[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, http://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]]

http://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 http://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, 
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.

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

0
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;

0
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.

0
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).

0
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).

0
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)

0
6. The authority citation for part 590 continues to read as follows:

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

0
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.

0
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

0
9. The authority citation for part 592 continues to read as follows:

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

0
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, 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.

0
11. In Sec.  592.520, remove the second sentence and add three 
sentences in its place to read as follows:


Sec.  592.520  Overtime rate.

    * * * The official plant must give reasonable advance notice to the 
inspector of any overtime service

[[Page 20229]]

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 Sec.  592.510(b), and the cost of living increases and 
percentage of inflation factors set forth in Sec.  592.510(c).

0
12. In Sec.  592.530, remove the second sentence and add three 
sentences in its place to read as follows:


Sec.  592.530  Holiday rate.

    * * * 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 Sec.  592.510(b), and the cost of 
living increases and percentage of inflation factors set forth in Sec.  
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