This section of the FEDERAL REGISTER

contains notices to the public of the proposed

issuance of rules and regulations. The

purpose of these notices is to give interested

persons an opportunity to participate in the

rule making prior to the adoption of the final

rules.

Proposed Rules Federal Register

51800 

Vol. 74, No. 194 

Thursday, October 8, 2009 

DEPARTMENT OF AGRICULTURE 

Food Safety and Inspection Service 

9 CFR Parts 391, 590, and 592 

[FDMS Docket Number FSIS–2006–0025] 

RIN 0583–AD40 

Changes in Fees for Meat, Poultry, and 

Egg Products Inspection Services 

AGENCY: Food Safety and Inspection 

Service, USDA. 

ACTION: Proposed rule. 

SUMMMARY: The Food Safety and 

Inspection Service (FSIS) is proposing 

to amend its regulations to establish 

formulas for calculating the fees that it 

charges meat and poultry 

establishments, egg products plants, 

importers, and exporters for providing 

voluntary inspection, identification and 

certification services, overtime and 

holiday inspection services, and 

laboratory services. If the rule becomes 

effective, FSIS will calculate these fees 

based on the formulas. For future fiscal 

years, FSIS will calculate the fees on an 

annual basis and apply them at the start 

of the fiscal year. The Agency is also 

proposing to increase the codified flat 

annual fee for its Accredited Laboratory 

Program. 

DATES: The Agency must receive 

comments by November 9, 2009. 

ADDRESSES: FSIS invites interested 

persons to submit comments on this 

proposed rule. Comments may be 

submitted by either of the following 

methods: 

• Federal eRulemaking Portal: This 

Web site provides the ability to type 

short comments directly into the 

comment field on this Web page or 

attach a file for lengthier comments. Go 

to http://www.regulations.gov. Follow 

the online instructions at that site for 

submitting comments. 

• Mail, including floppy disks or CD– 

ROMs, and hand- or courier-delivered 

items: Send to Docket Clerk, U.S. 

Department of Agriculture (USDA), 

FSIS, Room 2–2127, George Washington 

Carver Center, 5601 Sunnyside Avenue, 

Mailstop 5474, Beltsville, MD 20705– 

5474. 

Instructions: All items submitted by 

mail or electronic mail must include the 

Agency name and docket number FSIS– 

2006–0025. Comments received in 

response to this docket will be made 

available for public inspection and 

posted without change, including any 

personal information, to http:// 

www.regulations.gov. 

Docket: For access to background 

documents or to comments received, go 

to the FSIS Docket Room at the address 

listed above between 8:30 a.m. and 4:30 

p.m., Monday through Friday. 

All comments submitted in response 

to this proposal, as well as background 

information used by FSIS in developing 

this document, will be available for 

public inspection in the FSIS Docket 

Room at the address listed above 

between 8:30 a.m. and 4:30 p.m., 

Monday through Friday. 

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 Deborah Patrick, 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) 720–2912, fax (202) 720–5399. 

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, respectively. The Egg 

Products Inspection Act (EPIA) (21 

U.S.C. 1031 et seq.) provides for 

mandatory inspection of egg products 

processing at official plants. FSIS bears 

the cost of mandatory inspection 

provided during non-overtime and nonholiday hours of operation. Official 

establishments and 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. The AMA provides 

that FSIS may prescribe the collection of 

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. 

Historically, FSIS amended its 

regulations annually to change the fees 

it charges establishments for providing 

overtime and holiday inspection 

services; voluntary inspection, 

certification, and identification services; 

and laboratory services and 

accreditation. Because of the length of 

the rulemaking process, each year the 

fiscal year would partially elapse before 

the Agency could publish a final rule to 

amend its fees. As a result, the Agency 

was unable to recover the full cost of the 

services it provided, which represented 

a considerable fiscal loss to FSIS. In 

2006, in an effort to address the delays 

that resulted from the rulemaking 

process, FSIS amended its regulations to 

provide for multiple annual fee 


srobinson on DSKHWCL6B1PROD with PROPOSALS
Federal Register / Vol. 74, No. 194 / Thursday, October 8, 2009 / Proposed Rules 51801 

increases in one action (71 FR 2135). 

With the rulemaking to increase fees for 

2006–2008, FSIS established criteria for 

determining the fee increases on a 

multi-year basis. While this solution 

enabled the Agency to collect an 

increased fee each year, estimates used 

to set out the annual rates were 

imprecise and may well have left the 

Agency collecting too little in fees to 

fully cover its costs. The difference 

between the established rate and current 

economic conditions will likely be 

small during the first year of a multiyear rule but could well become large 

during the later years. 

The Agency performed a cost analysis 

in 2008 (at the same time that the new 

fees analysis was performed) to 

determine whether the fees established 

were adequate to recover the costs that 

it incurred in providing these services. 

On the basis of this analysis, FSIS 

determined the necessary fees for FY 

2010 and established the proposed 

formulas to determine the fees for FY 

2010 and subsequent fiscal years. 

Proposed Formulas 

With this rulemaking, FSIS is 

proposing to amend its regulations to 

codify formulas in 9 CFR parts 391, 590, 

and 592 that FSIS will use to calculate 

and apply annual fees starting with the 

effective date of this rule and for 

subsequent fiscal years. FSIS intends to 

announce the actual annual fees in 

Federal Register notices prior to the 

start of each fiscal year. 

Salary, hours, and all rates used in the 

formulas will be based on the prior 

fiscal year’s actual costs and hours. In 

9 CFR 391.2 and 592.510, FSIS is 

proposing the following formula to 

calculate the base time rate per hour per 

program employee: Base Time Rate = 

Office of Field Operations (OFO) plus 

Office of International Affairs (OIA) 

inspection program personnel salaries 

paid divided by regular hours 

multiplied by the next year’s percentage 

of cost of living increase (e.g., pay raise 

of 2.9% for 1⁄4 of FY 2008 + 3.2% for 3⁄4 of FY 2008), plus the benefits rate, 

plus the travel and operating rate, plus 

the overhead rate, plus an allowance for 

bad debt. 

For the 2010 base time rate per hour 

per program employee, the calculation 

will look like this: [2008 Direct Pay 

divided by Total Direct Hours 

($447,373,444/17,417,642)] = $25.69 * 

2.175% (2009 Cost of Living) = $26.25 

* 3.125% (2010 Cost of Living) = $27.07 

+ $6.83 (benefits rate) + $16.55 (travel 

and operating rate) + $.91 (overhead 

rate) + $.02 (bad debt allowance rate)= 

$51.38 (rounded to $51.36; rounding is 

done to reflect billable quarters). 

In 9 CFR 391.3, 590.126 and, 592.520 

and 592.530, FSIS is proposing to 

establish the following formulas for 

overtime and holiday rates per hour per 

program employee: Overtime = Salary 

component of Base Time Rate (OFO 

plus OIA inspection program personnel 

salaries paid divided by regular hours 

multiplied by the next 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 an allowance for bad debt. 

For the 2010 overtime rate per hour 

per program employee, the calculation 

will look like this: $27.07 * 1.5 (Time 

and one half) = $40.60 + $6.83 + $16.55 

+ $.91 + $.02 = $64.91 (rounded to 

$64.88). 

Holiday Rate = Salary component of 

base time rate multiplied by 2, plus 

benefits rate, plus the travel and 

operating rate, plus the overhead rate, 

plus an allowance for bad debt. 

For the 2010 holiday rate per hour per 

program employee, the calculation will 

look like this: $27.07 * 2 (Double time) 

= $54.14 + $6.83 + $16.55 + $.91 + $.02 

= $78.44. 

In 9 CFR 391.4, FSIS is proposing the 

following formula for the laboratory 

services rate per hour per program 

employee: Laboratory Salary Rate = 

Office of Public Health Science (OPHS) 

salaries paid divided by OPHS Hours 

worked, multiplied by the next calendar 

year’s percentage cost of living increase, 

plus the benefits rate, plus the travel 

and operating rate, plus the overhead 

rate, plus an allowance for bad debt. 

For the 2010 holiday salary per hour 

per program employee, the calculation 

will look like this: [2008 Total OPHS 

Direct Pay/Total OPHS hours 

(21,312,832/550,424)] = $38.72 * 

2.175% (2009 Cost of Living) = $39.56 

* 3.125% (2010 Cost of Living) = $40.80 

+ $6.83 + $16.55 + $.91 + $.02 = $65.11 

(rounded to $65.08). 

The formulas are based on the prior 

fiscal year’s actual costs and cost of 

living increases and percentage of 

inflation factors from the economic 

assumptions in the Office of 

Management and Budget (OMB) 

Memorandum M–08–13, ‘‘Update to 

Civilian Position Full Fringe Benefit 

Cost Factor, Federal Pay Raise 

Assumptions, and Inflation Factors used 

in OMB Circular A–76, Performance of 

Commercial Activities’’ Memorandum 

M–08–13, dated March 11, 2008, which 

is available at the following link: http:// 

www.whitehouse.gov/omb/assets/omb/ 

memoranda/fy2008/m08-13.pdf. Rather 

than codify a reference to OMB 

Memorandum M–08–13 in the proposed 

rule, FSIS intends to use the economic 

factors in the memo for calculating the 

fees until new economic assumptions 

are issued in a new OMB Memorandum 

in the future. 

As is proposed in §§ 391.2 and 

592.510, FSIS intends to derive the 

components of proposed formulas, 

using previous fiscal year actual costs, 

as follows: 

Benefits Rate: Direct benefits costs 

multiplied by the next calendar year’s 

percentage cost of living increase. Some 

examples of direct benefits are health 

insurance, retirement, life insurance, 

and Thrift Savings Plan (TSP) 

retirement basic and matching 

contributions. 

For the 2010 benefits rate per hour per 

program employee, the calculation will 

look like this: [2008 Direct Benefits/ 

(Total Direct hours + Total OT hours + 

Total Holiday hours) ($130,744,894/ 

20,164,116)] = $6.48 * 2.175% (2009 

Cost of Living) = $6.62 * 3.125% (2009 

Cost of Living) = $6.83. 

Travel and Operating Rate: Total 

direct travel and operating costs 

multiplied by the percentage of 

inflation. 

For the 2010 travel and operating rate 

per hour per program employee, the 

calculation will look like this: [2008 

Total Direct Travel and Operating Costs/ 

(Total Direct hours + Total OT hours + 

Total Holiday hours) (17,489,892/ 

20,164,116)] = $.87 * 2.00% (2009 

Inflation) = $.89 * 2.00% (2010 

Inflation) = $.91. 

Overhead Rate: All indirect costs plus 

the average information technology (IT) 

costs over the previous two years in the 

Public Health Data Communication 

Infrastructure System Fund plus the 

Office of Management Program cost in 

the Reimbursable and Voluntary Funds 

plus 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, divided by total direct hours 

(regular, overtime, and holiday) worked 

across all funds, multiplied by the 

percentage of inflation. 

For the 2010 the overhead rate per 

hour per program employee, the 

calculation will look like this: [2008 

Total Overhead/(Total Direct hours + 

Total OT hours + Total Holiday hours) 

(320,820,057/20,164,116)] = $15.91 * 

2.00% (2009 Inflation) = $16.23 * 2.00% 

(2010 Inflation) = $16.55. 

Allowance for Bad Debt Rate = Total 

allowance for bad debt (for plants and 

establishments that declare bankruptcy) 

divided by total direct hours (regular, 

overtime, and holiday) worked. 

For the 2010 allowance for bad debt 

rate per hour per program employee, the 

calculation will look like this: [2008 


srobinson on DSKHWCL6B1PROD with PROPOSALS
51802 Federal Register / Vol. 74, No. 194 / Thursday, October 8, 2009 / Proposed Rules 

Total Bad Debt/Total Direct hours + 

Total OT hours + Total Holiday hours) 

($325,481/20,164,116)] = $.02 (for 2009 

and after). 

As is noted above, the proposed 

formulas reflect that the cost of 

providing inspection services includes 

both direct and overhead costs. 

Overhead costs include the cost of 

program and Agency activities that 

support the food inspection services 

provided by the industry. Overhead 

expenditures are allocated across the 

Agency for each direct hour of 

inspection. Direct costs include the cost 

of salaries, employee benefits, travel and 

operating costs. Because of 

improvements in accessing data from 

the accounting system, the Agency has 

been able to estimate the employee 

benefits ascribable to overtime work and 

has included these in the fee 

calculation. 

Section 10703 of the 2002 Farm Bill 

authorized the Secretary of Agriculture 

to set the hourly rate of compensation 

for FSIS employees exempt from the 

Fair Labor Standards Act (i.e., 

veterinarians) who work in 

establishments subject to the FMIA and 

PPIA at one and one-half times the 

employee’s hourly rate of base pay. In 

FSIS’s January 13, 2006, final rule on 

fees, FSIS adjusted its overtime fees to 

reflect these costs. Previously, 

veterinarians were limited to the time 

and a half rate paid to employees at 

grade level GS–10, step 1. This 

proposed rule continues to provide 

overtime rates at one and one-half times 

the employee’s hourly rate of base pay. 

In this rule, FSIS is proposing to 

differentiate the holiday rate from the 

overtime rate in future years in order to 

collect the full expenditure of providing 

services on holidays. FSIS inspectors 

are paid double time for holiday work, 

while the current overtime rate only 

accounts for time and a half. Therefore, 

FSIS is proposing a holiday rate of two 

times the employee’s hourly rate of base 

pay. 

Laboratory Accreditation Fee 

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. Because these fees 

are fixed amounts and do not fluctuate 

with economic conditions, FSIS is not 

proposing a formula for these fees. FSIS 

will propose to change the codified 

laboratory accreditation fees through 

future rulemaking when necessary. 

FSIS needs to raise its fees for the 

Accredited Laboratory 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 and uses it to 

cover the contractual costs that the 

Accredited Laboratory Program must 

pay at the beginning of each fiscal year. 

The proposed 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 

distributed 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. 

FSIS is proposing to amend 9 CFR 

391.5 to keep the laboratory 

accreditation fee at $4,500 for FY 2009, 

2010, and 2011 and increase it to $5,000 

for FY 2012 and FY 2013. These 

adjustments are necessary to recover 

FSIS costs for providing these 

accreditation services, including 

maintaining an adequate reserve. The 

amount of the accreditation fee each 

year is based on the number of expected 

new and renewal accreditations, the 

anticipated costs directly related to the 

accreditation process, and the estimated 

reserve from previous years. These fees 

are set based on FSIS’s best projections 

of what it will cost the Agency to 

provide these services in fiscal years 

2010 through 2013. 

Projected Fees 

The differing proposed fee increases 

for each type of service are the result of 

the different amounts that it costs FSIS 

to provide these four types of services. 

The differences in costs stem from 

various factors, including the different 

salary levels of the program employees 

who perform the services. 

In the Agency’s analysis of projected 

costs, set forth in Table 2, the Agency 

has identified the bases for the fiscal 

year 2010 increases in the cost of 

voluntary base time inspection services, 

overtime and holiday inspection 

services, and laboratory services. FSIS 

calculated its projected increases in 

salaries and inflation in fiscal year 2010. 

The average pay raise for Federal 

employees in calendar year 2010, 

reflecting both a national cost of living 

increase and locality differentials, will 

be 2.9 percent for .25 of the fiscal year 

and 3.2 percent for .75 of the fiscal year. 

Inflation for fiscal year 2010 is projected 

to be 2 percent. 

The estimates in the tables below are 

based on the Presidential Economic 

Assumptions for FY 2009 and the out 

years in the OMB Memorandum M–08– 

13. In Table 1, FSIS estimated fees for 

subsequent fiscal years based on 

previous fiscal year actual costs, 

projected inflation, and cost of living 

factors. 

The current and proposed fees are 

listed by type of service in Table 1. 


srobinson on DSKHWCL6B1PROD with PROPOSALS
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TABLE 1—CURRENT AND NEW FEES (PER HOUR PER EMPLOYEE) BY TYPE OF SERVICE

Service Current rate 

2008 & 2009 

Base time ............................................................................................................................................................................................. $49.93 

Overtime & holiday .............................................................................................................................................................................. 58.93 

Laboratory ............................................................................................................................................................................................ 70.82 

Service Proposed rate 

2010 

Projected rate 

2011 

Projected rate 

2012 

(estimates rounded to reflect billable quarters) 

Base Time .................................................................................................................................... $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 base time rate for inspection 

services provided pursuant to §§ 350.7, 

351.8, 351.9, 352.5, 354.101, 355.12, and 

362.5 is an estimated $51.36 per hour 

per program employee in fiscal year 

2010, $52.84 per hour per program 

employee in fiscal year 2011, and 

$54.64 per hour per program employee 

in fiscal year 2012. 

The overtime rate for inspection 

services provided pursuant to §§ 307.5, 

350.7, 351.8, 351.9, 352.5, 354.101, 

355.12, 362.5 and 381.38 is an estimated 

$64.88 per hour per program employee 

in fiscal year 2010, $66.84 per hour per 

program employee in fiscal year 2011, 

and $68.84 per hour per program 

employee in fiscal year 2012. 

The holiday rate for inspection 

services provided pursuant to §§ 307.5, 

350.7, 351.8, 351.9, 352.5, 354.101, 

355.12, 362.5 and 381.38 is an estimated 

hourly rate of $78.44 per hour per 

program employee in fiscal year 2010, 

$80.84 per hour per program employee 

in fiscal year 2011, and $83.82 per hour 

per program employee in fiscal year 

2012. 

The rate for laboratory services 

provided pursuant to §§ 350.7, 351.9, 

352.5, 354.101, 355.12, and 362.5 is an 

estimated $65.08 per hour per program 

employee in fiscal year 2010, $67.04 per 

hour per program employee in fiscal 

year 2011, and $69.08 in fiscal year 

2012. 

The projected fees for FY 2010, 2011, 

and 2012 may not be significantly 

different from current codified fees. 

Table 2 summarizes the calculations for 

the different types of services for 2010. 

See Table 3 for the proposed Laboratory 

Accreditation Fees. 

TABLE 2—CALCULATIONS FOR THE DIFFERENT TYPES OF SERVICES FOR FY 2010 

Actual costs 

per hour 

FY 2009 

Cost of living 

allowance 

Projected salary costs per 

hour FY 2010 

Base Time: 

Actual 2009 Base Salary (Pay raise of 2.9% for .25 of FY + 3.2% for .75 of FY) .............. $26.25 3.125% $27.07 

Benefits ................................................................................................................................. 6.62 3.125% 

Inflation 

6.83 

Overhead (Department, Agency, and Program, including IT costs) .................................... 16.23 2.0% 16.55 

Travel/Operating Costs ......................................................................................................... 0.89 2.0% 0.91 

Bad Debt Allowance ............................................................................................................. 0.02 ........................ 0.02 

Total Projected Costs .................................................................................................... ........................ ........................ 51.38 

Overtime ...................................................................................................................................... 39.37 3.125% 40.60 

Holiday Pay .................................................................................................................................. 52.50 3.125% 54.14 

Laboratory Fees ........................................................................................................................... 39.56 3.125% 40.80 

* Similar benefits, overhead, travel/operating costs, and bad debt allowance for projected salary costs are also added to arrive to the totals 

shown in Table 1 for FY 2010 for overtime, holiday, and laboratory projected salary fees. 

TABLE 3—CALCULATIONS FOR ACCREDITED LABORATORY FEES FY 2009–2013 

Estimated 

FY 2009 

Proposed 

FY 2010 

Proposed 

FY 2011 

Proposed 

FY 2012 

Proposed 

FY 2013 

Estimated Income .................................................................................... $364,500 $382,500 $382,500 $405,000 $425,000 

Estimated Expenses ................................................................................ 386,230 423,863 438,453 444,886 456,464 

New Accreditation Fee ............................................................................. 4,500 4,500 4,500 5,000 5,000


srobinson on DSKHWCL6B1PROD with PROPOSALS
51804 Federal Register / Vol. 74, No. 194 / Thursday, October 8, 2009 / Proposed Rules 

Executive Order 12866 and Regulatory 

Flexibility Act 

Because this proposed rule has been 

determined to be not significant, the 

Office of Management and Budget 

(OMB) did not review it under EO 

12866. 

The Administrator, FSIS, has 

determined that this proposed rule 

would not have a significant economic 

impact, as defined by the Regulatory 

Flexibility Act (5 U.S.C. 601), on a 

substantial number of small entities. 

The inspection services provided under 

these proposed fees are voluntary. Meat 

and poultry establishments and egg 

products plants requesting these 

services are likely to have calculated 

that the revenues generated from 

additional production will exceed the 

incremental costs of the services. 

Similarly, laboratories will determine 

whether the additional revenue for 

services that require accreditation will 

exceed the costs of becoming accredited. 

Economic Effects of New Fees 

By proposing to codify formulas to 

calculate future increases in annual fees 

instead of proposing to codify actual 

fees, the Agency will streamline the 

rulemaking process to help ensure that 

the fee increases are effective at the 

beginning of each fiscal year. In 

subsequent years, food safety will be 

maintained at the establishments 

affected by this rule as the Agency 

provides the services. The increased 

fees will cover inflation and national 

and locality pay raises but will not 

support any new budgetary initiative. 

The costs that industry will experience 

by the raise in fees 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 

2007 was about 91 billion pounds (2007 

Livestock, Dairy, Meat, and Poultry 

Outlook Report, Economic Research 

Service, USDA). The total volume in egg 

product production in 2007 was about 

2.8 billion pounds (2007 National 

Agricultural Statistical Service, USDA). 

The increase in cost per pound of 

product associated with the new 

increased fees is, in general, $.0002. 

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 this increase in fees is 

negligible, the industry is likely to pass 

along a significant portion of the 

proposed fee increases to consumers 

because of the inelastic nature of the 

demand curve facing consumers. 

Research has shown that consumers are 

unlikely to reduce demand significantly 

for meat, poultry, and egg products, 

when prices increase. Huang estimates 

that demand would fall by .36 percent 

for a one percent increase in price 

(Huang, Kao S., A Complete System for 

Demand for Food. USDA/ERS Technical 

Bulletin No. 1821, 1993, p. 24). Because 

of the inelastic nature of demand and 

the competitive nature of the industry, 

individual firms are not likely to 

experience any change in market share 

in response to an increase in inspection 

fees. 

As a result of the new Accredited 

Laboratory Program fees, the Agency 

expects to collect about $2 million over 

the next 5 years from 85 laboratories, an 

average of $4,700 per entity per year. 

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 EGovernment 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 proposed rule has been reviewed 

under Executive Order 12988, Civil 

Justice Reform. This proposed 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 proposed rule, if the 

challenge involves any decision of an 

FSIS employee relating to inspection 

services provided under the FMIA, 

PPIA, or EPIA. 

Additional Public Notification 

Public awareness of all segments of 

rulemaking and policy development is 

important. Consequently, in an effort to 

ensure that minorities, women, and 

persons with disabilities are aware of 

this notice, FSIS will announce it online 

through the FSIS Web page located at 

http://www.fsis.usda.gov/ 

Regulations_&_Policies/ 

2009_Proposed_Rules_Index/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 http:// 

www.fsis.usda.gov/news_and_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. 

List of Subjects 

9 CFR Part 391 

Fees and charges, Government 

employees, Meat inspection, Poultry 

products. 

9 CFR Part 590 

Eggs and egg products, Exports, Food 

labeling, Imports. 

9 CFR Part 592 

Eggs and egg products, Exports, Food 

labeling, Imports. 

For the reasons set forth in the 

preamble, FSIS proposes to amend 9 

CFR Chapter III as follows: 

PART 391—FEES AND CHARGES FOR 

INSPECTION AND LABORATORY 

ACCREDITATION 

1. The authority citation for part 391 

continues to read as follows: 

Authority: 7 U.S.C. 138d; 7 U.S.C. 1622, 

1627 and 2219al; 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 Base time rate. 

(a) For each fiscal year and based on 

the previous fiscal year’s actual costs 


srobinson on DSKHWCL6B1PROD with PROPOSALS
Federal Register / Vol. 74, No. 194 / Thursday, October 8, 2009 / Proposed Rules 51805 

and hours, FSIS calculates the base time 

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 using the following 

formula: Office of Field Operations plus 

Office of International Affairs inspection 

program personnel salaries paid divided 

by regular hours multiplied by the next 

year’s percentage of cost of living 

increase, plus the benefits rate, plus the 

travel and operating rate, plus the 

overhead rate, plus an allowance for bad 

debt. 

(b) FSIS calculates the components of 

the base time rate, which are based on 

previous fiscal year’s actual costs, using 

the following formulas: 

(1) Benefits Rate. Direct benefits costs 

multiplied by the next calendar year’s 

percentage cost of living increase. Some 

examples of direct benefits are health 

insurance, retirement, life insurance, 

and Thrift Savings Plan (TSP) 

retirement basic and matching 

contributions. 

(2) Travel and Operating Rate. Total 

direct travel and operating costs 

multiplied by the percentage of 

inflation. 

(3) Overhead Rate. All indirect costs 

plus the average information technology 

(IT) costs over the previous two years in 

the Public Health Data Communication 

Infrastructure System Fund plus the 

Office of Management Program cost in 

the Reimbursable and Voluntary Funds 

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, divided by total direct hours 

(regular, overtime, and holiday) worked 

across all funds, multiplied by the 

percentage of inflation. 

(4) Allowance for Bad Debt Rate. Total 

allowance for bad debt (for plants and 

establishments that declare bankruptcy) 

divided by total direct hours (regular, 

overtime, and holiday) worked. 

(c) The 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 rate. 

For each fiscal year and based on the 

previous fiscal year’s actual costs and 

hours, FSIS calculates 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 using 

the following formulas: 

(a) Overtime. Office of Field 

Operations plus Office of International 

Affairs inspection program personnel 

salaries paid divided by regular hours 

multiplied by the next 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 an allowance for bad debt. 

(b) Holiday Rate. Office of Field 

Operations plus Office of International 

Affairs inspection program personnel 

salaries paid divided by regular hours 

multiplied by the next year’s percentage 

of cost of living increase multiplied by 

2, plus benefits rate, plus the travel and 

operating rate, plus the overhead rate, 

plus an allowance for bad debt. 

(c) FSIS calculates the benefits rate, 

travel and operating rate, overhead rate, 

and allowance for bad debt using the 

formulas in § 391.2(b), and the cost of 

living increases and percentage of 

inflation factors in 391.2(c). 

4. Section 391.4 is revised to read as 

follows: 

§ 391.4 Laboratory services rate. 

(a) For each fiscal year and based on 

the previous fiscal year’s actual costs 

and hours, FSIS calculates 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 will be calculated for 

future fiscal years using the following 

formula: Office of Public Health Science 

(OPHS) salaries paid divided by OPHS 

hours worked, multiplied by the next 

calendar year’s percentage cost of living 

increase, plus the benefits rate, plus the 

travel and operating rate, plus the 

overhead rate, plus an allowance for bad 

debt. 

(b) FSIS calculates the benefits rate, 

the travel and operating rate, the 

overhead rate, and the allowance for bad 

debt using the formulas in 391.2(b), and 

the cost of living increases and 

percentage of inflation factors 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 shall be $4,500.00 for fiscal 

years 2010 and 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, revise the second 

sentence to read as follows: 

§ 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 fiscal year and based 

on previous fiscal year’s actual costs 

and hours, FSIS calculates the overtime 

rate for inspection service, per hour per 

program employee, using the following 

formula: Office of Field Operations plus 

Office of International Affairs inspection 

program personnel salaries paid divided 

by regular hours multiplied by the next 

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 an allowance for bad debt. FSIS 

calculates the benefits rate, travel and 

operating rate, overhead rate, and 

allowance for bad debt using the 

formulas in § 592.510(b) and the cost of 

living increases and percentage of 

inflation factors in § 592.510(c). 

8. In § 590.128(a), revise the second 

sentence to read as follows: 

§ 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 fiscal year and based on the 

previous year’s actual costs and hours, 

FSIS calculates the holiday rate for 

inspection service, per hour per 

program employee, using the following 

formula: Office of Field Operations plus 

Office of International Affairs inspection 

program personnel salaries paid divided 

by regular hours multiplied by the next 

year’s percentage of cost of living 

increase multiplied by 2, plus benefits 

rate, plus the travel and operating rate, 

plus the overhead rate, plus an 

allowance for bad debt. FSIS calculates 

the benefits rate, travel and operating 

rate, overhead rate, and allowance for 

bad debt using the formulas in 

§ 592.510(b), and the cost of living 

increases and percentage of inflation 

factors in § 592.510(c). 

* * * * * 

PART 592—VOLUNTARY INSPECTION 

OF EGG PRODUCTS 

9. The authority citation for part 592 

continues to read as follows: 

Authority: 7 U.S.C. 1621–1627. 

10. Section 592.510 is revised to read 

as follows: 


srobinson on DSKHWCL6B1PROD with PROPOSALS
51806 Federal Register / Vol. 74, No. 194 / Thursday, October 8, 2009 / Proposed Rules 

§ 592.510 Base time rate. 

(a) For each fiscal year and based on 

the previous fiscal year’s actual costs 

and hours, FSIS calculates the base time 

rate for inspection services, per hour per 

program employee, using the following 

formula: Office of Field Operations plus 

Office of International Affairs inspection 

program personnel salaries paid divided 

by regular hours multiplied by the next 

year’s percentage of cost of living 

increase, plus the benefits rate, plus the 

travel and operating rate, plus the 

overhead rate, plus an allowance for bad 

debt. 

(b) FSIS calculates the components of 

the base time rate (which are based on 

previous fiscal year’s actual costs) using 

the following formulas: 

(1) Benefits Rate: Direct benefits costs 

multiplied by the next calendar year’s 

percentage cost of living increase. Some 

examples of direct benefits are health 

insurance, retirement, life insurance, 

and Thrift Saving Plan (TSP) retirement 

basic and matching contributions. 

(2) Travel and Operating Rate: Total 

direct travel and operating costs 

multiplied by the percentage of 

inflation. 

(3) Overhead Rate: All indirect costs 

plus the average information technology 

(IT) costs over the previous two years in 

the Public Health Data Communication 

Infrastructure System Fund plus the 

Office of Management Program cost in 

the Reimbursable and Voluntary Funds 

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, divided by total direct hours 

(regular, overtime, and holiday) worked 

across all funds, multiplied by the 

percentage of inflation. 

(4) Allowance for Bad Debt Rate: Total 

allowance for bad debt (for plants and 

establishments that declare bankruptcy) 

divided by total direct hours (regular, 

overtime, and holiday) worked. 

(c) The 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. 

12. In § 592.520, revise the second 

sentence to read as follows: 

§ 592.520 Overtime rate. 

* * * The official plant must give 

reasonable advance notice to the 

inspector of any overtime service 

necessary. For each fiscal year and 

based on the previous fiscal year’s 

actual costs and hours, FSIS calculates 

the overtime rate for inspection service, 

per hour per program employee, using 

the following formula: Office of Field 

Operations plus Office of International 

Affairs inspection program personnel 

salaries paid divided by regular hours 

multiplied by the next 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 an allowance for bad debt. 

FSIS calculates the benefits rate, travel 

and operating rate, overhead rate, and 

allowance for bad debt using the 

formulas in § 592.510(b), and the cost of 

living increases and percentage of 

inflation factors in § 592.510(b). 

13. In 592.530, revise the second 

sentence to read as follows: 

§ 592.530 Holiday rate. 

* * * The official plant must, in 

advance of such holiday work, request 

that the inspector in charge furnish 

inspection service during such period 

and must pay the Agency for such 

holiday work at the hourly rate. For 

each fiscal year and based on the 

previous fiscal year’s actual costs and 

hours, FSIS calculates the holiday rate 

for inspection service, per hour per 

program employee, using the following 

formula: Office of Field Operations plus 

Office of International Affairs inspection 

program personnel salaries paid divided 

by regular hours multiplied by the next 

year’s percentage of cost of living 

increase multiplied by 2, plus benefits 

rate, plus the travel and operating rate, 

plus the overhead rate, plus an 

allowance for bad debt. FSIS calculates 

the benefits rate, travel and operating 

rate, overhead rate, and allowance for 

bad debt using the formulas in 

§ 592.510(b), and the cost of living 

increases and percentage of inflation 

factors in § 592.510(b). 

Done in Washington, DC, on October 5, 

2009. 

Alfred V. Almanza, 

Administrator. 

[FR Doc. E9–24283 Filed 10–7–09; 8:45 am] 

BILLING CODE 3410–DM–P 

FEDERAL RESERVE SYSTEM 

[Regulation A; Docket No. R–1371] 

12 CFR Part 201 

Extensions of Credit by Federal 

Reserve Banks 

AGENCY: Board of Governors of the 

Federal Reserve System. 

ACTION: Proposed rule. 

SUMMARY: The Board of Governors 

(Board) is publishing for public 

comment a proposed amendment to 

Regulation A that would provide a 

process by which the Federal Reserve 

Bank of New York may determine the 

eligibility of credit rating agencies and 

the ratings they issue for use in the 

Term Asset-Backed Securities Loan 

Facility, which is maintained by the 

Federal Reserve Bank of New York and 

for which the Board has expressly set a 

particular credit rating requirement for 

collateral offered by the borrower. The 

proposed rule would not apply to 

discount window lending or other 

extensions of credit provided by the 

Federal Reserve System. In addition, the 

rule would only apply to asset-backed 

securities that are not backed by 

commercial real estate. This proposed 

amendment is designed to provide the 

Federal Reserve Bank of New York with 

a consistent framework for determining 

the eligibility of ratings issued by 

individual credit rating agencies when 

used in conjunction with a separate 

asset-level risk assessment process. The 

proposed amendment does not 

represent a change in the stance of 

monetary policy. The Board solicits 

comment on all aspects of the proposal, 

as well as specific aspects of the 

proposal as set out in the preamble. 

DATES: Written comments on this notice 

of proposed rulemaking must be 

submitted on or before November 9, 

2009. 

ADDRESSES: You may submit comments, 

identified by Docket Number R–1371, 

by any of the following methods: 

• Agency Web site: http:// 

www.federalreserve.gov. Follow the 

instructions for submitting comments at 

http://www.federalreserve.gov/ 

generalinfo/foia/ProposedRegs.cfm. 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

• E-mail: 

regs.comments@federalreserve.gov. 

Include docket number in the subject 

line of the message. 

• Fax: (202) 452–3819 or (202) 452– 

3102. 

• Mail: Jennifer J. Johnson, Secretary, 

Board of Governors of the Federal 

Reserve System, 20th Street and 

Constitution Avenue, NW., Washington, 

DC 20551. 

All public comments are available 

from the Board’s Web site at http:// 

www.federalreserve.gov/generalinfo/ 

foia/ProposedRegs.cfm, as submitted, 

unless modified for technical reasons. 

Accordingly, your comments will not be 

edited to remove any identifying or 

contact information. Public comments 

may also be viewed electronically or in 

paper in Room MP–500 of the Board’s 

Martin Building (20th and C Streets, 

NW.) between 9 a.m. and 5 p.m. on 

weekdays. 


srobinson on DSKHWCL6B1PROD with PROPOSALS