and add three sentences in its
place to read as follows:
■
§ 592.530
Holiday rate.
erowe on DSK5CLS3C1PROD with RULES
* * * The official plant must, in
advance of such holiday work, request
that the inspector in charge furnish
inspection services during such period
and must pay the Agency for such
holiday work at the hourly rate. For
each calendar year, FSIS will calculate
the holiday rate for inspection service,
per hour per program employee, using
the following formula: The quotient of
dividing the Office of Field Operations
plus Office of International Affairs
inspection program personnel’s
previous fiscal year’s regular direct pay
by previous fiscal year’s regular hours,
plus the quotient multiplied by the
calendar year’s percentage of cost of
living increase, multiplied by 2, plus the
benefits rate, plus the travel and
operating rate, plus the overhead rate,
plus the allowance for bad debt rate.
FSIS calculates the benefits rate, the
travel and operating rate, the overhead
rate, and the allowance for bad debt
using the formulas set forth in
§ 592.510(b), and the cost of living
increases and percentage of inflation
factors set forth in § 592.510(c).
Done in Washington, DC, on April 7, 2011.
Alfred V. Almanza,
Administrator.
[FR Doc. 2011–8699 Filed 4–11–11; 8:45 am]
BILLING CODE 3410–DM–P
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DEPARTMENT OF TRANSPORTATION
Federal Aviation Administration
14 CFR Part 39
[Docket No. FAA–2011–0233; Directorate
Identifier 98–ANE–10–AD; Amendment
39–16660; AD 2011–08–10]
RIN 2120–AA64
Airworthiness Directives; Rolls-Royce
plc (RR) RB211–Trent 768–60 and
Trent 772–60 Turbofan Engines
Federal Aviation
Administration (FAA), DOT.
ACTION: Final rule; request for
comments.
AGENCY:
We are superseding an
existing airworthiness directive (AD) for
RR RB211–Trent 700 series turbofan
engines. That AD currently requires, for
the step aside gearbox (SAGB),
repositioning of the oil metering jet up
into the oil distributor within the bevel
gearshaft, followed by initial and
repetitive visual inspections of the
magnetic chip detector (MCD). Since we
issued that AD, RR has demonstrated
that the repositioning of the oil metering
jet eliminates the need for the repetitive
inspections. This AD changes the
applicability from RB211–Trent 700
series turbofan engines, to RB211–Trent
768–60 and Trent 772–60 turbofan
engines. This AD also eliminates the
visual inspections of the MCD from the
AD requirements. This AD was
prompted by RR demonstrating that the
repositioning of the oil metering jet
eliminates the need for the repetitive
inspections, by the need to correct the
AD applicability, and by the need to
eliminate the visual inspections of the
MCD. We are issuing this AD to prevent
in-flight engine shutdowns caused by
SAGB driving bevel gearshaft ball
bearing failure.
DATES: This AD is effective April 27,
2011.
The Director of the Federal Register
previously approved the incorporation
by reference of a certain publication
listed in this AD as of October 1, 1998
(63 FR 49416, September 16, 1998).
We must receive any comments on
this AD by May 27, 2011.
ADDRESSES: You may send comments by
any of the following methods:
• Federal eRulemaking Portal: Go to
https://www.regulations.gov. Follow the
instructions for submitting comments.
• Fax: 202–493–2251.
• Mail: U.S. Department of
Transportation, Docket Operations,
M–30, West Building Ground Floor,
Room W12–140, 1200 New Jersey
Avenue, SE., Washington, DC 20590.
SUMMARY:
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20229
• Hand Delivery: U.S. Department of
Transportation, Docket Operations,
M–30, West Building Ground Floor,
Room W12–140, 1200 New Jersey
Avenue, SE., Washington, DC 20590,
between 9 a.m. and 5 p.m., Monday
through Friday, except Federal holidays.
For service information identified in
this AD, contact Rolls-Royce plc, P.O.
Box 31, Derby, DE24 8BJ, United
Kingdom; telephone 44 1332 242424;
fax 44 1332 249936; e-mail:
tech.help@rolls-royce.com. You may
review copies of the referenced service
information at the FAA, Engine &
Propeller Directorate, 12 New England
Executive Park, Burlington, MA. For
information on the availability of this
material at the FAA, call 781–238–7125.
Examining the AD Docket
You may examine the AD docket on
the Internet at https://
www.regulations.gov; or in person at the
Docket Management Facility between 9
a.m. and 5 p.m., Monday through
Friday, except Federal holidays. The AD
docket contains this AD, the regulatory
evaluation, any comments received, and
other information. The street address for
the Docket Office (phone: 800–647–
5527) is in the ADDRESSES section.
Comments will be available in the AD
docket shortly after receipt.
FOR FURTHER INFORMATION CONTACT:
Alan Strom, Aerospace Engineer, Engine
Certification Office, FAA, Engine &
Propeller Directorate, 12 New England
Executive Park, Burlington, MA 01803;
telephone 781–238–7143; fax 781–238–
7199; e-mail: alan.strom@faa.gov.
SUPPLEMENTARY INFORMATION:
Discussion
On September 8, 1998, we issued AD
98–19–12, Amendment 39–10754 (63
FR 49416, September 16, 1998), for RR
RB211–Trent 700 series turbofan
engines. That AD requires, for the
SAGB, repositioning of the oil metering
jet up into the oil distributor within the
bevel gearshaft, followed by initial and
repetitive visual inspections of the
MCD. That AD resulted from reports of
uncommanded engine shutdowns
caused by failure of the SAGB driving
bevel gearshaft ball bearing due to oil
starvation. We issued that AD to prevent
in-flight engine shutdowns caused by
SAGB driving bevel gearshaft ball
bearing failure.
Actions Since AD Was Issued
Since we issued AD 98–19–12, RR has
demonstrated that the repositioning of
the oil metering jet eliminates the need
for the repetitive inspections. Also,
since we issued that AD, Rolls Royce
put into service, its RB211–Trent 772B–
E:\FR\FM\12APR1.SGM
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]]>Agencies
[Federal Register Volume 76, Number 70 (Tuesday, April 12, 2011)]
[Rules and Regulations]
[Pages 20220-20229]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-8699]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF AGRICULTURE
Food Safety and Inspection Service
9 CFR Parts 391, 590, and 592
[FDMS Docket Number FSIS-2006-0025]
RIN 0583-AD40
New Formulas for Calculating the Basetime, Overtime, Holiday, and
Laboratory Services Rates; Rate Changes Based on the Formulas; and
Increased Fees for the Accredited Laboratory Program.
AGENCY: Food Safety and Inspection Service, USDA.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The Food Safety and Inspection Service (FSIS) is amending its
regulations to establish formulas for calculating the rates that it
charges meat and poultry establishments, egg products plants, and
importers and exporters for providing voluntary, overtime, and holiday
inspection, and identification, certification, and laboratory services.
The 2011 basetime, overtime, holiday, and laboratory services rates in
this final rule will be applied on the effective date. For future
years, FSIS will use the formulas established to calculate the annual
rates. FSIS will publish the rates annually in Federal Register notices
prior to the start of each calendar year and will apply them on the
first FSIS pay period at the beginning of the calendar year. The Agency
is also increasing the codified flat annual fee for its Accredited
Laboratory Program for FY 2012 and FY 2013.
DATES: This final rule is effective May 22, 2011.
FOR FURTHER INFORMATION CONTACT: For further information concerning
policy issues contact Rachel Edelstein, Director, Policy Issuances
Division, Office of Policy and Program Development, FSIS, U.S.
Department of Agriculture, Room 6065 South Building, 1400 Independence
Ave., SW., Washington, DC 20250-3700; telephone (202) 720-0399, fax
(202) 690-0486.
For further information concerning fees contact Michele Torrusio,
Director, Budget Division, Office of Management, FSIS, U.S. Department
of Agriculture, Room 2159 South Building, 1400 Independence Avenue,
SW., Washington, DC 20250-3700; telephone (202) 720-8700, 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 of 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 bears the cost of
mandatory inspection provided during non-overtime and non-holiday hours
of operation. Official establishments and official egg products plants
pay for inspection services performed on holidays or on an overtime
basis.
Under the Agricultural Marketing Act of 1946 (AMA), as amended (7
U.S.C. 1621 et seq.), FSIS provides a range of voluntary inspection,
certification, and identification services to assist in the orderly
marketing of various animal products and byproducts. These services
include the certification of technical animal fats and the inspection
of exotic animal products, such as antelope and elk products. The AMA
provides that FSIS may assess and collect fees to recover the costs of
the voluntary inspection, certification, and identification services it
provides.
Also under the AMA, FSIS provides certain voluntary laboratory
services that establishments and others may request the Agency to
perform. Laboratory services are provided for four types of analytic
testing: Microbiological testing, residue chemistry tests, food
composition tests, and pathology testing. Again, the AMA provides that
FSIS may collect fees to recover the costs of providing these services.
FSIS also accredits non-Federal analytical laboratories under its
Accredited Laboratory Program. Such accreditation allows laboratories
to conduct analyses of official meat and poultry samples. The Food,
Agriculture, Conservation, and Trade Act of 1990, as amended, mandates
that laboratory accreditation fees cover the costs of the Accredited
Laboratory Program. This same Act mandates an annual payment of an
accreditation fee on the anniversary date of each accreditation.
Proposed Rule
On October 8, 2009, FSIS published a proposed rule to amend its
regulations to establish formulas for calculating the rates it charges
meat and poultry establishments, egg products plants, and importers and
exporters for providing voluntary, overtime, and holiday inspection,
and identification, certification, and laboratory services (74 FR
51800). FSIS also proposed to keep the annual fee for its Accredited
Laboratory Program at $4,500 for FY 2009, 2010 and 2011, and increase
it to $5,000 for FY 2012 and FY 2013 (74 FR 51802).
As FSIS explained in the proposed rule, historically, the Agency
amended its regulations annually to change the rates and fees. However,
because the rulemaking process is lengthy, the fiscal year repeatedly
would partially elapse before the Agency could publish a final rule to
amend its rates and fees. As a result, the Agency was unable to recover
the full cost of the services it provided.
To address the delays in recovering the cost of services, in
January 2006, FSIS amended its regulations to provide for multiple
annual rate and fee increases in one action (71 FR 2135). With this
rulemaking, the rates and fees for 2006-2008 were increased and FSIS
established criteria for determining the rate and fee increases on a
multi-year basis. While this solution enabled the Agency to increase
rates and fees each year, estimates used to establish the annual rates
and fees were imprecise and have left the Agency collecting too little,
and thus, not fully recovering its
[[Page 20221]]
costs. Because of the duration of the rulemaking process, rate
increases have not been available until approximately three-fourths of
the way into the fiscal year. This has resulted in a considerable
monetary loss for FSIS.
In 2009, the Agency performed a cost analysis using actual FY 2008
data. On the basis of that analysis, the October 2009 proposed rule set
forth the various rates FSIS projected it needed to charge in order to
recover its costs. FSIS developed proposed formulas in consultation
with a private accounting firm to determine the rates for FY 2010 and
future years. FSIS also proposed raising its fees for the Accredited
Laboratory Program to cover its increased direct overhead costs,
including salary increases, employee benefits, inflation, and bad debt,
and to maintain an adequate operating reserve.
Final Rule
In this final rule, FSIS is amending its regulations to codify,
with modifications, the proposed formulas for calculating and
establishing the rates for basetime, overtime, holiday, and laboratory
services set forth in the proposed rule. FSIS has also made changes to
the proposed regulatory text to correct inadvertent inconsistencies in
terminology. For example, the preamble to the proposed rule referred to
``fees'' for the basetime, overtime, holiday, and laboratory services
rates. In this preamble, FSIS is consistently using the term ``rate''
for the basetime, overtime, holiday, and laboratory services rates, and
``fee'' for the laboratory accreditation fee.
In the proposed rule, the Agency stated that the basetime,
overtime, holiday, and laboratory services rates would be determined
``For each fiscal year and based on previous fiscal year's actual costs
and hours'' (proposed 9 CFR 391.2(a), 391.3, 391.4(a), 590.126,
590.128, 592.510(a), 592.520, 592.530). Because of the time necessary
to obtain previous fiscal year data and to calculate the formulas, in
this final rule FSIS is specifying that the rates will be determined
for each calendar year, as opposed to for ``each fiscal year,'' based
on the previous fiscal year's (ending on September 30) actual costs and
hours data, except for the cost of living and inflation percentages.
FSIS is also specifying that the cost of living and inflation
percentages included in the formulas will be based on economic
assumptions for the calendar year in which the rates will apply.
The proposed provisions for the ``overhead rate'' (9 CFR
391.2(b)(3) and 592.510(b)(3)) stated that the rate is based on the
``average information technology (IT) costs from the previous two years
in the Public Health Data Communication Infrastructure System Fund.''
The Agency proposed the two year average because of excessively high
2007 IT costs. However, in this final rule, to maintain consistency
with the timeframes used in the other rate calculations, the Agency is
amending 9 CFR 391.2(b)(3) and 592.510(b)(3) to refer to the
``information technology costs from the previous fiscal year.'' In
addition, the preamble discussion of the overhead rate stated that the
rate included ``provision for the operating balance''. This language
was not included in the proposed codified text. This final rule
corrects the codified text to include the addition of the provision for
the operating balance.
The proposed regulatory text for the ``benefits'' and ``travel and
operating rates'' (9 CFR 391.2(b)(1) and (2), and 592.510(b)(1) and
(2)) did not specify that the applicable costs would be divided by the
applicable hours. The proposed regulatory text did not clearly state
that the percentage of the cost of living increase (for the basetime,
overtime, holiday, laboratory services, and benefits rate) and the
percentage of inflation (for the travel and operating and overhead
rates) adjustments are added to the quotients of pay divided by hours
in the rate formulas. However, FSIS did provide examples in the
preamble which indicated that costs would be divided by the hours, and
demonstrated how the percent of cost of living and inflation are
calculated, then added in the formulas to determine the appropriate
rates. In this final rule, the regulatory text has been modified to
clearly state that applicable costs would be divided by applicable
hours and the cost of living and inflation percentage adjustments are
added to the quotients in the formulas to determine the rates.
The proposed rule's discussion of the ``Proposed Formulas'' (FR 74
51801) and the codified text (9 CFR 391.2(a), 391.3(a) and (b),
391.4(a), 590.126, 590.128, 592.510(a), 592.520, and 592.530) used the
terms ``regular hours'' and ``hours worked'' interchangeably. In this
final rule, the Agency is amending the codified text to use
consistently the term ``regular hours.'' The term ``regular hours''
refers to the hours during regular working time (not including holiday
or overtime hours) that are associated with on-site food product
inspection.
In addition, the proposed rule's preamble (74 FR 51801) and
codified text included the term ``salaries paid'' (9 CFR 391.2(a),
391.3(a) and (b), 391.4(a), 590.126, 590.128, 592.510(a), 592.520, and
592.530). In this nal rule, for clarity, the term ``salaries paid'' is
being replaced by ``regular direct pay'' because this is the pay for
``regular hours.''
FSIS intends to announce future annual rate changes, using the
formulas in this final rule, in Federal Register notices approximately
30 days prior to the start of each new calendar year. FSIS will apply
the new rates at the start of the first FSIS pay period each new
calendar year. The 2011 rates in this final rule will be applied
starting May 22, 2011, the first pay period 30 days after the
publication of the rule.
This final rule adopts the proposed fees for the accredited
laboratory program. FSIS will propose changes to the laboratory
accreditation fees in future rulemakings when necessary.
Recalculated Rates
The rates published in the October 2009 proposed rule were
calculated using the best data and economic analyses available at the
time. These rates were based upon actual FY 2008 data. The proposed
rule stated that the rates would be based on the previous year's actual
costs and hours. Fiscal Year 2010 ended on September 30, 2010, and the
Agency's FY 2010 actual cost data are now available. In addition, since
the publication of the proposed rule, the Office of Management and
Budget (OMB) released updated projected economic assumptions,
``Analytical Perspectives, Budget of the United States Government,
Fiscal Year 2011.'' The economic assumptions in the ``Economic and
Budget Analyses'' section, https://www.whitehouse.gov/sites/default/files/omb/budget/fy2011/assets/econ_analyses.pdf include the projected
overall average civilian Federal pay raises and locality pay
adjustments for future calendar years.
Therefore, the rates for 2011 in this final rule have been
recalculated based on the previous fiscal year costs and hours (FY
2010), the calendar year percentage of cost of living increase and
inflation (calendar year 2011), and, as discussed above, the IT costs
from the previous fiscal year (FY 2010). Table 1 lists the recalculated
2011 rates and the projected 2012 rates, Table 2 lists the rates FSIS
currently assesses, and Table 3 lists the rates from the October 2009
proposed rule.
[[Page 20222]]
Table 1--2011 Adjusted Rate (per Hour per Employee) by Type of Service
------------------------------------------------------------------------
Projected
2011 rate 2012 rate
(estimates (estimates
Service rounded to rounded to
reflect reflect
billable billable
quarters) quarters)
------------------------------------------------------------------------
Basetime...................................... $53.92 $54.68
Overtime...................................... 67.52 68.64
Holiday....................................... $81.08 $82.28
Laboratory.................................... 67.08 68.04
------------------------------------------------------------------------
Table 2--Current Rates (per Hour per Employee) by Type of Service
------------------------------------------------------------------------
Current
Service rate
------------------------------------------------------------------------
Basetime................................................... $49.93
Overtime & holiday......................................... 58.93
Laboratory................................................. 70.82
------------------------------------------------------------------------
Table 3--October 2009 Proposed Rates (per Hour per Employee) by Type of
Service
------------------------------------------------------------------------
Estimates rounded to reflect billable
quarters
Service --------------------------------------
Projected Projected
2010 rate rate 2011 rate 2012
------------------------------------------------------------------------
Basetime......................... $51.36 $52.84 $54.64
Overtime......................... 64.88 66.84 68.84
Holiday.......................... 78.44 80.84 83.32
Laboratory....................... 65.08 67.04 69.08
------------------------------------------------------------------------
The ``travel and operating rate'' and the ``overhead rate'' used in
the proposed rule calculations were inadvertently transposed. In this
final rule, the Agency has corrected this error in all of the preamble
calculations below that include ``travel and operating rate'' or
``overhead rate.''
Formulas for the Basetime, Overtime, Holiday, and Laboratory Services
Rates
FSIS is amending its regulations to provide the following formulas
for the basetime, overtime, holiday, and laboratory services rates. The
rates provided in Table 1, ``2011 ADJUSTED RATE (PER HOUR PER EMPLOYEE)
BY TYPE OF SERVICE'' are based on calculations using unrounded numbers
for the components, e.g., benefits, travel and operating, and overhead.
The calculations provided below are for illustration and the components
of the rates may not appear to be rounded correctly. However, the final
rates are rounded correctly. In addition, all of the final rates have
been rounded to make the amount divisible by the quarter hour (15
minutes). Fifteen minutes is the minimum charge for the services
covered by these rates.
FSIS is amending 9 CFR 391.2 and 592.510 to establish the following
formula to calculate the basetime rate per hour per program employee:
Basetime Rate = The quotient of dividing the Office of Field
Operations (OFO) plus Office of International Affairs (OIA) inspection
program personnel's previous fiscal year's regular direct pay by the
previous fiscal year's regular hours, plus the quotient multiplied by
the calendar year's percentage of cost of living increase, plus the
benefits rate, plus the travel and operating rate, plus the overhead
rate, plus the allowance for bad debt rate.
The calculation for the 2011 basetime rate per hour per program
employee is:
[FY 2010 OFO and OIA Regular Direct Pay divided by the previous
fiscal year's Regular Hours ($406,663,564/15,164,875)] = $26.82 +
($26.82 * 1.4% (calendar year 2011 Cost of Living Increase)) = $27.20 +
$8.30 (benefits rate) + $.89 (travel and operating rate) + $17.52
(overhead rate) + $.01 (bad debt allowance rate) = $53.92.
Following the discussion of the ``Laboratory Services Rate'' is an
explanation of how the benefits rate, travel and operating rate,
overhead rate, and bad debt allowance rate were calculated.
FSIS is amending 9 CFR 391.3, 590.126, 590.128, 592.520, and
592.530, to establish the following formulas for overtime and holiday
rates per hour per program employee:
Overtime Rate = The quotient of dividing the Office of Field
Operations (OFO) plus Office of International Affairs (OIA) inspection
program personnel's previous fiscal year's regular direct pay by the
previous fiscal year's regular hours, plus the quotient multiplied by
the calendar year's percentage of cost of living increase, multiplied
by 1.5, plus the benefits rate, plus the travel and operating rate,
plus the overhead rate, plus the allowance for bad debt rate.
The calculation for the 2011 overtime rate per hour per program
employee is:
[FY 2010 OFO and OIA Regular Direct Pay divided by previous fiscal
year's Regular Hours ($406,663,564/15,164,875)] = $26.82 + ($26.82 *
1.4% (calendar year 2011 Cost of Living Increase)) = $27.20 * 1.5 =
$40.79 + $8.30 (benefits rate) + $.89 (travel and operating rate) +
$17.52 (overhead rate) + $.01 (bad debt allowance rate) = $67.52.
Holiday Rate = The quotient of dividing the Office of Field
Operations (OFO) plus Office of International Affairs (OIA) inspection
program personnel's previous fiscal year's regular direct pay by the
previous fiscal year's regular hours, plus the quotient multiplied by
the calendar year's percentage of cost of living increase, multiplied
by 2, plus the benefits rate, plus the travel and operating rate, plus
the overhead rate, plus the allowance for bad debt rate.
The calculation for the 2011 holiday rate per hour per program
employee calculation is:
[FY 2010 OFO and OIA Regular Direct Pay divided by Regular Hours
($406,663,564/15,164,875)] = $26.82 + ($26.82 * 1.4% (calendar year
2011 Cost of Living Increase)) = $27.20 * 2 = $54.39 + $8.30 (benefits
rate) + $.89 (travel and operating rate) + $17.52 (overhead rate) +
$.01 (bad debt allowance rate) = $81.11 (rounded to $81.08).
FSIS is amending 9 CFR 391.4, to establish the following formula
for the
[[Page 20223]]
laboratory services rate per hour per program employee:
Laboratory Services Rate = The quotient of dividing the Office of
Public Health Science (OPHS) previous fiscal year's regular direct pay
by the OPHS previous fiscal year's regular hours, plus the quotient
multiplied by the calendar year's percentage cost of living increase,
plus the benefits rate, plus the travel and operating rate, plus the
overhead rate, plus the allowance for bad debt rate.
The calculation for the 2011 laboratory services rate per hour per
program employee is:
[FY 2010 OPHS Regular Direct Pay/OPHS Regular hours ($21,012,082/
527,975)] = $39.80 + ($39.80 * 1.4% (calendar year 2011 Cost of Living
Increase)) = $40.36 + $8.30 (benefits rate) + $.89 (travel and
operating rate) + $17.52 (overhead rate) + $.01 (bad debt allowance
rate) = $67.08.
Formulas for the Benefits, Travel and Operating, Overhead, and
Allowance for Bad Debt Rates
FSIS is amending 391.2 and 592.510 to provide the formulas for
calculating the Benefits, Travel and Operating, Overhead, and Allowance
for Bad Debt Rates. These rates are components of the basetime,
overtime, holiday, and laboratory services rates formulas.
Benefits Rate: The quotient of dividing the previous fiscal year's
direct benefits costs by the previous fiscal year's total hours
(regular, overtime, and holiday), plus the quotient multiplied by the
calendar year's percentage cost of living increase. Some examples of
direct benefits are health insurance, retirement, life insurance, and
Thrift Savings Plan basic and matching contributions.
The calculation for the 2011 benefits rate per hour per program
employee is:
[FY 2010 Direct Benefits/(Total Regular hours + Total Overtime hours +
Total Holiday hours) ($140,660,995/17,171,053)] = $8.19 + ($8.19 * 1.4%
(calendar year 2011 Cost of Living Increase) = $8.30.
Travel and Operating Rate: The quotient of dividing the previous
fiscal year's total direct travel and operating costs by the previous
fiscal year's total hours (regular, overtime, and holiday), plus the
quotient multiplied by the calendar year's percentage of inflation.
The calculation for the 2011 travel and operating rate per hour per
program employee is:
[FY 2010 Total Direct Travel and Operating Costs/(Total Regular hours +
Total Overtime hours + Total Holiday hours) ($15,090,489/17,171,053)] =
$.88 + ($.88 * 1.2% (2011 Inflation) = $.89.
Overhead Rate: The quotient of dividing the previous fiscal year's
indirect costs plus the previous fiscal year's information technology
(IT) costs in the Public Health Data Communication Infrastructure
System Fund plus the previous fiscal year's Office of Management
Program cost in the Reimbursable and Voluntary Funds plus the provision
for the operating balance less any Greenbook costs (i.e., costs of USDA
support services prorated to the service component for which fees are
charged) that are not related to food inspection by the previous fiscal
year's total hours (regular, overtime, and holiday) worked across all
funds, plus the quotient multiplied by the calendar year's percentage
of inflation.
The calculation for the 2011 overhead rate per hour per program
employee is:
[FY 2010 Total Overhead/(Total Regular hours + Total Overtime hours +
Total Holiday hours) ($337,861,367/19,521,571)] = $17.31 + ($17.31 *
1.2% (2011 Inflation) = $17.52.
Allowance for Bad Debt Rate = Previous fiscal year's total
allowance for bad debt (for example, debt owed that is not paid in full
by plants and establishments that declare bankruptcy) divided by
previous fiscal year's total hours (regular, overtime, and holiday)
worked.
The 2011 calculation for bad debt rate per hour per program
employee is:
[FY 2010 Total Bad Debt/(Total Regular hours + Total Overtime hours +
Total Holiday hours) = ($222,481/19,521,571)] = $.01.
Laboratory Accreditation Fee
Consistent with the proposed rule, FSIS is also amending 9 CFR
391.5 to keep the laboratory accreditation fee at $4,500.00 for fiscal
year 2011 and to increase it to $5,000.00 beginning in fiscal year
2012. FSIS will propose changes to the laboratory accreditation fees
through future rulemakings when necessary.
As discussed in the proposed rule (74 FR 51802), FSIS needs to
raise the fee for this program to cover its increased direct overhead
costs, including those for salary increases, employee benefits,
inflation, and bad debt, and to maintain an adequate operating reserve.
Furthermore, FSIS must maintain a ``carryover'' amount each year as a
reserve to cover the contractual costs that the Accredited Laboratory
Program must pay at the beginning of each fiscal year. The increases
are also necessary to cover salaries and other operating expenses
during the first two to three months of the fiscal year. Less than 5%
of the program's income is received during the first two months of a
fiscal year. Approximately 75% of the program's income is received in
late December and early January; the remainder of the program's income
is received about evenly across the rest of the fiscal year.
Maintaining an adequate reserve is therefore essential for the
Accredited Laboratory Program to be fully functional during the first
quarter of any fiscal year.
Responses to Comments
FSIS received seven comments in response to the proposed rule. The
commenters included meat trade associations, private citizens, and a
meat processor.
Most commenters acknowledged that codified formulas in the
regulations for these rates would afford the Agency the ability to
raise rates based on pay increases for Federal employees and inflation.
Comments: One comment from a meat processor expressed concern that
the first-year overtime rate increase is above the rate of inflation
and above the wage based increase in the commenter's geographical area.
Another comment from a trade association expressed concern that the
overtime rate for the first year is approximately a 10% increase.
Response: The existing basetime, overtime, holiday, and laboratory
services rates have not increased for more than three years, since
October 1, 2007. FSIS developed the current overtime rate in 2005,
using an estimated Annual General Increase (AGI) of 2.3% per year for
2006-2008. The actual AGI during 2006-2008 averaged 2.9%. The Agency
absorbed the difference between the projected and actual increase,
including the costs of benefits that have increased at an average of
4.6% each year. In addition, the rates established in the 2006 final
rule are still being used in calendar year 2010. The higher rates are
necessary because of increased salary costs across several years and
current overhead costs.
Comments: One meat processor and two trade associations opposed the
methodology of adding travel, benefits, overhead, and bad debt costs to
the overtime and holiday inspection rates and stated that the proposed
formulas were not clear.
Response: The methodology of adding travel, benefits, overhead and
bad debts costs to overtime and holiday inspection rates has been used
to establish the rates for previous years. FSIS has always been
reimbursed by industry for the salary
[[Page 20224]]
and overhead costs for both overtime work and work on Federal holidays.
Contrary to one commenter's concern, the calculations do not multiply
travel, benefits, overhead, and bad debt costs by 1.5 and 2.0 for
overtime and holiday rates, respectively. As illustrated in the
calculations, these costs are added to the adjusted salary amounts for
overtime and holiday pay.
The Agency contracted with a large world-wide accounting firm to
ensure that the methodology for the fee calculations was sound and
without flaws. The accounting firm's analysis of the methodology was
performed in accordance with the ``Standards for Consulting Services,''
established by the American Institute of Certified Public Accountants.
Consistent with the proposed rule, the final rule specifies all cost
components used to calculate the rates. In this final rule, the Agency
has clarified and made consistent the terminology used in the proposal.
Comments: One trade association encouraged the Agency to
acknowledge the impact that the holiday rate change would have on small
and very small meat processors. Another trade association expressed
concern that the overtime fee increase would disproportionately affect
small and medium sized businesses that are not able to run two shifts
but rely on overtime to meet consumer demand.
Response: Overtime and holiday inspection services are generally
sought by the 370 large establishments and plants that have a large
production volume of approximately 162,500,000 pounds of product per
year. These establishments have greater complexity and diversity in the
products they produce than the 5,140 small and very small Federal
establishments whose low production volume averages 1,400,000 pounds of
product per year.\1\ Establishments or plants with lower production
volume are unlikely to use a significant amount of overtime and holiday
inspection services, except on those occasions when demand exceeds
supply for their products. In addition, the costs that industry would
incur as a result of the increase in rates are similar to other
increases that the industry faces because of inflation and wage
increases.
---------------------------------------------------------------------------
\1\ Establishment numbers obtained from USDA FSIS Performance
Based Inspection System (PBIS) and represent all Federal & Talmadge-
Aiken (State excluded), Active & Inactive (Withdrawn excluded)
establishments. Volume data obtained from USDA FSIS PBIS, the Animal
Disposition Reporting System, and USDA Economic Research Service
Food Availability (Per Capital) Data System.
---------------------------------------------------------------------------
Comments: One meat processor opposed the holiday inspection service
rate because establishments do not recognize the same holidays as the
Federal government.
Response: FSIS follows the schedule of Federal holidays identified
by the Office of Personnel Management, as well as any additional
Federal holidays authorized by the President. FSIS has no authority to
mandate which days will be ``holidays'' for establishments or plants.
When an establishment chooses to remain open and requires reimbursable
inspection services from FSIS on a Federal holiday, then FSIS must pay
its inspection workforce accordingly. FSIS inspectors are paid double
time for holiday work. Therefore, consistent with the proposed rule,
the final rule provides a holiday rate of two times the employee's
hourly rate of base pay.
Comments: Three trade associations expressed concern regarding how
the Agency assesses overtime inspection rates. They contend that,
because establishments are required to operate under Hazard Analysis
Critical Control Point (HACCP) systems, processing establishments
should be able to freely operate at any appropriate time, with FSIS
providing a level of inspection to fit accordingly. The commenters
believe this would negate the need for overtime inspection.
Response: This rule establishes the rate for overtime inspection
service. The commenters' concern relates to a separate issue that is
whether HACCP systems in plants should permit plants to freely operate
at any time without being assessed ``overtime fees.'' Sections 9 CFR
307.4(c), 381.37(c), and 590.124 provide that official establishments
shall be provided inspection service, without charge, for up to 8
consecutive hours per shift during the workweek. The regulations also
provide that the workweek is 5 consecutive days. Inspection service
provided outside of these bounds is, by definition, overtime service.
Comment: One trade association questioned the 30-day comment period
for the proposed rule and stated that the comment period should have
been longer.
Response: The Agency must recover the actual cost of these
inspection services for its continued sound financial management. To
expeditiously solicit comments on the proposed rule and make the
rulemaking effective so that FSIS's costs can be recovered as quickly
as possible, the Administrator determined that 30 days for public
comment was sufficient. A 30-day comment period is not uncommon when
the Agency needs timely responses. For example, the July 2005 proposed
rule ``Changes in Fees for Meat, Poultry, and Egg Products Inspection
Services Fiscal Years 2005-2008,'' solicited comments within 30 days
(70 FR 41635).
Executive Order 12866 and Final Regulatory Flexibility Act
This final rule was reviewed by the Office of Management and Budget
under Executive Order 12866 and was determined to be significant. The
proposed rule was determined to be not significant.
This final rule establishes the formulas FSIS will use to calculate
the rates that it charges meat and poultry establishments, egg products
plants, and importers and exporters for providing voluntary inspection,
identification and certification services, overtime and holiday
inspection services, and laboratory services. This final rule also
increases the annual fee that FSIS assesses for its Accredited
Laboratory Program for FY 2012 and FY 2013. This rule is necessary to
ensure that FSIS recovers its cost of providing these voluntary
inspection and laboratory accreditation services.
Economic Effects of New Fees
By codifying formulas to calculate future annual rates, the Agency
will streamline the rulemaking process to help ensure that the new
rates are effective at the beginning of each calendar year. The rates
will be determined for each calendar year, based on the previous fiscal
year's (ending on September 30) actual costs and hours data, and the
upcoming year's projected cost of living and inflation percentages. The
new rates will be adjusted to reflect inflation and federal pay raises
but will not support any new budgetary initiatives. If rates increase,
the costs that industry will experience are similar to other increases
that the industry will experience because of inflation and wage
increases.
The total volume of meat and poultry slaughtered under Federal
inspection in 2009 was about 90.9 billion pounds (2009-8 Livestock,
Dairy, Meat, and Poultry Outlook Report, Economic Research Service,
USDA). The total volume in egg product production in 2009 was about 2.6
billion pounds (2009 National Agricultural Statistical Service, USDA).
The increase in cost per pound of product associated with the new rates
is, in general, $.002. Even in competitive industries such as meat,
poultry, and egg products, this amount of increase in costs would have
an insignificant impact on profits and processes.
Even though the increases in the basetime, overtime, and holiday
rates
[[Page 20225]]
are negligible, the industry is likely to pass along a significant
portion of the rate increases to consumers because of the inelastic
nature of the demand curve facing consumers. Research has shown that
consumers are unlikely to reduce demand significantly for meat,
poultry, and egg products when prices increase. Huang estimates that
quantity demanded of meat, poultry, and egg products 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.
Table 4 (below) represents the revenues the Agency collected in FY
2009 and FY 2010, and the projected revenues for FY 2011 and FY 2011.
For basetime, overtime, holiday, and laboratory services, the Agency
collected $146.5 million in FY 2009 and $148.9 million in FY 2010, and
based on the new rate structure, is projecting to collect $164.2
million in FY 2011, and $171.9 million in FY 2012.
For the Accredited Laboratory Program, the Agency collected
$317,250 in FY 2009 and $293,000 in FY 2010. The fee will increase from
$4,500 (the current rate) to $5,000 per entity in FY 2012. The Agency
expects to collect approximately $270,000 in FY 2011, and $300,000 in
FY 2012.
The total revenue amounts for the basetime, overtime, holiday, and
laboratory services rates with the Accredited Lab Fees for FY 2009 and
FY 2010 (actual amounts), and FY 2011 and FY 2012 (projected amounts)
are shown in Table 4 (below).
Table 4--Total Amount Collected by the Agency
----------------------------------------------------------------------------------------------------------------
Projected FY
2011 amounts Projected FY2012
Service Actual FY 2009 Actual FY 2010 based on rate amounts based on
amounts amounts increase rate increase
January 1, 2011 January 1, 2012
----------------------------------------------------------------------------------------------------------------
Basetime Rate........................... $ 7,300,000 $ 6,900,000 $ 7,409,000 $ 7,629,000
Overtime (OT)/Holiday Rate(H) \2\....... 126,400,000 (OT) 131,100,000 (OT) N/A N/A
12,800,000 (H) 10,900,000 (H)
Overtime Rate........................... N/A N/A 145,536,000 149,025,000
Holiday Rate............................ N/A N/A 11,250,000 15,222,000
Laboratory Services Rate................ 530 178 500 500
Accredited Lab Fee...................... 317,250 293,000 270,000 300,000
-----------------------------------------------------------------------
Grand Total......................... 146,817,780 149,193,178 164,465,500 172,176,500
----------------------------------------------------------------------------------------------------------------
Final Regulatory Flexibility Analysis
The FSIS Administrator certifies that, for the purposes of the
Regulatory Flexibility Act (5 U.S.C. 601-602), the final rule will not
have a significant impact on a substantial number of small entities in
the United States. As explained further below, while this action will
affect a substantial number of small entities, the action will likely
not have a significant effect on these small entities.
---------------------------------------------------------------------------
\2\ Overtime and Holiday Rates were the same for FY 2009 and
2010.
---------------------------------------------------------------------------
Objective of the Final Rule
The changes in this final rule will affect those entities in the
United States that slaughter or process meat, poultry, and egg products
for consumption. There are about 2,320 small federally inspected
establishments (with more than 10 but less than 500 employees) and
2,720 very small establishments (with fewer than 10 employees) based on
HACCP Classification. Therefore, a total of 5,040 small and very small
establishments (or 83 percent of the establishments) could be possibly
affected by this rule. These small and very small establishments are
categorized in the following North American Industry Classification
System (NAICS) codes: 311611--Animal (except Poultry) Slaughtering;
311612--Meat Processed from Carcasses; 311613--Rendering and Meat
Byproduct Processing; 311615-Poultry Processing; and 311999--All other
Miscellaneous Food Manufacturing (Egg products). These codes can be
found in The U.S. Small Business Administration Table of Small Business
Size Standards Matched to the NAICS \3\ as modified by the Office of
Management and Budget in 2007(effective August 22, 2008). The size
threshold for these industries is 500 employees. All establishments
that have 500 or fewer employees are considered small.
---------------------------------------------------------------------------
\3\ The size standards are for the most part expressed in either
millions of dollars or number of employees. A size standard is the
largest that a business can be and still qualify as a small business
for Federal Government programs.
---------------------------------------------------------------------------
These small and very small establishments like the 1,031 large
establishments would incur the rates from 2011-2012 and in perpetuity
only if they incur voluntary inspection, overtime and holiday
inspection services, identification and certification services, or
laboratory services.
Significant Alternatives Considered
Alternative 1: Amend the regulations to publish the basetime,
overtime, holiday, and laboratory services rates and laboratory
accreditation fees on a multiple year basis (current approach).
Under this alternative, the Agency would continue to publish
proposed and final rules to establish rates and fees for multiple
consecutive years. However, the projected rates and fees are based on
economic factors, such as inflation and cost of living, and other
factors such as employee benefits and travel and operating costs, that
change on a yearly basis. While this solution has enabled the Agency to
increase rates and fees on a multiple year basis, the estimates used to
establish the annual rates and fees were imprecise and have left the
Agency collecting too little, and thus, not fully recovering its costs.
Therefore, the Agency rejects this alternative because it would
continue to create unnecessary uncertainty and inflexibility to update
fees based on economic conditions.
Alternative 2: Amend the regulations to update the rates and fees
on an annual basis.
Under this alternative, the Agency would amend its regulations
annually to update the rates and fees using current
[[Page 20226]]
data and economic factors. This alternative was used prior to the
current approach of establishing the rates and fees on a multiple year
basis (Alternative 1). However, because the rulemaking process is
lengthy, the fiscal year repeatedly elapsed before the Agency could
publish the final rule to amend the rates and fees. As a result, the
Agency was unable to recover its full costs. This action would be the
least costly to small entities because they would not pay the adjusted
rates and fees until they were published, which would in effect cause a
shortfall in the Agency's budget. Therefore, the Agency rejects this
alternative.
Alternative 3: Establish formulas for calculating rates and publish
the rates in a Federal Register Notice prior to the start of the
calendar year.
Under this alternative, FSIS would establish formulas for
calculating rates that it charges for basetime, overtime, holiday, and
laboratory services, and publish the rates annually in a Federal
Register Notice prior to the start of each calendar year. The Agency
would continue to publish the laboratory accreditation fees on an as
needed basis. This action would enable the Agency to recover its costs
for providing voluntary inspection, overtime and holiday inspection
services, identification and certification services, and laboratory
services on a yearly basis, and would notify small entities of the new
rates prior to the beginning of the calendar year, so that the entities
can budget for these new fees. Therefore, the Agency has selected this
alternative.
Estimating the Impact on Small and Very Small Entities
As discussed in the Economic Effects of New Fees section, in 2009,
there was a total volume of 90.9 billion pounds slaughtered of meat and
poultry and 2.6 billion pounds of egg products processed. According to
the FSIS Animal Disposition Reporting System, in 2009 the 5,040 small
and very small Federal establishments' production volume averaged
1,400,000 pounds of product per year, or a total of 7.1 billion pounds
per year or approximately 7 percent of the total production.
In FY 2009, there were a total of 146,000 hours charged from
voluntary inspection (basetime) service, 2.1 million hours charged from
reimbursable overtime, 218,000 hours charged from holiday inspection
services, and 7 hours charged for laboratory services.\4\ There are not
enough data to definitively determine the number of these hours that
were incurred by small and very small entities, and therefore their
direct cost as a result of this rule. However, if we used the 7 percent
from the total production and apply it to the hours, small and very
small entities would incur 147,000 hours out of 2.1 million hours of
reimbursable overtime and 15,300 hours of holiday inspection services,
and at a rate of $58.93, per hour (2009 rate), the total cost will be
$9.6 million ((15,300 + 147,000)* $58.93), compared to $127 million for
large entities.
---------------------------------------------------------------------------
\4\ There are estimated to be no small entities applying for
laboratory services.
---------------------------------------------------------------------------
For the voluntary inspection (basetime), if we used the 7 percent
from the total production and apply it to the hours, small and very
small entities would incur 10,200 hours out of 146,000 hours and at a
rate of $49.93, the total cost would be $510,000 dollars compared to
$6.8 million for the large entities. Dividing the total cost of $10.1
million ($9.6 million plus $510,000) by 5,040 small and very small
entities would incur a cost of an average of $2,000 per small and very
small entity.
Likewise, if we apply the 2011 rates, the 5,040 small and very
small entities would incur a cost of $10.5 million (155,800 hours *
$67.52) for overtime, $787,000 (9,712 hours * $81.08) for holiday, and
$528,000 (9,800 hours * $53.92) for voluntary services (basetime). The
total cost incurred by small and very small entities for the 2011 year
would be $11.8 million ($10.5 million plus $787,000 plus $528,000) or
$2,341 ($11.8 million/5,040 entities) per entity.
Comparing the average cost of $2,000 per small and very small
entity (2009) to $2,341 per entity (2011 rate), the total increase in
fees and impact of the final rule on small and very small entities
would be about $341 per entity.
The Accredited Laboratory program has a total of 60 labs \5\
participating, of which an estimated 40 labs are considered small. The
Accredited Lab fee for each lab will increase by $500, from $4,500 in
FY 2011 to $5,000 in FY 2012. This fee is necessary to have a carry
over amount each year as a reserve 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. Without this fee, the
Agency would not have enough funds to cover the cost incurred during
this period. The laboratory fee is a mandatory cost of doing business
with FSIS and without the FSIS accreditation the labs would not be
permitted to analyze official meat and poultry samples for
establishments. These small entities would likely recover this cost by
passing it along to the establishments, who pay for their services.
---------------------------------------------------------------------------
\5\ Four of the labs are the states of Illinois, Iowa,
Louisiana, and Minnesota Department of Agriculture Laboratories.
---------------------------------------------------------------------------
Therefore, the Agency believes that the final rule will not have a
significant economic impact on a substantial number of small entities,
whether establishments or laboratories.
Paperwork Reduction Act
This rule does not contain any new information collection or record
keeping requirements that are subject to the Office of Management and
Budget (OMB) approval under the Paperwork Reduction Act, 44 U.S.C. 3501
et seq.
E-Government Act
FSIS and USDA are committed to achieving the purposes of the E-
Government Act (44 U.S.C. 3601, et seq.) by, among other things,
promoting the use of the Internet and other information technologies
and providing increased opportunities for citizen access to Government
information and services, and for other purposes.
Executive Order 12988
This rule has been reviewed under Executive Order 12988, Civil
Justice Reform. This rule: (1) Has no retroactive effect; and (2) does
not require administrative proceedings before parties may file suit in
court challenging this rule. However, the administrative procedures
specified in 9 CFR 306.5, 381.35, and 590.300 through 590.370,
respectively, must be exhausted before any judicial challenge may be
made of the application of the provisions of the final rule, if the
challenge involves any decision of an FSIS employee relating to
inspection services provided under the FMIA, PPIA, or EPIA.
Executive Order 13175
This final rule has been reviewed in accordance with the
requirements of Executive Order 13175, Consultation and Coordination
with Indian Tribal Governments. The review reveals that this regulation
will not have substantial and direct effects on Tribal governments and
will not have significant Tribal implications.
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
rule, FSIS will announce it online through the FSIS Web page located at
[[Page 20227]]
https://www.fsis.usda.gov/regulations_&_policies/Federal_Register_Publications_&_Related_Documents/index.asp.
FSIS will also make copies of this Federal Register publication
available through the FSIS Constituent Update, which is used to provide
information regarding FSIS policies, procedures, regulations, Federal
Register notices, FSIS public meetings, and other types of information
that could affect or would be of interest to constituents and
stakeholders. The Update is communicated via Listserv, a free
electronic mail subscription service for industry, trade and farm
groups, consumer interest groups, allied health professionals, and
other individuals who have asked to be included. The Update is also
available on the FSIS Web page. Through the Listserv and Web page, FSIS
is able to provide information to a much broader and more diverse
audience. In addition, FSIS offers an e-mail subscription service which
provides automatic and customized access to selected food safety news
and information. This service is available at https://www.fsis.usda.gov/News_&_Events/Email_Subscription/.
Options range from recalls to export information to regulations,
directives and notices. Customers can add or delete subscriptions
themselves, and have the option to password protect their accounts.
USDA Nondiscrimination Statement
The U.S. Department of Agriculture (USDA) prohibits discrimination
in all its programs and activities on the basis of race, color,
national origin, gender, religion, age, disability, political beliefs,
sexual orientation, and marital or family status. (Not all prohibited
bases apply to all programs.)
Persons with disabilities who require alternative means for
communication of program information (Braille, large print, audiotape,
etc.) should contact USDA's Target Center at 202-720-2600 (voice and
TTY).
To file a written complaint of discrimination, write USDA, Office
of the Assistant Secretary for Civil Rights, 1400 Independence Avenue,
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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 is amending 9 CFR
Chapter III as follows:
PART 391--FEES AND CHARGES FOR INSPECTION AND LABORATORY
ACCREDITATION
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1. The authority citation for part 391 continues to read as follows:
Authority: 7 U.S.C. 138d; 7 U.S.C. 1622, 1627 and 2219a 21
U.S.C. 451 et seq.; 21 U.S.C. 601-695;
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2. Section 391.2 is revised to read as follows:
Sec. 391.2 Basetime rate.
(a) For each calendar year, FSIS will calculate the basetime rate
for inspection services, per hour per program employee, provided
pursuant to Sec. Sec. 350.7, 351.8, 351.9, 352.5, 354.101, 355.12, and
362.5 of this chapter, using the following formula: The quotient of
dividing the Office of Field Operations plus Office of International
Affairs inspection program personnel's previous fiscal year's regular
direct pay by the previous fiscal year's regular hours, plus the
quotient multiplied by the calendar year's percentage of cost of living
increase, plus the benefits rate, plus the travel and operating rate,
plus the overhead rate, plus the allowance for bad debt rate.
(b) FSIS will calculate the benefits, travel and operating,
overhead, and allowance for bad debt rate components of the basetime
rate, using the following formulas:
(1) Benefits rate. The quotient of dividing the previous fiscal
year's direct benefits costs by the previous fiscal year's total hours
(regular, overtime, and holiday), plus the quotient multiplied by the
calendar year's percentage cost of living increase. Some examples of
direct benefits are health insurance, retirement, life insurance, and
Thrift Savings Plan basic and matching contributions.
(2) Travel and operating rate. The quotient of dividing the
previous fiscal year's total direct travel and operating costs by the
previous fiscal year's total hours (regular, overtime, and holiday),
plus the quotient multiplied by the calendar year's percentage of
inflation.
(3) Overhead rate. The quotient of dividing the previous fiscal
year's indirect costs plus the previous fiscal year's information
technology (IT) costs in the Public Health Data Communication
Infrastructure System Fund plus the previous fiscal year's Office of
Management Program cost in the Reimbursable and Voluntary Funds plus
the provision for the operating balance less any Greenbook costs (i.e.,
costs of USDA support services prorated to the service component for
which the fees are charged) that are not related to food inspection, by
the previous fiscal year's total hours (regular, overtime, and holiday)
worked across all funds, plus the quotient multiplied by the calendar
year's percentage of inflation.
(4) Allowance for bad debt rate. Previous fiscal year's allowance
for bad debt (for example, debt owed that is not paid in full by plants
and establishments that declare bankruptcy) divided by the previous
fiscal year's total hours (regular, overtime, and holiday) worked.
(c) The calendar year's cost of living increases and percentage of
inflation factors used in the formulas in this section are based on the
Office of Management and Budget's Presidential Economic Assumptions.
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3. Section 391.3 is revised to read as follows:
Sec. 391.3 Overtime and holiday rates.
For each calendar year, FSIS will calculate the overtime and
holiday rates, per hour per program employee, provided pursuant to
Sec. Sec. 307.5, 350.7, 351.8, 351.9, 352.5, 354.101, 355.12, 362.5,
and 381.38 of this chapter, using the following formulas:
(a) Overtime rate. The quotient of dividing the Office of Field
Operations plus Office of International Affairs inspection program
personnel's previous fiscal year's regular direct pay by the previous
fiscal year's regular hours, plus the quotient multiplied by the
calendar year's percentage of cost of living increase, multiplied by
1.5, plus the benefits rate, plus the travel and operating rate, plus
the overhead rate, plus the allowance for bad debt rate.
(b) Holiday rate. The quotient of dividing the Office of Field
Operations plus Office of International Affairs inspection program
personnel's previous fiscal year's regular direct pay by the previous
fiscal year's regular hours, plus the quotient multiplied by the
calendar year's percentage of cost of living increase, multiplied by 2,
plus the benefits rate, plus the travel and operating rate, plus the
overhead rate, plus the allowance for bad debt rate.
(c) FSIS will calculate the benefits rate, the travel and operating
rate, the overhead rate, and the allowance for bad debt rate using the
formulas set forth in
[[Page 20228]]
Sec. 391.2(b), and the cost of living increases and percentage of
inflation factors set forth in Sec. 391.2(c).
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4. Section 391.4 is revised to read as follows:
Sec. 391.4 Laboratory services rate.
(a) For each calendar year, FSIS will calculate the laboratory
services rate, per hour per program employee, provided pursuant to
Sec. Sec. 350.7, 351.9, 352.5, 354.101, 355.12, and 362.5 of this
chapter, using the following formula: The quotient of dividing the
Office of Public Health Science (OPHS) previous fiscal year's regular
direct pay by OPHS previous fiscal year's regular hours, plus the
quotient multiplied by the calendar year's percentage cost of living
increase, plus the benefits rate, plus the travel and operating rate,
plus the overhead rate, plus the allowance for bad debt rate.
(b) FSIS will calculate the benefits rate, the travel and operating
rate, the overhead rate, and the allowance for bad debt rate using the
formulas set forth in Sec. 391.2(b), and the cost of living increases
and percentage of inflation factors set forth in Sec. 391.2(c).
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5. Paragraph (a) of Sec. 391.5 is revised to read as follows:
Sec. 391.5 Laboratory accreditation fee.
(a) The annual fee for the initial accreditation and maintenance of
accreditation provided pursuant to Sec. 439.5 of this chapter shall be
$4,500.00 for fiscal year 2011; and $5,000.00 for fiscal years 2012 and
2013.
* * * * *
PART 590--INSPECTION OF EGGS AND EGG PRODUCTS (EGG PRODUCTS
INSPECTION ACT)
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6. The authority citation for part 590 continues to read as follows:
Authority: 21 U.S.C. 1031-1056.
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7. In Sec. 590.126, remove the second sentence and add three sentences
in its place to read as follows:
Sec. 590.126 Overtime inspection service.
* * * The official plant must give reasonable advance notice to the
inspector of any overtime service necessary and must pay for such
overtime. For each calendar year, FSIS will calculate the overtime rate
for inspection service, per hour per program employee, using the
following formula: The quotient of dividing the Office of Field
Operations plus Office of International Affairs inspection program
personnel's previous fiscal year's regular direct pay by the previous
fiscal year's regular hours, plus the quotient multiplied by the
calendar year's percentage of cost of living increase, multiplied by
1.5, plus the benefits rate, plus the travel and operating rate, plus
the overhead rate, plus the allowance for bad debt rate. FSIS
calculates the benefits rate, the travel and operating rate, the
overhead rate, and the allowance for bad debt rate using the formulas
set forth in Sec. 592.510(b) and the cost of living increases and
percentage of inflation factors set forth in Sec. 592.510(c) of this
chapter.
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8. In Sec. 590.128(a), remove the second sentence and add three
sentences in its place to read as follows:
Sec. 590.128 Holiday inspection service.
(a) * * * The official plant must, in advance of such holiday work,
request the inspector in charge to furnish inspection service during
such period and must pay the Agency for such holiday work at the hourly
rate. For each calendar year, FSIS calculates the holiday rate for
inspection service, per hour per program employee, using the following
formula: The quotient of dividing the Office of Field Operations plus
Office of International Affairs inspection program personnel's previous
fiscal year's regular direct pay by the previous fiscal year's regular
hours, plus the quotient multiplied by the calendar year's percentage
of cost of living increase, multiplied by 2, plus the benefits rate,
plus the travel and operating rate, plus the overhead rate, plus the
allowance for bad debt rate. FSIS will calculate the benefits rate, the
travel and operating rate, the overhead rate, and the allowance for bad
debt rate using the formulas set forth in Sec. 592.510(b), and the
cost of living increases and percentage of inflation factors set forth
in Sec. 592.510(c) of this chapter.
* * * * *
PART 592--VOLUNTARY INSPECTION OF EGG PRODUCTS
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9. The authority citation for part 592 continues to read as follows:
Authority: 7 U.S.C. 1621-1627.
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10. Section 592.510 is revised to read as follows:
Sec. 592.510 Basetime rate.
(a) For each calendar year, FSIS will calculate the basetime rate
for inspection services, per hour per program employee, using the
following formula: The quotient of dividing the Office of Field
Operations plus Office of International Affairs inspection program
personnel's previous fiscal year's regular direct pay by the previous
fiscal year's regular hours, plus the quotient multiplied by the
calendar year's percentage of cost of living increase, plus the
benefits rate, plus the travel and operating rate, plus the overhead
rate, plus the allowance for bad debt rate.
(b) FSIS will calculate the benefits, travel and operating,
overhead, and allowance for bad debt rate components of the basetime
rate, using the following formulas:
(1) Benefits rate. The quotient of dividing the previous fiscal
year's direct benefits costs by the previous fiscal year's total hours
(regular, overtime, and holiday), plus the quotient multiplied by the
calendar year's percentage cost of living increase. Some examples of
direct benefits are health insurance, retirement, life insurance, and
Thrift Savings Plan basic and matching contributions.
(2) Travel and operating rate. The quotient of dividing the
previous fiscal year's total direct travel and operating costs by the
previous fiscal year's total hours (regular, overtime, and holiday),
plus the quotient multiplied by the calendar year's percentage of
inflation.
(3) Overhead rate. The quotient of dividing the previous fiscal
year's indirect costs plus the previous fiscal year's information
technology (IT) costs in the Public Health Data Communication
Infrastructure System Fund plus the previous fiscal year's Office of
Management Program cost in the Reimbursable and Voluntary Funds plus
the provision for the operating balance less any Greenbook costs (i.e.,
costs of USDA support services prorated to the service component for
which fees are charged) that are not related to food inspection, by the
previous fiscal year's total hours (regular, overtime, and holiday)
worked across all funds, plus the quotient multiplied by the calendar
year's percentage of inflation.
(4) Allowance for bad debt rate. Previous fiscal year's allowance
for bad debt (for example, debt owed that is not paid in full by plants
and establishments that declare bankruptcy) divided by the previous
fiscal year's total hours (regular, overt
