[Federal Register: March 3, 2000 (Volume 65, Number 43)]
[Proposed Rules]
[Page 11486-11488]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr03mr00-21]
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DEPARTMENT OF AGRICULTURE
Food Safety and Inspection Service
9 CFR Part 590
[Docket No. 99-012P]
RIN 0583-AC71
Fee Increase for Egg Products Inspection--Year 2000
AGENCY: Food Safety and Inspection Service, USDA.
ACTION: Proposed rule.
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SUMMARY: The Food Safety and Inspection Service (FSIS) is proposing to
increase the fees FSIS charges egg products plants for providing
overtime and holiday inspection services. These proposed fee increases
reflect the total cost of inspection, including the national and
locality pay raise for Federal employees, applicable overhead costs,
and other inspection costs. FSIS is proposing to make the fee increases
effective thirty days after the final rule is published. The Agency is
also proposing to delete the reference to regulations governing the
voluntary grading of eggs.
DATES: Comments must be received by May 2, 2000.
ADDRESSES: Submit one original and two copies of written comments to
FSIS Docket Clerk, Docket #99-012P, U.S. Department of Agriculture,
Food Safety and Inspection Service, Room 102, Cotton Annex, 300 12th
Street, SW., Washington, DC 20250-3700. All comments submitted in
response to this proposal will be available for public inspection in
the Docket Clerk's Office between 8:30 a.m. and 4:30 p.m., Monday
through Friday.
FOR FURTHER INFORMATION CONTACT: For information concerning policy
issues, contact Daniel Engeljohn, Ph.D., Director, Regulations
Development and Analysis Division, Office of Policy, Program
Development, and Evaluation, FSIS, U.S. Department of Agriculture, Room
112, Cotton Annex, 300 12th Street, SW., Washington, DC 20250, (202)
720-5627, fax number (202) 690-0486.
For information concerning fee development, contact Michael B.
Zimmerer, Director, Financial Management Division, Office of
Management, FSIS, U.S. Department of Agriculture, Room 2130-S, 1400
Independence Avenue, SW., Washington, DC 20250, (202) 720-3552.
SUPPLEMENTARY INFORMATION:
Background
The Egg Products Inspection Act (EPIA) (21 U.S.C. 1031 et seq.),
provides for the inspection of egg products by Federal inspectors at
official plants. Federal inspection protects the health and welfare of
consumers by assuring that egg products are wholesome, not adulterated,
and properly labeled and packaged.
The Agricultural Marketing Service (AMS) was responsible for
administering the EPIA from its enactment in 1970 until 1995. At that
time, the Federal Crop Insurance Reform and Department of Agriculture
Reorganization Act of 1994 (Pub. L. 103-354; 7 U.S.C. 6981) delegated
food safety responsibilities to the Under Secretary of Agriculture for
Food Safety. The Department subsequently revised its regulations to
transfer egg product inspection functions under the EPIA to FSIS. AMS
retained those functions related to the shell egg surveillance program.
The regulations governing the inspection of eggs and egg products (9
CFR part 590) were transferred to Part 9 of the Code of Federal
Regulations on December 31, 1998 (63 FR 72352).
The cost of mandatory inspection (excluding such services performed
on holidays or on an overtime basis) is borne by FSIS. However, plants
pay for inspection services performed on holidays or on an overtime
basis. There has not been a change in overtime and holiday fees for egg
products inspection services since the transfer of program functions
from AMS to FSIS in May 1995. AMS established and implemented the
current fees in November 1994. These fees reflect only the direct costs
of inspection at that time and are insufficient to recover FSIS's
current costs for delivery of inspection service.
In order to recover the full cost of inspection, FSIS is proposing
overtime and holiday fees for egg products inspection services that are
the same as overtime and holiday fees for meat and poultry inspection.
In its analysis of projected costs for January 1, 2000 to September
30, 2000, FSIS has identified increases in the
[[Page 11487]]
costs that it will incur in providing overtime and holiday inspection
services. Based on its analysis, FSIS is proposing to amend
Sec. 590.126 of 9 CFR to increase the fee for providing overtime
inspection services from $26.16 per hour per program employee to $39.76
per hour per program employee. For holiday services, FSIS proposes to
amend Sec. 590.128(a) to increase the fee from $17.44 per hour per
program employee to $39.76 per hour per program employee. Although
these proposed fee increases are large, they reflect the total cost of
inspection, including national and locality pay raises for Federal
employees, applicable overhead costs, and other inspection costs. The
current fees and the proposed increases are reported in Table 1.
Table 1.--Current and Proposed Fees for Overtime and Holiday Inspection
Services
------------------------------------------------------------------------
Service ($/hr.) Current Proposed
------------------------------------------------------------------------
Overtime Inspection Services................ 26.16 39.76
Holiday Inspection Services................. 17.44 39.76
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The proposed fees are based on the full Agency cost for meat,
poultry and egg products inspection services (Table 2). These costs are
then divided by the total hours of inspection to obtain the hourly
rate. FSIS intends to charge egg products establishments requesting
overtime and holiday inspection services the same rate charged meat and
poultry establishments for these services. Table 2 shows salary,
overhead, and other inspections costs for FY 98 and the added inflation
and Federal pay increase used to obtain the total amount from which the
proposed rates are derived. Overhead costs are the indirect costs for
administration and management associated with providing inspection
services. Other inspection costs include direct costs for travel and
laboratory support costs associated with inspection services.
Table 2.--Components of Proposed Fee--Agency Inspection Costs
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Component $Thousand Percent
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Direct Salaries............................. 57,242 56.86
Inflation and Pay Increase.................. 7,951 7.91
Overhead.................................... 22,197 22.05
Other Inspection Costs (Travel and 13,282 13.17
Laboratory Support.........................
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Total..................................... 100,671 100
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Beginning with the Federal fiscal year 2001, which starts October
1, 2000, FSIS intends to review annually its fees for overtime and
holiday egg products inspection services to allow for necessary
adjustments on a fiscal year basis. The fiscal year approach is an
accepted accounting principle and will facilitate more consistent and
timely proposals to adjust fees and assist the Agency and affected
industry to plan for these fee adjustments.
The Agricultural Marketing Act of 1946, as amended, provides the
authority for collection of fees approximately equal to the cost of
voluntary egg grading programs. Therefore, AMS retains the
responsibility of changing the fees set out in the regulations
governing the grading of eggs (7 CFR Part 55). FSIS is proposing to
amend 9 CFR 590.130 to delete the reference to regulations governing
the collection of fees associated with the voluntary grading of eggs.
Executive Order 12866 and Regulatory Flexibility Act
Because this proposed rule has been determined to be not
significant, the Office of Management and Budget (OMB) did not review
it under Executive Order 12866.
The Administrator, FSIS, has determined that this action will not
have a significant economic impact, as defined by the Regulatory
Flexibility Act (5 U.S.C. 601), on a substantial number of small
entities. There are 73 egg products firms, and all but 5 would be
classified as small on the basis of the Small Business Administration
size definitions (having under 100 employees in a stand-alone
establishment or under 500 employees in an in-line establishment).
FSIS believes that the small plants in the egg products industry
would not be affected adversely by the fee increases provided for
because they reflect only a small increase in the costs currently borne
by those entities that elect to use overtime and holiday inspection
services. These holiday and overtime inspection services are generally
sought by plants with larger production volume, greater complexity and
diversity in the products they produce, and the need for on time
delivery of large volumes of product by their clients--generally large
commercial or institutional establishments. Plants with smaller
production are unlikely to use a significant amount of overtime and
holiday inspection services. FSIS expects that plants seeking FSIS
services are likely to have calculated that the incremental costs of
overtime and holiday inspection services would be less than the
incremental expected benefits of additional revenues they would realize
from additional production.
Economic Effects
Under the proposed fees, the Agency expects to collect nearly $2.5
million in revenues for FY 2000, compared to the $1.5 million under
current fees. The total volume of U.S. egg product production in 1998
was 3.2 billion pounds. The increase in cost per pound of product
associated with the overtime and holiday fee increase is $0.0003. Even
in a competitive industry like egg products, this amount of increase in
annual production costs, if firms choose to use the service, would have
an insignificant impact on profits and prices. The increase in costs
per firm would be about $13,700. On average, this would not be a
significant increase in annual production costs given the volume of
production. Egg product
[[Page 11488]]
firms produce an average of 44.3 million pounds of product annually.
Table 3.--Revenues for Inspection Services
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Current Proposed
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$Thousand
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1,482...................................................... 2,460
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The industry is also likely to pass through a significant portion
of the fee increase to consumers because of the inelastic nature of the
demand curve facing these firms. Research has shown that consumers are
unlikely to significantly reduce demand for meat and poultry products,
including egg products, when prices increase. Huang estimates that
demand would fall by .36 percent for a one percent increase in price
(Huang, Kao S., A Complete System of U.S. Demand for Food. USDA/ERS
Technical Bulletin No. 1821, 1993, p.24). Because of this inelastic
nature of demand and the competitive nature of the industry, individual
firms are not likely to experience any change in market share due to an
increase in inspection fees.
Executive Order 12988
This proposed rule has been reviewed under Executive Order 12988,
Civil Justice Reform. This rule: (1) Preempts State and local laws and
regulations that are inconsistent with this rule; (2) has no
retroactive effect; and (3) does not require administrative proceedings
before parties may file suit in court challenging this rule. However,
the administrative procedures specified in 9 CFR 590.320 through
590.370 must be exhausted prior to any judicial challenge of the
application of the provisions of this proposed rule, if the challenge
involves any decision of an FSIS employee relating to inspection
services provided under the EPIA.
Additional Public Notification
Public awareness of all segments of rulemaking and policy
development is important. FSIS provides a weekly FSIS Constituent
Update via fax to over 300 organizations and individuals. In addition,
the update is available on line through the FSIS web page located at
http://www.fsis.usda.gov. The update is used to provide information
regarding FSIS policies, procedures, regulations, Federal Register
notices, FSIS public meetings, recalls, and any other types of
information that could affect or would be of interest to our
constituents/stakeholders. The constituent fax list consists of
industry, trade, and farm groups, consumer interest groups, allied
health professionals, scientific professionals, and other individuals
that have requested to be included. Through these various channels,
FSIS is able to provide information to a much broader, more diverse
audience than would be otherwise possible. For more information or to
be added to the constituent fax list, fax your request to the
Congressional and Public Affairs Office, at (202) 720-5704.
List of Subjects in 9 CFR Part 590
Eggs and egg products, Exports, Food labeling, Imports.
Accordingly, FSIS proposes to amend 9 CFR Part 590 as follows:
PART 590--INSPECTION OF EGGS AND EGG PRODUCTS (EGG PRODUCTS
INSPECTION ACT)
1. The authority citation for part 590 continues to read as
follows:
Authority: 21 U.S.C. 1031-1056.
2. Section 590.126 is revised to read as follows:
Sec. 590.126 Overtime inspection service.
When operations in an official plant require the services of
inspection personnel beyond their regularly assigned tour of duty on
any day or on a day outside the established schedule, such services are
considered as overtime work. The official plant must give reasonable
advance notice to the inspector of any overtime service necessary and
must pay the Agency for such overtime at an hourly rate of $39.76.
3. Section 590.128(a) is revised to read as follows:
Sec. 590.128 Holiday inspection service.
(a) When an official plant requires inspection service on a holiday
or a day designated in lieu of a holiday, such service is considered
holiday work. The official plant must, in advance of such holiday work,
request the inspector in charge to furnish inspection service during
such period and must pay the Agency for such holiday work at an hourly
rate of $39.76.
* * * * *
Sec. 590.130 [Amended]
4. Section 590.130 is amended by removing the last sentence.
Done in Washington, DC on: February 28, 2000.
Thomas J. Billy,
Administrator.
[FR Doc. 00-5166 Filed 3-2-00; 8:45 am]
BILLING CODE 3410-DM-P
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