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contains regulatory documents having general

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Rules and Regulations Federal Register

60093 

Vol. 65, No. 196 

Tuesday, October 10, 2000 

DEPARTMENT OF AGRICULTURE 

Food Safety and Inspection Service 

9 CFR Parts 391 and 590 

[Docket No. 00–025F] 

RIN 0583–AC74 

Increases in Fees for Meat, Poultry, 

and Egg Products Inspection 

Services—Fiscal Year (FY) 2001 

AGENCY: Food Safety and Inspection 

Service, USDA. 

ACTION: Final rule. 

SUMMARY: The Food Safety and 

Inspection Service (FSIS) is increasing 

the fees that it charges meat and poultry 

establishments, egg products plants, 

importers, and exporters for providing 

voluntary inspection services, overtime 

and holiday inspection services, 

identification services, certification 

services, and laboratory services. These 

increases in fees reflect the national and 

locality pay raise for Federal employees 

(proposed 3.7 percent effective January 

2001) and inflation. The Agency will 

make the increases in fees effective 

October 8, 2000. At this time, FSIS is 

not proposing to amend the fee for the 

Accredited Laboratory Program. 

EFFECTIVE DATE: October 8, 2000. 

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– 

3700, (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 20250–3700, (202) 720– 

3552. 

SUPPLEMENTARY INFORMATION: 

Background 

The Federal Meat Inspection Act 

(FMIA) (21 U.S.C. 601 et seq.), the 

Poultry Products Inspection Act (PPIA) 

(21 U.S.C. 451 et seq.), and the Egg 

Products Inspection Act (EPIA) (21 

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

mandatory Federal inspection of meat 

and poultry slaughter and processing at 

official establishments and of egg 

products at official plants. FSIS bears 

the cost of mandatory inspection. 

Establishments and plants pay for 

inspection services performed on 

holidays or on an overtime basis. 

In addition, under the Agricultural 

Marketing Act of 1946, 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. FSIS 

is required to recover the costs of 

voluntary inspection, certification, and 

identification services. 

Under the Agricultural Marketing Act 

of 1946, FSIS also provides certain 

voluntary laboratory services that 

establishments and others may request 

the Agency to perform. Laboratory 

services are provided for four types of 

analytic testing: microbiological testing, 

residue chemistry tests, food 

composition tests, and pathology 

testing. FSIS must recover these costs. 

Every year FSIS reviews the fees that 

it charges for providing overtime and 

holiday inspection services; voluntary 

inspection, identification, and 

certification services; and laboratory 

services. The Agency performs a cost 

analysis to determine whether the fees 

that it has established are adequate to 

recover the costs that it incurs in 

providing these services. In the 

Agency’s analysis of projected costs for 

October 1, 2000 to September 30, 2001, 

the Agency has identified increases in 

the costs of these nonmandatory 

inspection services due specifically to 

the national and locality pay raise for 

Federal employees (proposed 3.7 

percent effective January 2001) and 

inflation. 

FSIS calculated the new fees by 

adding the projected increase in salaries 

and inflation for FY 2000 and FY 2001 

to the actual cost of the services in FY 

1999. The Agency calculated inflation to 

be 1.55% for FY 2000 and 1,90% for FY 

2001. The Agency considered the costs 

that it will incur because of the pay 

raise in January 2001 and averaged its 

pay costs out over the entire FY 2001. 

FSIS did not use the fees currently 

charged as a base for calculating the 

new fees for FY 2001 because the 

current fees are based on estimates of 

costs to the Agency for FY 1999 and FY 

2000. The Agency now knows the actual 

cost of inspection services for FY 1999 

and used the actual costs in calculating 

the new fees. 

The current and new fees are listed by 

type of service in Table 1. 

TABLE 1.—CURRENT AND NEW FEES— 

PER HOUR PER EMPLOYEE—BY

TYPE OF SERVICE

Service Previous 

rate New rate 

Base time .......... $37.88 $38.44 

Overtime & holiday ................ 39.76 41.00 

Laboratory ......... 58.52 60.04 

The differing fee increase for each 

type of service is the result of the 

different amount that it costs FSIS to 

provide these three types of services. 

The differences in costs stem from 

various factors including different salary 

levels of the program employees who 

perform the services. See Table 2. 

TABLE 2.—CALCULATIONS FOR THE

DIFFERENT TYPES OF SERVICES

Base Time: 

Actual FY 1999 cost ..................... $35.52 

Inflation and salary increases ....... 2.91 

Adjustment for divisibility by quarter hours .................................... .01 

Total ....................................... $38.44 

Overtime and Holiday Inspection 

Services: 

Actual FY 1999 cost ..................... $37.88 

Inflation and salary increases ....... 3.10 

Adjustment for divisibility by quarter hours .................................... .02 

Total ....................................... $41.00 


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60094 Federal Register / Vol. 65, No. 196 / Tuesday, October 10, 2000 / Rules and Regulations 

TABLE 2.—CALCULATIONS FOR THE

DIFFERENT TYPES OF SERVICES— 

Continued 

Laboratory Services: 

Actual FY 1999 cost ..................... $55.50 

Inflation and salary increases ....... 4.54 

Total ....................................... $60.04 

An increase in fees for egg products 

overtime and holiday inspection 

services recently became effective on 

July 30, 2000. However, FSIS is 

publishing a new fee because the 

Agency has moved to a FY basis for 

reviewing fees and is charging the same 

fee for meat, poultry, and egg products 

overtime and holiday inspection 

services. FSIS calculated the new fees 

based on the presumption that they 

would become effective at the beginning 

of FY 2001. 

FSIS is exploring the possibility of 

proposing a three to five year plan of fee 

rate adjustments based on estimates of 

cost escalation. 

The Agency must recover the actual 

cost of voluntary inspection services 

covered by this rule. These fee increases 

are essential to continued sound 

financial management of the Agency’s 

costs. FSIS announces in its July 24, 

2000 proposed rule (65 FR 45545) that 

it intended to implement the fee 

increases provided for in this final rule 

effective October 8. The Agency believes 

adequate notice has been given to 

affected parties. Accordingly, the 

Administrator has determined that these 

amendments should be effective less 

than 30 days after publication in the 

Federal Register. Therefore, the 

increases in fees will be effective 

October 8, 2000. 

Proposed Rule and Comments 

On July 24, 2000 FSIS published a 

proposed rule (65 FR 45545) increase 

the fees it charges for meat, poultry, and 

egg products voluntary inspection 

services. FSIS provided 30 days for 

public comment, ending on August 23, 

2000. 

The Agency received two comments 

from industry organizations opposing 

the increase in fees. The Agency 

addresses their specific objections. 

Comment: The commenter stated that 

the fees increases, though moderate, are 

unnecessary because just one year ago 

FSIS imposed a 12.5% increase in 

voluntary program base rates and a 9% 

increase in overtime and holiday 

inspection services rates. Furthermore, 

these new rates are being proposed at a 

time when FSIS appropriations are at a 

record high and HACCP—which is 

supposed to result in inspection cost 

savings—has been implemented. 

Response: The Agency did increase 

inspection fees for meat and poultry in 

a final rule published last December 28, 

1999 [64 FR 72492] and more recently 

for egg products overtime and holiday 

inspection services in a final rule 

published on July 20, 2000 [65 FR 

44948]. The actual percentage of 

increases last December was 2.3% for 

base time meat and poultry voluntary 

inspection, 7.93% increase for meat and 

poultry overtime and holiday inspection 

services, and 15.02% increase for meat 

and poultry laboratory services. 

However, the new increase in fees 

represents the raise in inspection costs 

since the promulgation of the two 

previous fee increases. 

FSIS appropriations do not cover 

voluntary inspection services or 

overtime and holiday inspection 

services. Any cost savings that might be 

realized through more effective use of 

inspection resources in HACCP do not 

translate into lower expenses for 

voluntary inspection services or 

overtime and holiday inspection 

services. 

Comment: The commenter takes 

exception to FSIS exploring the 

possibility of proposing a three to five 

year plan of rate adjustments when the 

Agency should be realizing inspection 

cost savings. 

Response: FSIS is merely announcing 

that it is exploring the possibility of 

proposing a three to five year plan of 

rate adjustments. The Agency would not 

introduce such a plan without formally 

proposing it through rulemaking 

procedures. 

Comment: The commenter maintains 

that the Agency should reconsider its 

proposed increase in fees after 

addressing global issues like inspection 

resource allocation. 

Response: The allocation of 

inspection resources does not have a 

direct effect on the cost of holiday and 

overtime inspection services or 

voluntary inspection services. 

Comment: The commenter suggests 

that the Agency should provide a 

detailed explanation of its proposed fee 

increases to allow for meaningful 

comment. 

Response: The agency believes that it 

has presented adequate information to 

explain how the new increases in fees 

were arrived at. 

Summary of the Final Rule 

FSIS is amending 9 CFR 391.2 to 

increase the base time fee for providing 

meat and poultry voluntary inspection, 

identification, and certification services 

from $37.88 per hour per employee to 

$38.44 per hour per program employee. 

FSIS is also amending §§ 391.3, 590.126, 

and 590.128(a) to increase the rate for 

providing meat, poultry, and egg 

products overtime and holiday 

inspection services from $39.76 per 

hour per employee to $41.00 per hour 

per employee. In addition, FSIS is 

amending § 391.4 to increase the rate for 

laboratory services from $58.52 per hour 

per employee to $60.04 per hour per 

employee. 

Executive Order 12866 and Regulatory 

Flexibility Act 

Because this final 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 final 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. 

Small establishments and plants 

should not be affected adversely by the 

increases in fees because the new fee 

increases provided for reflect only a 

small increase in the costs currently 

borne by those entities that choose to 

use certain inspection services. These 

inspection services are generally sought 

by larger establishments and plants 

because of 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. 

Moreover, smaller establishments and 

plants are unlikely to use a significant 

amount of overtime and holiday 

inspection services. Establishments and 

plants that seek 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 new fees, the Agency 

expects to collect an estimated $106.2 

million in revenues for FY 2001, 

compared to $103 million under the 

current fee structure. 

The costs that industry would 

experience by the raise in fees are 

similar to other increases the industry 

faces due to inflation and wage 

increases. 

The total volume of meat and poultry 

slaughtered under Federal inspection in 

1998 was about 81 billion pounds. The 


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Federal Register / Vol. 65, No. 196 / Tuesday, October 10, 2000 / Rules and Regulations 60095 

total volume of U.S. egg product 

production in 1998 was about 3.2 

billion pounds. The increase in cost per 

pound of product associated with these 

proposed fees increases is $.00004. Even 

in competitive industries like meat, 

poultry, and egg products, this amount 

of increase in costs would have an 

insignificant impact on profits and 

prices. 

The industry is 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 reduce 

demand significantly 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 (Haung, Kao S., A Complete 

System of U.S. 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 to response to an 

increase in inspection fees. 

Executive Order 12988 

This final rule has been reviewed 

under Executive Order 12988, Civil 

Justice Reform. This final rule: (1) 

Preempts State and local laws and 

regulations that are inconsistent with 

this rule; (2) has no retroactive effect; 

and (3) does not require administrative 

proceedings before parties may file suit 

in court challenging this rule. However, 

the administrative procedures specified 

in 9 CFR 306.5, 381.35, and 590.320 

through 590.370, respectively, must be 

exhausted before 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 FMIA, PPIA, or EPIA. 

Additional Public Notification 

Public awareness of all segments of 

rulemaking and policy development is 

important. Consequently, in an effort to 

better ensure that minorities, women, 

and persons with disabilities are aware 

of this final rule, FSIS will announce 

and provide copies of this Federal 

Register publication in the FSIS 

Constituent Update. 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 

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. 

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. 138f; 7 U.S.C. 394, 

1622 and 1624; 21 U.S.C. 451 et. seq.; 21 

U.S.C. 601–695; 7 CFR 2.18 and 2.53. 

2. Sections 391.2, 391.3, and 391.4 are 

revised to read as follows: 

§ 391.2 Base time rate. 

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 $38.44 per hour per program 

employee. 

§ 391.3 Overtime and holiday rate. 

The overtime and 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 

$41.00 per hour per program employee. 

§ 391.4 Laboratory services rate. 

The rate for laboratory services 

provided pursuant to §§ 350.7, 351.9, 

352.5, 354.101, 355.12, and 362.5 is 

$60.44 per hour per program employee. 

PART 590—INSPECTION OF EGGS 

AND EGG PRODUCTS (EGG 

PRODUCTS INSPECTION ACT) 

3. The authority citation for part 590 

continues to read as follows: 

Authority: 21 U.S.C. 1031–1056. 

4. Section 590.126 is revised to read 

as follows: 

§ 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 

$41.00. 

5. In § 590.128, paragraph (a) is 

revised to read as follows: 

§ 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 $41.00. 

* * * * * 

Done at Washington, DC, on: October 3, 

2000. 

Thomas J. Billy, 

Administrator. 

[FR Doc. 00–25945 Filed 10–4–00; 3:37 pm] 

BILLING CODE 3410–DM–M 

DEPARTMENT OF THE TREASURY 

Office of Thrift Supervision 

12 CFR Parts 563b and 575 

[No. 2000–56] 

RIN 1550–AB24 

Repurchases of Stock by Recently 

Converted Savings Associations, 

Mutual Holding Company Dividend 

Waivers, Gramm-Leach-Bliley Act 

Changes 

AGENCY: Office of Thrift Supervision, 

Treasury. 

ACTION: Interim final rule; extension of 

comment period. 

SUMMARY: The Office of Thrift 

Supervision (OTS) is extending the 


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