[Federal Register: July 25, 1996 (Rules and Regulations)]
[Page 38956-38989]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr25jy96-22]
[[pp. 38956-38989]] Pathogen Reduction; Hazard Analysis and Critical Control Point
(HACCP) Systems
[[Continued from page 38955]]
[[Page 38956]]
The estimated annual industry costs (not discounted) are summarized
in Table 2. These annual costs vary over the first four years as the
new HACCP-based program is undergoing its implementation phase. After
the initial four years, the recurring costs are estimated at a constant
$99.6 to $119.8 million per year. The present value of all industry
costs summarized in Table 2 for the 20-year time period is $968 to
$1,156 million as shown earlier in Table 1. This total of $968 to
$1,156 million ($0.97 to $1.16 billion) is the total industry cost for
the rule as shown in Table 3.
TABLE 2.--Summary of Annual Industry Costs--All Requirements
[$ Thousands]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Cost Category Year 1 Year 2 Year 3 Year 4 Year 5+
--------------------------------------------------------------------------------------------------------------------------------------------------------
I. Sanitation SOP's:
Plans and Training................................... 2,992
Observation and Recording............................ 8,345 16,691 16,691 16,691 16,691
II. E. coli Sampling:
Plans and Training................................... 2,627
Collection and Analysis.............................. 8,716 16,122 16,122 16,122 16,122
Record Review........................................ 406 752 752 752 752
III. Compliance with Salmonella Standards................ ................. 5,472-16,899 5,353-25,753 5,811-25,956 5,811-26,079
Compliance with Generic E. coli Criteria............. ................. (\1\) (\1\) (\1\) (\1\)
IV. HACCP:
Plan Development..................................... ................. 3,769 27,755 35,464 .................
Annual Plan Reassessment............................. ................. ................. 69 448 1,179
Initial Training..................................... ................. 1,270 8,284 18,435 .................
Recurring Training................................... ................. 64 542 1,877 2,799
Recordkeeping (Recording, Reviewing and Storing Data) ................. 3,050 18,479 42,478 54,097
V. Additional Overtime................................... ................. 189 837 1,711 2,125
----------------------------------------------------------------------------------------------
Total.............................................. 23,086 47,379-58,806 94,884-115,284 139,789-159,934 99,576-119,844
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Not Separately Estimated.
Table 3.-- Present Value of 20-Year Costs and Benefits
[$ Billions]
------------------------------------------------------------------------
Public health
Effectiveness in reducing pathogens in the benefits Industry
manufacturing sector (percent) ---------------- costs
Low High
------------------------------------------------------------------------
10.......................................... 0.71 2.66 0.97-1.16
20.......................................... 1.43 5.32 0.97-1.16
30.......................................... 2.14 7.98 0.97-1.16
40.......................................... 2.85 10.64 0.97-1.16
50.......................................... 3.57 13.30 0.97-1.16
60.......................................... 4.28 15.96 0.97-1.16
70.......................................... 4.99 18.61 0.97-1.16
80.......................................... 5.71 21.27 0.97-1.16
90.......................................... 6.42 23.93 0.97-1.16
100......................................... 7.13 26.59 0.97-1.16
------------------------------------------------------------------------
Note: Analysis assumes zero benefits until year 5. All elements
of the HACCP-based program will be in place 42 months after
publication of the final rule.
The public health benefits of this rule are discussed in detail in
Section IV. The benefits are based on reducing the risk of foodborne
illness due to Campylobacter jejuni/coli, Escherichia coli 0157:H7,
Listeria monocytogenes and Salmonella. Section IV concludes that these
four pathogens are the cause of 1.4 to 4.2 million cases of foodborne
illness per year. FSIS has estimated that 90 percent of these cases are
caused by contamination occurring at the manufacturing stage that can
be addressed by improved process control. This addressable foodborne
illness costs society from $0.99 to $3.69 billion, annually. The high
and low range occurs because of the current uncertainty in the
estimates of the number of cases of foodborne illness and death
attributable to the four pathogens. Being without the knowledge to
predict the effectiveness of the requirements in the rule to reduce
foodborne illness, the Department has calculated projected health
benefits for a range of effectiveness levels, where effectiveness
refers to the percentage of pathogens eliminated at the manufacturing
stage. The link between effectiveness and health benefits is the
proportionate reduction assumption which is explained in Section IV.
Because of the wide range in estimates for the cost of foodborne
illness, each effectiveness level will have a low and high estimate for
public health benefits. These estimates of public health benefits are
shown in Table 2, as the present value of a 20-year benefit stream.
The analysis assumes that benefits will begin to accrue in year
five. The five year lag leads to conservative benefit estimates since
the new HACCP-based inspection program will be fully implemented in 42
months, and benefits should accrue during those 42 months as well as in
the 1\1/2\ years that follow. Limiting the benefit estimates to four
pathogens also leads to conservative cost estimates. To the extent that
the proportionate reduction estimate may overestimate benefits, these
other factors provide conservative balance.
Net benefits exist for every cost and benefit combination
illustrated in Table 2 except for the case of 10 percent effectiveness
using the low benefit estimate. If the low benefit estimate is correct,
the new HACCP-based regulatory program would have to reduce pathogens
by 14 to 17 percent to cover the projected 20-year industry costs of
$968 to $1,156 million. For the high benefit estimate net benefits
begin to occur at an effectiveness level of 4 to 5 percent.
The costs summarized in Tables 1 and 2 have not been reduced to
account for firms that already have existing HACCP programs. FSIS does
not have a good estimate of the number of such firms.
C. Impact on ``Smaller'' Businesses
The final rule provides regulatory flexibility for smaller firms
consistent with the Regulatory Flexibility Act. For the slaughter
facilities, the generic E. coli sampling requirements vary depending on
the number of birds or animals slaughtered annually. This will
significantly reduce the microbial
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testing costs for smaller establishments which, under the proposed
rule, would have been required to test every species or kind they
slaughter every day on which slaughter of that species or kind occurs.
Under the final rule, the impact on smaller establishments is mitigated
by the change to base generic E. coli sampling requirements on annual
production and by a change to no longer require that every species or
kind be sampled. The costs to small establishments are also reduced
because the proposed carcass cooling and antimicrobial near term
requirements have been eliminated from the final rule and training
requirements are more flexible. The requirement to sample each variety
of raw ground product, which caused a heavier burden on small
establishments, has also been eliminated.
The regulatory burden on small establishments is eased by the
provisions which extend the time small establishments have to meet the
HACCP system requirements. The detailed cost analysis in Section V
outlines the methodology used in developing cost estimates and varying
regulatory requirements for the purpose of regulatory flexibility for
small establishments.
D. Effect on Retail Price
The preliminary analysis included an estimate that the total four-
year implementation costs represented only $0.0024 per pound of fresh
meat and poultry. This type of estimate helps put overall cost figures
into perspective in terms of the potential increase in food prices. A
large number of smaller processors responded very emotionally to the
low figure of $0.0024 per pound on the basis that the lack of economies
of scale in their businesses means their potential unit cost increases
would be far higher. This ``cost-per-pound'' analysis was not meant to
imply that the cost impact on all business would be the same. In a
competitive industry, the impact on overall retail price is, however,
an important indicator of net societal benefits. The four-year
implementation costs for the final rule represent $0.0011 to $0.0013
per pound based on 1993 production of 67.15 billion pounds (66.4
billion pounds federally inspected and 748 million state inspected) of
meat and poultry on a carcass weight basis. The annual recurring cost
of $99.6 to $119.8 million represents $0.0015 to $0.0018 per pound
based on 1993 production.
E. Impact on International Trade
The final rule will have an impact on countries and the
establishments in those countries that export meat and poultry products
to the United States. The inspection statutes require that imported
product be produced under an inspection system that is equivalent to
the U.S. inspection system. The equivalence of a country's system must
be established by the United States before product can be exported to
the United States. The notion of equivalence has been clarified under
the World Trade Organization (WTO) Agreement on Sanitary and
Phytosanitary measures. Under the WTO, all members have an obligation
to apply the principle of equivalence on importing countries.
Equivalence determinations are based on scientific evidence and risk
assessment methodologies.
In light of the WTO emphasis on the use of science to determine
equivalence, a number of countries are moving toward implementation of
HACCP systems. The preliminary analysis noted that a large portion of
the eligible exporting establishments are in countries that are
themselves in the process of implementing HACCP and complying with
their own country's HACCP requirements may achieve equivalence with the
requirements of this rule.
As of January 1, 1995 there were 1,395 establishments in 36
different countries certified to export meat or poultry products to the
United States. Canada (599 establishments), Denmark (125
establishments), Australia (111 establishments) and New Zealand (94
establishments) accounted for two-thirds of the 1,395 establishments.
These four countries were the source of 85 percent of the 2.6 billion
pounds of product imported during 1994. These four countries are
currently developing HACCP systems for their respective inspection
programs.
Half (18) of the 36 countries have fewer than 10 establishments
approved to export products to the U.S. These 18 countries represent a
total of 77 establishments, 5 percent of the total. Meeting the
equivalency requirements may present a problem for some of these
countries in the near term. Their inspection programs will have to meet
equivalency requirements for HACCP according to the implementation
schedule for domestic establishments, i.e., 18 months for large
establishments, 30 months for small establishments and 42 months for
very small establishments. This schedule should lessen the burden on
smaller establishments.
There are other factors that will affect the burden on foreign
establishments. As HACCP becomes the international norm, these
establishments will be required to implement changes to meet the
requirements of other countries implementing HACCP. Thus, their costs
may not be solely associated with U.S. requirements. Establishing
impact is further complicated because the U.S. requirements apply only
when they are preparing product that is to be exported to the U.S. This
product may represent only a small portion of total establishment
production.
Upon implementation of these regulations, FSIS will review other
countries' meat and poultry systems to ensure that exporting countries
have adopted comparable measures, which would entitle them to continue
exporting product to the United States. As other countries improve
their regulations by adopting provisions comparable to those contained
in this rule, it is expected that U.S. exports will similarly be
affected, i.e., the receiving countries will be closely reviewing
domestic exporting establishments to assure that they are meeting the
requirements of the importing country.
FSIS will continue to carry out its import inspection
responsibilities with a two-stage approach. The first stage is system
review, which consists of an evaluation of the laws, policies, and
administration of the inspection system in each eligible country. This
overall evaluation will include an assessment of the implementation of
HACCP supplemented by on-site reviews of individual establishments,
laboratories, and other facilities within the foreign system. The
``equivalency'' of foreign requirements will be determined at this
stage.
The second level of review involves port-of-entry inspection by
FSIS inspectors to verify the effectiveness of foreign inspection
systems. Using statistical sampling plans based on the foreign
establishment's history and the nature of the product, FSIS will
continue to give greater scrutiny to shipments posing the highest risk.
Products that do not meet U.S. requirements, which includes having been
produced under a HACCP or HACCP-equivalent system, will be refused
entry. FSIS has concluded that requiring HACCP systems in combination
with the two-stage inspection approach will better ensure the safety of
imported meat and poultry products.
All countries exporting raw products to the U.S. must develop and
implement performance standards that are equivalent to the pathogen
reduction performance standards for Salmonella. They must also be able
to demonstrate that they have systems in place to assure
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compliance with the standards. As with any other type of standard, FSIS
could choose to test imported product for Salmonella at port-of-entry
to verify the effectiveness of the foreign inspection system.
With respect to the specific requirements for sampling generic E.
coli to validate control of slaughter and sanitary dressing procedures,
it will be necessary for all foreign countries to demonstrate that they
have an equivalent procedure to verify that they are controlling their
slaughter and sanitary dressing processes.
There were several comments related to trade issues. Most of the
comments concerning the impact on exports dealt with the proposed
requirement for antimicrobial treatment of U.S. product. That proposed
requirement raised particular concerns because the European Union
member states and Canada restrict the use of certain antimicrobials on
meat and poultry carcasses. The concerns raised in the comments are no
longer an issue because the final rule does not require the use of
antimicrobials. The final rule will affect exports only if a company
has difficulty meeting the microbial performance criteria without using
an antimicrobial. One option discussed in the proposed rule was that
hot water would be considered to be an acceptable antimicrobial
treatment, and that would be acceptable to Canada and the members of
the European Union. The public comments also indicated that Trisodium
Phosphate (TSP) is approved for use in Canada and the United Kingdom
and is being considered by the European Union, Australia, and New
Zealand.
Comments related to imports were concerned about the procedures
FSIS would use to determine equivalence with the new U.S. requirements.
As a condition of the NAFTA Treaty and the GATT Treaty, the United
States has agreed to allow imports from countries that have systems of
inspection equivalent to that of the United States. FSIS is considering
alternative methods for determining that a foreign country's system of
inspection can assure that the establishments within that system are
using a process control system equivalent to the HACCP-based inspection
system outlined in the final rule.
F. Impact on Agency Costs
Implementation of this rule will lead to both one-time nonrecurring
costs and recurring costs for FSIS. There are three categories of one-
time nonrecurring costs: (1) Training, (2) in-establishment
demonstration projects, and (3) laboratory renovation. In order to
implement the rule, FSIS will provide training to in-establishment
personnel in two segments. The first training segment will cover issues
related to sanitation standard operating procedures and generic E. coli
sampling and testing requirements. The estimated costs for this
activity is $3.6 million in the first year of implementation. The
second training segment will cover issues related to the implementation
of HACCP and is estimated the cost $3.6 million spread over the second
and third year of implementation. FSIS will utilize the train-the-
trainer approach to minimize the costs of these initiatives. FSIS is
also committed to working with States and industry to sponsor HACCP
demonstration projects for small businesses. Pursuant to implementation
of the HACCP rule, microbiological sampling and testing will increase
dramatically. In the period from 1990 to 1995, FSIS averaged
approximately 33,000 analyses for microbiology per year. This is
estimated to increase to 125,000 analyses per year after HACCP
implementation. In order to accommodate this increase, FSIS will
renovate its field laboratory facilities to expand their capacity,
improve ability to test for a broader range of pathogens, and purchase
new equipment. FSIS estimates that the planned renovation will cost
$1.5 million.
By implementing this rule, FSIS will incur recurring costs
associated with increased microbiological testing and upgraded
inspector salaries. FSIS estimates that microtesting costs will
increase approximately $3.0 million annually. Of this amount $2.0
million is needed for equipment, supplies, and shipping costs to
conduct Salmonella testing, $0.5 million for microtesting conducted to
verify HACCP systems, and $0.5 million for personnel necessary to
handle the increased workload. Under HACCP-based inspection, FSIS
personnel will be required to assume greater responsbility for more
complex food inspection tasks. Slaughter inspectors will be required to
perform health and safety tasks, such as taking microbiological
samples, and verifying HACCP systems. Processing inspectors' roles will
take them out of the establishment and put them into retail and market
place settings to take microbiological samples, and to ensure meat and
poultry products are handled in a manner to that minimizes the growth
of pathogenic organisms. FSIS estimates that compensating inspectors
for assuming more complex food safety tasks will cost $1.6 million per
year.
G. Impact on State Programs
Comments stated that FSIS failed to adequately consider the cost of
the changes to State programs and that FSIS was increasing the resource
demands for State programs without providing adequate funding. The
preliminary analysis did not address the impact on State programs.
However, FSIS recognizes that the 26 States operating their own meat
and poultry inspection programs will likely have to substantially
modify their programs after the HACCP/Pathogen Reduction regulation is
finalized to remain ``at least equal to'' Federal inspection programs
as required by the FMIA and PPIA. During the regulation's
implementation period, FSIS will be using the Agency's State-Federal
Program staff to assist the States in bringing the necessary changes to
the State inspection programs. Although FSIS has requested some
additional funds to implement this rule, FSIS has also acknowledged
that implementation of this rule will require eliminating some tasks,
conducting other tasks differently and streamlining the organization in
order to free up resources to fully address the new requirements. FSIS
believes that the same type of restructuring or reprogramming will take
place within the State programs. This does guarantee, however, that all
States with inspection programs will be able to implement the necessary
program changes without additional funds. FSIS believes, however, that
with FSIS assistance and with the flexibility provided under the
``equal to'' provisions, most of the States should be able to modify
their programs with minimal additional funding. To the extent that
there are any additional costs, the State inspection programs are
eligible to receive up to 50 percent Federal matching funds.
H. Consumer Welfare Analysis
It is likely that at least some of the costs of the new HACCP-based
regulatory program will be passed on to consumers in the form of higher
prices. Even if costs are fully reflected in retail prices, the impact
on consumers and consumption will be small. Retail costs are not
expected to increase more than 0.02 percent. Retail demand for meat and
poultry is inelastic. A likely range is -0.25 to -0.75. This suggests
changes in quantity demanded of less than 0.02 percent. Given that
annual per capita meat and poultry consumption is about 211 pounds,
retail weight, the impact on individual consumption will be less than
\1/10\th of a pound per year. In aggregate, with a high impact
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scenario, consumption would decrease by about 50 million pounds. These
impacts may be overstated if meat and poultry producers pass some costs
back to livestock and poultry producers. Improved consumer confidence
in the safety of meat and poultry could offset price driven decreases
in consumption.
IV. Analysis of Public Health Benefits
A. Introduction
This section addresses the methodology used to develop the
estimates for public health benefits that, for the purpose of this
final Regulatory Impact Assessment, have been defined as the reduction
in the cost of foodborne illness attributable to pathogens that
contaminate meat and poultry products at the manufacturing stage. This
section is organized around the Agency's responses to the public
comments related to benefits. The first part of this section addresses
the general comments related to risk assessment. The Agency has
responded to these general requirements by providing an overall summary
of the current state-of-the-art with respect to risk assessment for
foodborne pathogens. The second part of the discussion (see subsection
titled ``Analysis of Comments on Public Health Benefits'') addresses
the more specific comments on the methodology used to estimate benefits
in the preliminary analysis.
Several comments suggested that FSIS has not conducted an adequate
risk assessment and/or should conduct a thorough risk assessment before
proceeding with the current rulemaking. More focused comments assert
that the relationship between pathogen reduction at the manufacturing
stage and foodborne illness reduction is unknown. Those comments
suggest that establishing that relationship requires a quantitative
risk assessment, i.e., an estimate of the probability of adverse health
effects (foodborne illness) given a particular level of a hazard
(pathogens at manufacturing stage).
The preliminary analysis and this final RIA recognize that the
relationship is unknown and acknowledge that there are significant data
gaps regarding both likelihood and magnitude of illness and numbers of
foodborne pathogens. These data gaps mean that multiple assumptions
must be made in order to calculate the probabilities of risk, and FSIS
is concerned with this tremendous uncertainty. However, the agency is
developing quantitative assessments and believes that these will become
the basis on which to make future regulatory decisions. In this
rulemaking, FSIS estimates of the risk of foodborne disease linked to
specific pathogens are based upon the best judgement of nationally
recognized experts in infectious disease, epidemiology, microbiology,
and veterinary medicine. FSIS is also relying on a qualitative
estimation of risk as expressed in publications and summary reports
from the CDC, other public health agencies, and special panels, such as
the National Advisory Committee on Microbiological Criteria in Foods
and those established by the NAS. Based on this sizable body of
information and scientific judgement, FSIS is proceeding to develop
benefit estimates using the assumption that a reduction in pathogens
leads to a proportionate reduction in illness and death. The benefits
analysis could have used a more conservative relationship estimate,
e.g., a reduction in pathogens leads to a reduction in illness that is
less than proportional. However, given the current level of knowledge,
FSIS views the proportional assumption as most appropriate at present.
The Department has initiatives in place that will begin to relate
pathogen levels at inspected establishments to incidence of human
illness and support quantitative risk assessment (see Section IV-D on
FSIS Data Initiatives). The present paucity of data to support a risk
model for the major foodborne pathogens causing human disease limits
the usefulness of quantitative risk assessment in the regulatory arena
of meat and poultry inspection. It is unlikely that any single
numerical constant will adequately describe the dose-response
relationships for all pathogens associated with all of the products
that FSIS regulates, given the complexity of possible interactions of
factors associated with the host, the pathogenic strain, the diet, and
the environment (CAST, 1994).
The Federal Crop Insurance Reform and Department of Agriculture
Reorganization Act of 1994 (P.L. 103-354) now requires that for each
proposed major regulation (i.e. economic effects of at least $100
million a year and effects on human health, safety, or the environment)
the Department publish an analysis of the risks addressed by the
regulation. While this statute does not apply to this final rule, FSIS
is providing a qualitative estimation of risk (Tables 4 and 5) and a
recommendation to manage risk using HACCP in meat and poultry
inspection programs. Concurrently, scientists from FSIS and USDA's
Agricultural Research Service (ARS), Economic Research Service (ERS),
and modelers from academia and industry continue to develop risk models
which blend failure analysis, predictive microbiology, and other models
into the framework described by the NAS (NRC, 1983). FSIS believes this
approach is flexible and responsive to new data necessary to fully
document risks of foodborne diseases.
B. FSIS Risk Assessment
Following the publication of the 1985 National Academy of Sciences
(NAS) study on the scientific basis for meat and poultry inspection,
FSIS requested that the National Research Council of NAS conduct a
follow-up study that included the objective of developing a risk
assessment model for the poultry production system. The subsequent
report, ``Poultry Inspection: The Basis for a Risk-Assessment
Approach'' was published by the National Academy Press in 1987. The
1987 study concluded that the present system of inspection provides
little opportunity to detect or control the most significant health
risks presented by microbial agents that are pathogenic to humans. The
study also concluded that current databases can serve as the basis for
a comprehensive, quantitative risk assessment only for certain well-
characterized chemical residues.
The committee conducting the study also concluded that their report
did constitute a qualitative risk assessment that could be useful for
many purposes, including the evaluation of inspection strategies. That
assessment found: ``There is evidence linking disease in humans to the
presence of pathogens on chickens. For example, epidemiological studies
indicate that approximately 48% of Campylobacter infections are
attributable to chicken. Data also suggest that chicken is probably an
important source of salmonellosis in the United States.'' Based on
these and other findings, the committee recommended that FSIS ``modify
the existing system so that it more directly addresses public health
concerns.'' FSIS believes that the implementation of HACCP programs at
slaughter for meat and poultry is such a ``modification'' of the food
safety system which will address human health hazards, particularly
foodborne diseases.
C. Risk Assessment Framework
The National Research Council (1983) presented a framework for risk
assessment that has become a standard paradigm to organize risk
assessments for chemical and microbial hazards. The framework,
consisting of hazard identification, dose-response assessment, exposure
assessment, and risk characterization, is flexible and can accommodate
many different modeling strategies. The major distinction
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between foodborne microbial risk assessments and chemical risk
assessments may be the additional uncertainties of microbial growth and
survival in food prior to consumption. Survival of pathogens present in
a raw food and after cooking can be modeled using predictive
microbiology methods. These models can also address the growth of
pathogens with time and temperature abuse of raw and cooked foods.
One of the first U.S. publications on the application of predictive
microbiology to microbial risk assessment (Buchanan & Whiting, 1996)
included estimations of risk of salmonellosis for several ``what-if
scenarios'' as examples of potential time and temperature abuses of
partially cooked food. The predictive microbiology model was linked to
a published dose-response model for salmonellosis (Haas, 1983) to
calculate a risk estimate. The dose-response model was developed by
empirically fitting data from human feeding studies conducted at high-
dose challenges with a number of pathogenic strains of Salmonella to
the ``beta poisson'' model (Haas, 1983). The authors generated risk
estimates for selected cooking and abuse scenarios, but recognized that
the risk of illness is zero when the pathogen is not present in the
sample even with unsafe food handling. HACCP programs at slaughter are
expected to affect pathogen presence and levels before potential time
and temperature abuses can occur. Therefore, changes at slaughter, in
the duration of cooking, and final storage conditions of the food exert
a tremendous impact upon the model outcomes.
An unpublished draft risk model is in development as a research
endeavor by Agriculture and Agri-Food Canada and Health Canada. A
variety of modeling approaches were organized within the 1983 NRC
framework to estimate risk of human illness from E. coli 0157:H7 in
ground beef. The draft risk model includes many stochastic variables to
account for the variability and uncertainty associated with the inputs
and assumptions of the model. The authors are developing the model to
identify current limitations to the construction of quantitative models
which accurately describe the risk of foodborne disease along the farm
to fork continuum.
These recent quantitative risk assessment efforts are an
encouraging beginning and serve to illustrate the tremendous
uncertainties created by insufficient data describing processes
throughout the farm to table continuum that contribute to risk.
Additional uncertainties surround assumptions based on epidemiologic
data for human illness. For example, recent data in the U.S. indicates
a growing number of outbreaks of E. coli 0157:H7 disease linked to
sources other than ground beef. The ecology of the organism on the
farm, in the bovine gastrointestinal tract, and in irrigation,
recreational, and drinking waters is largely unknown. Additionally, the
primary sources of E. coli 0157:H7 causing sporadic disease may remain
undercooked hamburger and may differ from vehicles causing outbreaks,
as has been documented for Campylobacter (CDC, 1988). Outbreaks of
campylobacteriosis have been caused primarily by unpasteurized milk and
contaminated water, yet the overwhelming majority of infections are
sporadic and have been linked to undercooked chicken. Control
strategies to reduce both outbreak and sporadic case numbers for both
of these pathogens may require greater understanding of vehicles of
disease and more information than is currently available.
FSIS concludes that risk models for foodborne illnesses are
necessarily based largely on assumptions because scientific data
describing key foodborne disease processes have not been developed. The
models are extremely useful to identify basic research needs that might
reduce the uncertainty associated with the inputs and assumptions of
the models. The agency is proposing initiatives to generate data which
may reduce uncertainties associated with modeling the risk of foodborne
diseases. However, application of microbial risk assessment models to
regulatory decision-making appears premature at this time. The
following is a summary of the availability and limitations of data
supporting risk assessment for foodborne pathogens:
1. Hazard Identification
The Agency selected from the pathogens listed in Tables 4 and 5 the
three most common enteric pathogens of animal origin: Campylobacter
jejuni/coli, E. coli 0157:H7, Salmonella and one environmental pathogen
Listeria monocytogenes for consideration in risk assessment. FSIS
believes that these four pathogens may contaminate meat and poultry
food vehicles at slaughter and can be reduced through improved process
control in the manufacturing sector. Available data on estimated human
disease incidence are summarized in Table 4. Data on human disease
attributable to proven as well as epidemiologically linked pathogens
and food vehicles are presented in Table 5. Additional and more precise
information for this section regarding estimated national disease
incidence and disease severity and duration is expected on these
pathogens from the sentinel site surveillance initiative.
2. Exposure Assessment
Rarely can actual exposure to a specific strain of foodborne
pathogen be quantified with certainty in foodborne disease outbreaks.
Microbes in food are known to be non-homogeneously distributed,
imposing additional uncertainty due to sampling error upon the
analytical variability of the methods for detection and quantification
of microbes in foods. The outbreak strain may or may not be detected in
the feces of diarrheal cases or in leftovers or companion samples from
suspected lots. The levels detected in leftovers or companion samples
from the same lot of food may or may not be representative of the
serving that was prepared and consumed since the microbial numbers vary
with time and temperature conditions and the initial microbial
populations. The amount of the serving consumed may not be known.
The FSIS baseline studies provide data on occurrence of pathogens
(likelihood) and levels (magnitude) in uncooked meat and poultry
products at slaughter and raw ground processing. Data for likelihood
and magnitude of pathogens in the distribution, preparation, and
consumption phases of the farm-to-fork continuum of food production are
sparse. Predictive microbiology models may be the most cost-effective
method to deduce possible exposure scenarios in meat and poultry beyond
the slaughter phase that may result in foodborne illness. The
likelihood that the selected scenarios of improper cooking and abuse
actually occur among U.S. consumers may not be measurable, but the
scenarios may be useful in modification of behaviors that pose
increased risk to consumers.
3. Dose-Response Assessment
The relationship between the dose of a pathogen and response in the
host, when known, can vary greatly for foodborne pathogens. Human
feeding studies with foodborne pathogens were largely conducted several
decades ago with small numbers of healthy adult males. One study
reported both ill and asymptomatic volunteers who had consumed up to
1,000,000,000 pathogenic Salmonella. Outbreak data for other Salmonella
serotypes in food vehicles suggest a range of infective doses from one
cell to 1,000,000,000,000 cells (Blaser & Newman, 1982). Fatty food
vehicles, including some meat and
[[Page 38961]]
poultry products, are thought to protect enteropathogens from stomach
acids and digestive enzymes that might otherwise reduce the dose to the
intestinal tract and reduce the likelihood of disease. The effects of
competition of the pathogen with the large indigenous microbial
populations in food (ICMSF, 1980) and in the human gastrointestinal
tract (Rolfe, 1991) may reduce the likelihood and/or the severity of
foodborne disease.
Even carefully controlled volunteer feeding experiments at doses up
to one billion organisms per volunteer have shown variability in the
infectious dose of one pathogen for individuals within a group of
seemingly healthy, young adults. Extrapolation of empirical models of
effects at high doses to low doses typical of properly handled food may
or may not be appropriate. The dose-response curve for healthy adult
males may not be useful in estimating dose-response relationships for
the general population or sensitive sub-populations. The data available
from human feeding studies were generated from very few species and
strains of bacterial pathogens, excluding E. coli 0157:H7. Dose-
response modeling is crucial to microbial and chemical risk
assessments. FSIS believes that application of dose-response models in
food safety regulation requires careful examination of the validity of
the assumptions and inputs of the model and of the plausibility of the
model as a descriptor of foodborne disease processes.
4. Risk Characterization
The integration of exposure and dose-response models is expected in
risk characterization, along with sensitivity and uncertainty analyses
(Burmaster & Anderson, 1995) for the risk model. Perhaps of greater
significance than the numerical estimate of risk is the uncertainty
associated with the estimate. A fully developed risk characterization
would include risk estimates and sensitivity/uncertainty analyses for
alternative models and assumptions. FSIS is collaborating with
scientists in academia, the Agricultural Research Service, the Animal &
Plant Health Inspection Service, the Economic Research Service, and the
Office of Risk Assessment and Cost Benefit Analysis to develop and
validate a risk assessment model for a single pathogen in a single meat
product. This model may be modified for other specific pathogens of
concern. The expectation of a generic model for all foodborne disease
agents in all products does not appear promising based on differences
in pathogenesis of bacterial species and strains and in human
sensitivity and pathology.
FSIS continues to evaluate new information on foodborne pathogens
and on risk assessment methods and tools in accordance with the FSIS
public health mission. The NAS Report, the CAST Report and the 1995
Conference recognize HACCP as a system to reduce the likelihood of
foodborne illness. The CAST Task Force also concluded that ``the
efficacy of a HACCP system depends on the rigor and consistency with
which it is designed and implemented and the use of (a) critical
control point(s) that will control pathogens.''
D. FSIS Data Initiatives
The 1994 report, ``Foodborne Pathogens: Risks and Consequences,
CAST Task Force Report No. 122, September 1994'' concluded that ``a
comprehensive system of assessing the risks of human illness from
microbial pathogens in the food supply has yet to be devised.'' They
cited the limitations of the current food safety information database
and the difficulty in accumulating dose response and minimum infective
dose data. A recent multidisciplinary conference, ``Tracking Foodborne
Pathogens from Farm-to-Table, Data Needs to Evaluate Control Options'',
carefully reviewed current databases and confirmed limitations outlined
in the CAST Task Force report.
FSIS has established initiatives to improve the quality and
quantity of data in two major areas. First, FSIS is working with the
Food and Drug Administration (FDA) and the Centers for Disease Control
and Prevention (CDC) to establish an active sentinel site surveillance
system for the major causes of foodborne illness. This project is
designed to accumulate data on the incidence of foodborne illness by
pathogen and by food.
Second, the Agency has been developing baseline data for pathogen
levels on major food animal species at the time of slaughter. The
baseline data will allow the Agency to detect changes in the overall
nation-wide pathogen levels. The National Baseline program was
initiated in 1992 to provide information on the type and level of
microbiological contamination on raw products under Federal inspection.
Each sample collected is analyzed for nine microorganisms or groups of
organisms. Microbiological baseline data are now available for steers
and heifers, cows and bulls, and broiler chickens.
If sufficient data on both pathogen levels and foodborne disease
epidemiology result from current and future initiatives, FSIS should be
able to develop models showing how these two variables are related for
different pathogens. These models should then permit/facilitate a
quantitative estimate of risk. Such data are essential for FSIS to
evaluate the effect of control measures on both pathogens levels and on
foodborne illness.
E. ARS Food Safety Research Program
The Agricultural Research Service (ARS) administers a food safety
research program that is currently funded at approximately $45 million
per year. This program addresses problems in four different areas;
pathogen reduction, mycotoxins, residues, and natural toxins. The
reduction of microbial pathogens in food products of animal origin is
the most pressing food safety problem today. Consequently, the pathogen
reduction component is the largest of the four areas and is currently
funded at $18.2 million annually. The ARS research in pathogen
reduction addresses both preharvest and animal production, and post
harvest problem areas, with approximately equal funding for each.
Ongoing ARS research will help FSIS improve its capability for
performing quantitative risk assessment in the area of foodborne
pathogens or improve the ability to predict the effectiveness of new
pathogen reduction technologies. Ongoing projects include the modeling
of bacterial growth or thermal death times which will help set
standards for meat and poultry products. Ongoing projects will also
provide new laboratory screening or confirmatory methods. Other
projects provide and/or evaluate technology and management methods
which can help producers achieve lower contamination levels in animals
presented for slaughter, such as vaccines or competitive bacterial
cultures to prevent pathogens in live animals. There are also
technology and management methods for use in slaughter and processing
establishments, such as, organic acids for use in carcass sanitation,
improvements to the feather picking operation for poultry, washing of
trailers to reduce microbiological contamination, and establishment of
guidelines on the microbiological safety of recycling cooling solutions
for ready-to-cook meat and poultry products. In many cases the research
may provide the scientific basis for developing and improving
technology, for example, the nature of bacterial attachment to various
meat surfaces.
FSIS can and does forward very specific research requests to ARS.
In preparation for this final rule, FSIS requested that ARS compare the
results
[[Page 38962]]
from different microbial sample collection techniques, sponging versus
excision at one versus three carcass sites. These studies are currently
being conducted on both cow/bull and market hog carcasses. There are
other specific ARS projects that will help provide the scientific basis
for HACCP through risk assessment, predictive microbiology, and
pathogen reduction interventions for several different bacterial
pathogens which must be controlled to assure the safety of meat and
poultry.
These projects include: (1) Development of models to predict the
growth rates, survival times, and thermal death rates for microbial
pathogens potentially present in foods, including meat and meat
products. (Microbiological modeling is time consuming and expensive
because it requires that the data be quantified, that is, that numbers
of bacteria are obtained, rather just the knowledge of the presence or
absence of a pathogen under the conditions of the test.) The
microorganisms being studied include E. coli O157:H7, Listeria
monocytogenes, and Salmonella. These models are written into personal
computer software that gives FSIS a readily useable tool to help
evaluate proposed meat processes and assess out-of-process events.
Refining predictive models has the goal of linking an entire process
from raw ingredients to distribution of finished product. A specific
project is to model the survival of E. coli O157:H7 during the
manufacture of uncooked, fermented meat products. Using the information
obtained, ARS will closely collaborate with other USDA agencies to
develop strategies for risk reduction using the various processing
techniques, and to create risk assessment models.
(2) Modeling studies to predict the thermal inactivation of spore-
forming and non-spore-forming bacterial pathogens of both cooked and
ready-to-eat products. These studies will be extended to the cooling of
these products to ensure that there is no potential for growth of
Clostridium botulinum and C. perfringens.
(3) Determination of the long-term effects (21 days of storage at
refrigerated temperatures) of organic acid treatment of red meat on
some key pathogens (E. coli O157:H7, Listeria, and Clostridium), as
well as on spoilage bacteria (mesophilic aerobes, lactic acid bacteria,
and pseudomonads).
(4) Delineation of the parameters affecting the antibacterial
activity of organic acids. These include tissue type (pre-rigor, post-
rigor, frozen post rigor), inoculum type (pure culture or inoculated
feces), inoculum level and the temperature of spray wash at meat
surface. These results should clarify inconsistent reports on
antibacterial activity of organic acids and also define optimum
conditions to maximize the antibacterial activity of organic acids.
(5) The correlation of the Campylobacter levels in broilers from
the chill tank with their Campylobacter levels during production.
F. Analysis of Comments on Public Health Benefits
There were many comments on the methodology used to estimate public
health benefits in the preliminary analysis. This methodology used a
series of estimates or assumptions based on incomplete data related to
the six following areas:
<bullet> Incidence of foodborne illness
<bullet> Cost of foodborne illness
<bullet> Percentage of foodborne illness and cost of foodborne
illness attributable to meat and poultry products
<bullet> Pathogens addressed by the rule
<bullet> Effectiveness of rule in reducing pathogens
<bullet> Estimated reduction in cost of foodborne illness related
to reduction of pathogens
To facilitate discussion of the issues raised in comments, the
issues are addressed organized by these six areas.
1. Incidence of Foodborne Illness
Table 4 presents the most recent estimates on the incidence of
illness and death for selected pathogens along with the latest
estimates on the percentage of illness and death which is foodborne. As
discussed in the preliminary RIA, Table 4 includes the ``best
estimates'' when precise data are not available. Many of these
estimates are based on the landmark CDC study by Bennett, Holmberg,
Rogers, and Solomon, published in 1987, which used CDC surveillance and
outbreak data, published reports, and expert opinion to estimate the
overall incidence and case- fatality ratio for all infectious and
parasitic diseases. Estimates on the foodborne percentage of illness
and death for bacteria in Table 4 are all based on CDC data. The
resulting estimates for the number of foodborne cases and deaths are
presented in the second and third columns of Table 5.
The benefits for the preliminary analysis and this final RIA are
calculated for the three most common enteric pathogens of animal
origin: Campylobacter jejuni/coli, E. coli O157:H7, Salmonella and one
environmental pathogen Listeria monocytogenes. FSIS believes that these
four pathogens can be reduced through improved process control in the
manufacturing sector.
Although Clostridium perfringens and Staphylococcus aureus also
cause a significant number of foodborne illnesses, they are not
included in the benefits analysis because it is not clear that the
HACCP-based regulatory program, which focuses on federally inspected
processing, will significantly affect the incidence of disease caused
by these organisms. Staphylococcus aureus usually enters the food chain
through food handlers in restaurants and other commercial kitchens.
Although C. perfringens may enter the food chain through the slaughter
process, it is so ubiquitous in the environment that FSIS will not
assume that controls at slaughter will be effective against this
pathogen.
One commenter questioned why the Agency has not addressed the
public health problem of toxoplasmosis given the Table 5 estimate of
$2.7 billion in annual costs. FSIS believes that while process control
may help decrease the spread of cysts during boning and cutting
operations, most of the Toxoplasma gondi cysts are internal to
infective muscle tissues and are not addressable by process control.
Therefore, FSIS is making the more conservative assumption to exclude
this pathogen in the benefits estimate of disease averted.
Many comments suggested that the large range in the illness
incidence estimates demonstrates that there are insufficient data on
which to base a new regulatory program. Historically, the lack of
quantitative data on benefits and specific health risks have meant that
health and safety regulations have required decisionmaking under
uncertainty and have required the decisionmaker to balance the need to
act with the need for additional or improved data. Compared to such
issues as whether a chemical is a potential human carcinogen or whether
low levels of air pollutants cause adverse health effects, the health
effects of enteric pathogens are relatively well documented. If the
pathogens enter the food supply, they do, under certain conditions,
cause foodborne illness. If their presence can be prevented, no amount
of temperature abuse, mishandling or undercooking can lead to foodborne
illness.
The Agency believes that the existing estimates on foodborne
illness are adequate to conclude that a substantial and intolerable
public health problem exists. Furthermore, existing estimates are
appropriate for developing estimates on the cost of foodborne illness
attributable to meat and poultry. The
[[Page 38963]]
Agency notes that similar estimates on the incidence of foodborne
illness have been published by scientists from ERS in peer-reviewed
journal articles (see footnotes to Table 5) and by the 1994 CAST Task
Force.
The above statement that Table 4 includes the most recent estimates
of the incidence of illness and death requires further explanation in
the case of Listeria monocytogenes. The estimates of 1,795-1,860 cases
of listeriosis and 445-510 deaths are the ones used in the latest cost
of illness study conducted by ERS. ERS is in the process of publishing
a comprehensive documentation for the estimates of cost of illness for
1993. In their draft document they acknowledge that the estimate for
listeriosis cases originates from an extrapolation to the U.S.
population of incidence data from a CDC-conducted surveillance study of
six geographic regions in 1986 and 1987 (Gellin et al. 1987). They also
note that (Tappero et al. 1995) found that the incidence of listeriosis
has decreased since the 1960's and that projections from the
surveillance data suggest that there were 1,092 listeriosis cases and
248 deaths in 1993. ERS did not modify their cost of illness estimates
because Tappero et al., was published after their analysis was
concluded.
FSIS considered modifying the cost of illness estimates for this
final analysis but decided to use the estimates in Tables 4 and 5
because (1) They are the figures that will appear in the upcoming ERS
publication and, (2) updating the listeriosis estimates would have
minimal impact on the overall cost of illness estimates. Considering
the overall range and uncertainties involved in the cost of illness
estimates, the change in listeriosis estimates has negligible impact on
the regulatory analysis information conveyed through the potential
benefits estimate.
The Agency also recognizes that in using the 1993 estimates for
incidence of foodborne illness, the benefits analysis has not accounted
for possible reductions in foodborne illness attributable to the rule
that mandated safe handling statements on labeling of raw meat and
poultry products. The rule mandating safe handling instructions became
effective on May 27, 1994. Thus, it can be argued that the incidence of
foodborne illness for 1994 through the present should reflect the
effectiveness of the 1994 labeling requirement in reducing the
incidence of illness.
FSIS is not aware of any quantitative evaluation of the
effectiveness of safe handling labeling. Two recent surveys indicate a
high level of awareness, but these surveys do not contain findings that
can be translated into changes in consumer behavior. A recent
Associated Press poll found that 9 in 10 Americans say they follow the
safe-handling instructions. This poll, conducted in April 1996,
included 1,019 randomly selected adults. This was a telephone survey
conducted by ICR Survey Research Group. A November 1995 survey
conducted by Wegman Food Markets in Buffalo, Rochester, and Syracuse
found that 67.9 percent of respondents indicated they had read the safe
handling information. The Wegman's survey found that most household
meat preparers rely on color of meat or clarity of juices rather than
temperature to determine when meat has been cooked thoroughly.
In this analysis, FSIS has not attempted to adjust the 1993
baseline to account for safe handling labeling. The potential effect of
the 1994 regulation is one of many factors that could be affecting the
current incidence or cost of illness. A May 1996 GAO study on foodborne
illness notes that food safety and public health officials believe that
the risk of foodborne illness is increasing. If they are correct, the
1994 labeling rule may be slowing the growth rather than reducing the
absolute level.
There are many other factors that could have been incorporated into
the baseline for the analysis such as population growth and increases
in the cost of medical care. FSIS believes that attempts to adjust the
cost of illness baseline to account for factors such as inflation,
possible increases in foodborne illness due to behavior change or
population increases, and possible decreases due to inventions such as
safe handling labels are more likely to be misleading than informative
given the level of uncertainly and wide range in existing estimates.
2. Cost of Foodborne Illness
The fourth column of Table 5 shows that the 1993 estimated cost of
foodborne illness by pathogen or parasite was between $5.6 and $9.4
billion. These cost of illness estimates have been developed by ERS in
conjunction with CDC over the past 15 years. As indicated in footnotes
to Table 5, the results of that work have been frequently published in
peer-reviewed journals.
There were only a few public comments on the proposed rule which
addressed the methodology used for estimating the cost of foodborne
illness. Some comments argued that the public health benefit estimates
are low because of the low value-of-life factor used in the estimates
for the cost of foodborne illness.
ERS intentionally used a conservative method to estimate the value
of a statistical life (VOSL) acknowledging the controversy over valuing
lives. ERS used Landefeld and Seskin's VOSL estimates and recognizes
that the cost of illness estimates would be substantially higher if
they used alternative methods. For example, Viscusi (1993) summarized
the results of 24 principal labor market studies and found that the
majority of the VOSL estimates lie between $3 million and $7 million
per life. A survey of the wage-risk premium literature on the
willingness to pay to prevent death concluded that reasonably
consistent estimates of the value of a statistical life range from $1.6
million to $6.5 million dollars (1986 dollars) (Fisher et al. 1989).
Updated to 1993 dollars using the change in average weekly earnings,
Viscusi's range becomes $3.2 million to $7.6 million per VOSL and
Fisher's range becomes $2.0 million to $10.4 million dollars for each
statistical-life lost. Viscusi and the Fisher estimates are greater
than the highest Landefeld-Seskin (LS) VOSL estimate of $1,584,605 in
1993 dollars (estimate for a 22 year old).
Table 4.--Sources of Data for Selected Pathogens, 1993
--------------------------------------------------------------------------------------------------------------------------------------------------------
Estimated
Pathogen Estimated number of number of Source(s) for case and death Percent Source
cases deaths estimates foodborne
--------------------------------------------------------------------------------------------------------------------------------------------------------
Bacteria:
Campylobacter jejuni or coli.. 2,500,000 200-730 Tauxe............................... 55-70 Tauxe et al.
Clostridium perfringens....... 10,000 100 Bennett et al....................... 100 Bennett et al.
Escherichia coli O157:H7...... 10,000-20,000 200-500 AGA Conference...................... 80 AGA Conf./CDC.
Listeria monocytogenes........ 1,795-1,860 445-510 Roberts and Pinner.................. 85-95 Schuchat.
[[Page 38964]]
Salmonella.................... 800,000-4,000,000 800-4,000 Helmick et al./Bennett et al. 87-96 Bennett et al./Tauxe & Blake.
Staphylococcus aureus......... 8,900,000 7,120 Bennett et al....................... 17 Bennett et al
Parasite:
Toxoplasma gondii............. 4,111 82 Roberts et al....................... 50 Roberts et al.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Sources: American Gastroenterological Association Consensus Conference on E. coli O157:H7, Washington, DC, July 11-13, 1994. Bennett, J.V., S.D.
Holmberg, M.F. Rogers, and S.L. Solomon. 1987. ``Infectious and Parasitic Diseases,'' In R.W. Amler and H.B. Dull (Eds.) Closing the Gap: The Burden
of Unnecessary Illness. Oxford University Press, New York. Helmick, C.G., P.M. Griffin, D.G. Addiss, R.V. Tauxe, and D.D. Juranek. 1994. ``Infectious
Diarrheas.'' In: Everheart, JE, ed. Digestive Diseases in the United States: Epidemiology and Impact. USDHHS, NIH, NIDDKD, NIH Pub. No. 94-1447, pp.
85-123, Wash, DC: USGPO.
Roberts, T., K.D. Murrell, and S. Marks. 1994. ``Economic Losses Caused by Foodborne Parasitic Diseases,'' Parasitology Today. vol. 10, no. 11: 419-423.
Schuchat, Anne, CDC, personal communication with T. Roberts at the FDA Science Forum on Regulatory Sciences, Washington, DC, September 29, 1994.
Tauxe, R.V., ``Epidemiology of Campylobacter jejuni infections in the United States and other Industrialized Nations.'' In Nachamkin, Blaser, Tompkins,
ed. Campylobacter jejuni: Current Status and Future Trends, 1994, chapter 2, pages 9-19. Tauxe, R.V. and P.A. Blake, 1992. ``Salmonellosis'' Chap. 12.
In: Public Health & Preventative Medicine, 13th ed. (Eds: Last JM: Wallace RB; Barrett-Conner E) Appleton & Lange, Norwalk, Connecticut, 266-268.
Tauxe, R.V., N. Hargrett-Bean, C.M. Patton, and I.K. Wachsmuth. 1988. ``Campylobacter Isolates in the United States, 1982-1986,'' Morbidity and
Mortality Weekly Report, vol 31, no. SS-2: pages 1-14.
Table 5.--Medical Costs and Productivity Losses Estimated for Selected Foodborne Pathogens, 1993
--------------------------------------------------------------------------------------------------------------------------------------------------------
Foodborne illness Percent Meat/poultry related Total
------------------------------ Foodborne from ------------------------------ costs *
Pathogen * costs meat/ meat/
Est. No. of Est. No. (bil $) poultry Est. No. of Est. No. poultry
cases deaths (%) cases deaths (bil $)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Bacteria:
Campylobacter jejuni or coli............................. 1,375,000-1,75
0,000 110-511 0.6-1.0 75 1,031,250-1,31
2,500 83-383 0.5-0.8
Clostridium perfringens **............................... 10,000 100 0.1 50 5,000 50 0.1
Escherichia coli 0157:H7................................. 8,000-16,000 160-400 0.2-0.6 75 6,000-12,000 120-300 0.2-0.5
Listeria monocytogenes................................... 1,526-1,767 378-485 0.2-0.3 50 763-884 189-243 0.1-0.2
Salmonella............................................... 696,000-3,840,
000 696-3,840 0.6-3.5 50-75 348,000-2,880,
000 348-2,880 0.3-2.6
Staphylococcus aureus **................................. 1,513,000 1,210 1.2 50 756,500 605 0.6
------------------------------------------------------------------------------------------
Subtotal............................................. 3,603,526-7,13
0,767 2,654-6,546 2.9-6.7 N/A 2,147,513-4,96
6,884 1,395-4,461 1.8-4.8
------------------------------------------------------------------------------------------
Parasite:
Toxoplasma gondii........................................ 2,056 41 2.7 100 2,056 41 2.7
------------------------------------------------------------------------------------------
Total................................................ 3,605,582-7,13
2,823 2,695-6,587 5.6-9.4 N/A 2,149,569-4,96
8,940 1,436-4,502 4.5-7.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: ERS, 1993
* Column rounded to one decimal place.
** Roberts' rough approximation of costs in ``Human Illness Costs of Foodborne Bacteria'', Amer. J. of Agricultural Economics, vol. 71, no. 2 (May 1989)
pp. 468-474 were updated to 1993 dollars using the Consumer Price Index (all items, annual average). Cost estimates for other pathogens are more
detailed, see the following for a discussion of the methodology:
listeriosis--Roberts, Tanya and Robert Pinner, ``Economic Impact of Disease Caused by Listeria monocytogenes'' in Foodborne Listeriosis ed. by A.J.
Miller, J.L. Smith, and G.A. Somkuti. Elsevier Science: Amsterdam, The Netherlands, 1990, pp. 137-149,
E. coli O157:H7--Roberts, T. and Marks, S., ``E. coli O157:H7 Ranks as the Fourth Most Costly Foodborne Disease,'' FoodReview, USDA/ERS, Sept-Dec 1993,
pp. 51-59.
salmonellosis--Roberts, Tanya, ``Salmonellosis Control: Estimated Economic Costs,'' Poultry Science. Vol. 67 (June 1988) pp. 936-943,
campylobacteriosis--Morrison, Rosanna Mentzer, Tanya Roberts, and Lawrence Witucki, ``Irradiation of U.S. Poultry--Benefits, Costs, and Export
Potential, FoodReview, Vol. 15, No. 3, October-December 1992, pp. 16-21, congenital toxoplasmosis--Roberts, T., K.D. Murrell, and S. Marks. 1944.
``Economic Losses Caused by Foodborne Parasitic Diseases,'' Parasitology Today. vol. 10, no. 11: 419-423; and Roberts, Tanya and J.K. Frenkel,
``Estimating Income Losses and Other Preventable Costs Caused by Congenital Toxoplasmosis in People in the United States,'' J. of the Amer. Veterinary
Medical Assoc., vol. 196, no. 2 (January 15, 1990) pages 249-256.
N/A indicates item is not-applicable.
ERS is currently working on a sensitivity analysis for their cost
of illness estimates for foodborne illness. The sensitivity analysis
replaces the LS VOSL estimates with estimates found in the literature
on wage-risk studies. Preliminary findings show that the estimates of
the total cost of foodborne illness will increase greatly when these
higher VOSL estimates are used.
FSIS considers that the existing conservative estimates are
appropriate considering the controversy and uncertainty. The
conservative estimates are more than sufficient to justify the
[[Page 38965]]
final rule implementing a new HACCP-based regulatory program for meat
and poultry. This final RIA uses the cost of illness estimates shown in
Table 5.
Another comment stated that the cost of illness estimates are low
because they do not account for increases in productivity. In response,
the Agency notes that ERS used Landefeld and Seskin's estimates for the
value of a statistical life, and those estimates do include an
estimated 1% annual increase in productivity.
One commenter suggested that a methodology based on earning power
may overestimate the value of life where many deaths from foodborne
illness are the very elderly, the immunocompromised and the terminally
ill. This commenter also noted that while all deaths are tragic, from a
strictly economic standpoint many of these tragic cases have little or
no productivity left and in fact are utilizing resources at the rate of
$3,000 to $12,000 or more dollars per month of maintenance.
The cost of illness methodology used by ERS does account for the
fact that older individuals have lower remaining earning power than
younger individuals. This difference was taken into account when
estimating the costs of lost productivity for salmonellosis patients.
Different Landefeld and Seskin estimates of the values of statistical
life were used for the different age categories. The methodology used
U.S. death certificate data to estimate that the average age for
patients who die from salmonellosis is over 65 years. The concept of a
statistical value of life accounts for the fact that older individuals
may continue to work or be retired or be patients under long term
health care.
3. Percentage of Foodborne Illness and Cost of Foodborne Illness
Attributable to Meat and Poultry
The fifth column of Table 5 includes estimates on the percentage of
foodborne illness attributable to meat and poultry products. A separate
estimate has been developed for each pathogen. These estimates are
based on outbreak data reported under the CDC Foodborne Disease
Outbreak Surveillance System and on data from community-based and other
epidemiologic studies. Major data sources are cited in the preamble to
the final rule. An assumption is made in this analysis that the source
of foodborne pathogens, i.e., meat and poultry versus dairy products,
seafood, vegetable, etc., has no effect on the cost of illness. The
Department is not aware of any data indicating that the severity of
foodborne illness cases varies by source of pathogens.
Comments noted that the Department had increased the percentage of
foodborne illness attributable to meat and poultry from the earlier
rulemaking for safe handling labels. One commenter stated that the
Department has not revealed any new information which would support
such an increase.
At this time, data on incidence of foodborne illnesses and the
percentage of cases attributable to different food items are limited.
Estimates by pathogen have been made by experts at CDC and USDA, based
on a variety of studies. However, these are, indeed, estimates: FSIS
does not have exact numbers. The estimates in the 1993 Federal Register
document were relatively crude, assuming that 100% of Campylobacter and
E. coli O157:H7 cases, 96% of Salmonella cases, and 85% of Listeria
cases were foodborne, and that, for all bacterial pathogens, a flat 50%
of foodborne cases were attributable to meat and poultry. The 1995
document looked at the numbers in a somewhat more sophisticated way,
evaluating each pathogen individually and, where appropriate, giving
ranges for, first, percentage of cases which were foodborne, and,
secondly, percentage of cases which were attributable to meat and
poultry. Nonetheless, when all of the various percentages are
multiplied out, estimates of total cases attributable to meat and
poultry were remarkably similar, as shown below in Table 6.
Table 6.--Percentage of Foodborne Illness Attributable to Meat and Poultry
----------------------------------------------------------------------------------------------------------------
Percentage Percentage
of total of total
cases cases
attributed attributed Estimated total Estimated total
Pathogen to meat and to meat and cases, 1993 cases, 1995
poultry <SUP>a poultry,
1993 1995
(percent) (percent)
----------------------------------------------------------------------------------------------------------------
Campylobacter............................... 50 41-53 1,050,000 1,031,250-1,312,500
Salmonella.................................. 48 43-72 921,600 348,000-2,880,000
E. coli O157:H7............................. 50 60 3,834-10,22 46,000-12,000
Listeria.................................... 43 43-48 649-672 763-884
----------------------------------------------------------------------------------------------------------------
<SUP>a Reflects percentage of foodborne multiplied by percentage attributable to meat and poultry.
Most other comments related to the estimates on the percentage of
foodborne illness attributable to poultry. Comments questioned the high
incidence of poultry-related foodborne illness when even, as a
commenter asserted, public health authorities tell consumers that the
problem with poultry meat is not due to consumption because poultry is
cooked. Comments questioned whether cross-contamination in the kitchens
could possibly generate such high levels of foodborne illness. Related
comments suggested that if cross-contamination was such a serious
problem, the data would show more outbreaks and fewer single cases.
Other comments suggested that the cost of salmonellosis attributed to
poultry was high because of the high incidence of Salmonella
enteritidis in eggs and requested that the Agency exclude any foodborne
illness costs associated with eggs, because those issues are outside
the scope of this rulemaking. Another comment cited an Australian
finding that the Campylobacter strains that infect chickens are not the
strains that primarily infect humans.
The Department agrees that undercooked poultry is not a primary
cause of foodborne illness. The preamble to the proposal stated that
the majority of salmonellosis results from cross-contamination. The
best available estimates for foodborne illness do suggest that a high
incidence of illness is attributable to cross-contamination in
kitchens--both household kitchens and food-service establishments.
The comment suggesting that cross-contamination would have led to
more outbreaks makes sense, if the available estimates on incidence
were heavily
[[Page 38966]]
based on outbreak data. However, as mentioned in the proposal, it is
widely recognized that CDC outbreak data do not provide accurate
estimates of foodborne disease incidence. The outbreak data are more
useful in identifying factors that lead to illness and have been used
to estimate proportions of illness attributable to specific food
groups. They do not play a major role in the overall incidence
estimates. The existing incidence estimates are for total cases
including both individual cases and multiple cases. The methodology
used does not distinguish between outbreaks and single cases. Just as
there are unreported individual cases of foodborne illness, there are
unreported cases where entire households or portions of households
experience foodborne illness due to cross-contamination in household
kitchens. As discussed above, the estimates of foodborne illness were
derived from both CDC outbreak data and community-based epidemiologic
studies.
The outbreak data (two or more individuals ill from the same
source) are compiled by CDC from reports that are voluntarily submitted
from state and local health authorities. The laboratory reporting
system for Salmonella only captures information on those cases where a
patient sees a doctor, the doctor collects a stool culture and sends
the culture to a participating laboratory and the laboratory can
perform the specific diagnostic test. The estimates for overall disease
incidence are derived using both databases plus data collected from
population-based studies in specific geographic areas. The current
(initiative) collaborative surveillance project should improve the
estimates in the future.
The comment referring to the Australian finding is referring to an
article by Korolik, et al, published in the May 1995 issue of the
Journal of Clinical Microbiology, entitled, ``Differentiation of
Campylobacter jejuni and Campylobacter coli strains by Using
Restriction Endonuclease DNA Profiles and DNA Fragment Polymorphisms.''
The study was undertaken to determine if DNA fingerprinting
technologies could identify strains of Campylobacter in chickens that
cause disease in humans.
FSIS reviewed the article and concluded that the study did not
refute U.S. epidemiologic studies showing that approximately 50% of
human Campylobacter infections are due to poultry. To confirm FSIS's
interpretation of the study, a staff member contacted the author, Dr.
Victoria Korolik, in Australia. She confirmed that her study does not
shed doubt on the role of poultry in human Campylobacter infections.
4. Pathogens Addressed by the Rule
While the proposed rule indicated that HACCP systems will be
designed to control all public health hazards, the preliminary benefits
analysis assumed that the primary benefits will come from controlling
the three most common enteric pathogens of animal origin: Campylobacter
jejuni/coli, E. coli O157:H7, Salmonella and one environmental pathogen
Listeria monocytogenes. Two other pathogens--Clostridium perfringens
and Staphylococcus aureus primarily become or create hazards in meat
and poultry products as prepared in restaurants, other commercial
kitchens, and in homes. Consequently, the proposed regulatory program,
which focuses on the manufacturing sector, will not significantly
affect the presence of these organisms on meat and poultry products.
The public comments did not address the assumption that the
proposed rule would have the most impact on the four pathogens
identified above and that benefits would be most appropriately
discussed in terms of reducing the level of these pathogens. This final
RIA will continue to assume that the HACCP-based regulatory program
will have the most impact on the four pathogens identified in the
preliminary analysis.
The preliminary benefits analysis also included an assumption
concerning the percentage of the four pathogens that contaminate the
meat and poultry supply at inspected establishments or grow from
contamination that occurs at inspected locations. Based on the expert
judgment of FSIS microbiologists, the preliminary benefit analysis
assumed that 90 percent of the four pathogens result from contamination
that occurs at inspected establishments.
The public comments did not directly address the estimate that
slaughter and processing establishments are the source of 90 percent of
enteric pathogen contamination. There were, however, a large number of
comments that cited studies or estimates that show or indicate that the
majority of foodborne illness can be attributed to improper cooking,
recontamination and other mishandling and abuse in the food service and
home environment. Many comments cited data presented in the 1994 CAST
Report which ``demonstrated'' that only 6.9 percent of outbreaks were
``attributable'' to the food processing establishments. Other comments
referred to ``a well-recognized fact that 97 percent of the problems
with foodborne illness occur outside the realm of state and federal
inspection.'' Other comments attributed the 97 percent figure to a
Special Report by the American Association of Meat Processors. These
types of comments were presented in a manner indicating that the
commenters believe that the data attributing ``cause'' to the food
service or home environment directly contradicts the Agency's estimate
that inspected establishments are the source of 90 percent of the four
pathogens addressed by this rule.
In response, the Agency points out that the studies cited by
commenters concluding that high percentages of foodborne illness are
attributable to factors such as temperature abuse and mishandling do
not conflict with either the assumption that slaughter and processing
establishments are the source of 90 percent of enteric pathogen
contamination or the assumption discussed later concerning the
effectiveness of HACCP in reducing that contamination. Occurrence of
foodborne disease is a multi-step process. The first, and critical,
step is the introduction of a pathogen into or onto the raw product. If
a pathogen is present, then subsequent temperature abuse or mishandling
may permit bacterial counts to increase to levels which increase the
likelihood that illness will occur; mishandling may result in cross-
contamination of other foods which are not cooked before being eaten;
or improper cooking may not kill all pathogenic bacteria present in the
product. In these instances, it may be said that the illness was
``caused'' by improper handling. However, disease would not have
occurred if the pathogen had not been present on the raw product in the
first place.
The CAST study included a table showing factors contributing to the
occurrence of 1,080 outbreaks occurring from 1973 to 1982. That table
consisted of data from the CDC national foodborne disease surveillance
system that was published in an article in the Journal of Food
Protection by Frank L. Bryan in 1988. The CAST study and journal
articles use terminology like ``factors that contribute'' and address
the location or type of employee/consumer where any mishandling or
mistreatment of food occurred. The focus of these studies is to enhance
our understanding of the sequences of events and behaviors that lead to
foodborne illness since behavioral modification for the food preparer
and consumer at the end of the food chain may have the greatest impact
on the incidence of foodborne disease. Many of the comments are written
in a manner that blurs the distinction
[[Page 38967]]
between factors in the kitchen that may permit an outbreak to occur
from slaughter-origin contamination and those that would have caused an
outbreak despite the absence of contamination of the raw ingredients.
The comments referring to the CAST study or directly to CDC
estimates have not interpreted the Foodborne Disease Outbreak
Surveillance Data correctly. The standard CDC foodborne disease
outbreak report form does not include a question about whether the food
processing industry was involved, and while many foodborne outbreaks
have a chain of causation, investigators may differ in their assessment
of the point or points in the chain to which primary responsibility for
occurrence of the outbreak should be assigned.
The Bryan article used for the CAST study had the following summary
concerning the role of food processing establishments: ``Many of the
animals that enter abattoirs are either infected or contaminated with
foodborne pathogens and further spread occurs during processing. Hence,
abattoirs and raw-product processing establishments must accept some of
the blame of spreading salmonellae and other pathogens to many
carcasses and pieces of meat. These products are major sources of
pathogens for food-service establishments and homes where further abuse
(e.g., inadequate cooking or cross contamination) leads to outbreaks of
foodborne illness.''
The comments have not provided any basis for changing the expert
judgment of FSIS microbiologists that inspected establishments are the
source of 90 percent of the four pathogens addressed by the final rule.
This final benefits analysis is based on this assumption.
5. Effectiveness of the Rule in Reducing Pathogens
In accordance with the assumption that meat and poultry
establishments are the source of 90 percent of the four pathogens
addressed by the rule, the preliminary analysis calculated the benefits
under a scenario where the proposed rule would eliminate essentially
100 percent of those pathogens that enter the meat and poultry supply
at inspected processing establishments. In other words, for the
preliminary analysis, FSIS calculated an estimate of maximum benefits
by assuming the rule would eliminate 100 percent of the 90 percent.
By assuming this scenario, FSIS was not predicting that it believed
that the rule would result in elimination of 100 percent of those
pathogens in the manufacturing sector. Rather, the Agency was
acknowledging that it has responsibility for having a food safety
objective that recognizes the scope of the problem and attempts to
reduce pathogens in that sector as much as possible, since without
pathogens, no amount of subsequent abuse would result in foodborne
illness.
By presenting a sensitivity analysis in the proposal, FSIS intended
to clarify that the benefit estimates were a maximum and not a
prediction of what is likely to happen. The distinction was unclear to
many commenters who expressed doubt that the proposed HACCP program
would result in a 90 percent reduction in pathogens. A large number of
comments on the potential effectiveness of HACCP programs contrasted
the FSIS estimates with those contained in the recent study by the
Institute of Food Science and Engineering, Texas A&M University, titled
``Reforming Meat and Poultry Inspection: Impacts of Policy Options,''
(hereafter referred to as the IFSE study). Both FSIS and IFSE estimates
are useful as assumptions rather than as quantitative predictions of
potential effectiveness of HACCP.
The ISFE study examined four policy options for addressing
pathogens in the meat and poultry supply. One option called for
mandatory HACCP for inspected slaughter and processing establishments
and estimated that mandatory HACCP in inspected establishments would
produce a 20 percent reduction in pathogens. The difference in the FSIS
and IFSE estimates is not based on data but on assumptions for
different ``HACCP'' scenarios.
The HACCP program scenario considered in the IFSE study did not
assume a mandatory pathogen reduction performance standard. Requiring
process control without a standard could lead to processes that are
well controlled at unacceptable pathogen levels. The Agency would agree
that such a situation would result in less pathogen reduction. FSIS
believes that a standard is necessary to encourage innovation and
provide the impetus for continuing improvement and increasing
effectiveness. In estimating effectiveness, the IFSE study noted that
``with experience and additional research, it is possible that higher
levels of reduction in pathogens could be achieved * * *''.
Another major difference between the two program scenarios is that
the IFSE program does not include a prerequisite requirement for SOP's.
SOP's could cover potential sources of enteric and environmental
pathogens that are not be covered under a HACCP plan. However, as
discussed in Section I, this analysis discusses benefits of SOP's in
terms of increased productivity for inspection resources and clarity of
responsibilities.
Several comments refer to the IFSE estimates as being more
objective or ``scientific'' than those in the Agency's analysis. The
IFSE authors characterize their own effectiveness estimates as ``the
consensus judgment of the task force'' or ``the most reasonable
expectation.'' The IFSE estimates are judgments, as are the Agency's
estimates.
A general comment related to the effectiveness issue stated that
while HACCP remains an interesting theoretical concept, it is still
only a concept that has never been tested on a meaningful scale under
actual meat establishment conditions, and never proven to significantly
improve the microbial quality of the finished product. Although HACCP
has been tested in food processing establishments to the satisfaction
of scientists, food technologists, and industry management to produce
safe food, the Agency recognizes that the potential effectiveness of
HACCP in reducing pathogens within a regulatory framework is unknown at
the present time. FSIS conducted a pilot HACCP study in nine
establishments from 1991 to 1993. Findings regarding pathogen reduction
effectiveness were inconclusive. FSIS did not receive any data during
the comment period from establishments currently operating HACCP
systems. Rather than select an arbitrary effectiveness estimate, or use
the maximum potential 100 percent estimate from the preliminary
analysis, this RIA will present a range of effectiveness estimates and
show the minimum level necessary to generate net benefits.
6. Estimated Reduction in Cost of Foodborne Illness
Several comments focused on the issue that the relationship between
pathogen reductions at the manufacturing stage and foodborne illness
reductions is unknown. The comments recognize that the proposal did
acknowledge that little data exist on the relationship between pathogen
levels and incidence of illness. One comment pointed out that FSIS
recognized that the pathogen testing requirements that are part of the
proposal will help to elucidate the relationship between pathogen
contamination and foodborne disease. The commenter concluded that it
did not seem reasonable for the Agency to rely on an assumption, whose
very validity can only be tested by the implementation of the proposal
under examination, to justify the proposal.
[[Page 38968]]
Other commenters concluded that the Agency needed to develop better
data or complete a thorough risk assessment that would establish the
public health benefits of pathogen reduction before proceeding.
The comments asking for better data or requesting a thorough risk
assessment are not comments on the cost-benefits analysis. These
comments imply there is insufficient evidence to support new pathogen
reduction efforts. This issue is addressed in the preamble to the final
rule. The comments have made a policy judgment with which the
Department does not agree.
For the benefits analysis included with the proposed rule, FSIS
assumed that a reduction in pathogens will lead to a corresponding
proportional reduction in foodborne illness. The Department notes that
the IFSE study referred to favorably by many commenters used the same
method for estimating public health benefits as did FSIS, i.e., a
reduction in pathogens leads to a proportionate reduction in illness
and death. The Agency is aware that the proportionate reduction method
is an assumption that has not been tested or validated. However, the
Agency also recognizes that research methodology for relating pathogen
levels at establishments to incidence of illness is in its early
developmental stages. Risk models for foodborne pathogens are likely to
develop as the basis for regulatory decision-making in the future. The
Agency believes the implementation of mandatory HACCP will improve food
safety and protect public health while research in modeling risk
associated with foodborne pathogens continues.
The Agency has and continues to support any effort to improve the
quality of data and methodology available for risk assessment of
illness caused by foodborne biological agents. FSIS, FDA, CDC, and
local public health departments are collaborating with state health
departments and local investigators at five locations nationwide to
identify more accurately the incidence of foodborne illness, especially
illness caused by Salmonella and E. coli O157:H7.
G. Summary
The final rule addresses four pathogens that are estimated to cause
from $1.1 to $4.1 billion in annual illness and death costs
attributable to meat and poultry products. The rule addresses 90
percent of that cost of illness or from $0.99 to $3.69 billion
annually. FSIS recognizes that the actual effectiveness of the final
requirements in reducing pathogens is unknown, and presents a range of
benefits based on reducing varying percentages of the $0.99 to $3.69
billion in annual cost of foodborne illness addressed by this rule.
References
International Commission on Microbiological Specifications for
Foods (ICMSF). 1980. Microbial Ecology of Foods: Factors Affecting
Life and Death of Microorganisms. Volume I. Academic Press, New
York. Pp. 215-231.
Rolfe, R.D. 1991. Population dynamics of the intestinal tract.
In: Colonization Control of Human Bacterial Enteropathogens in
Poultry. Ed. L.C. Blankenshipp, J.S. Bailey, N.A. Cox, S.E. Craven,
R.J. Meinersmann, N.J. Stern. Academic Press, Inc., New York. Pp.
59-76.
Centers for Disease Control (CDC). 1988. Campylobacter isolates
in the United States, 1982-1986. In: CDC Surveillance Summaries.
June 1988. MMWR 1988; 37 (No. SS-2:1-13).
Blaser, M.J. & L.S. Newman. 1982. A review of human
salmonellosis: I. Infective dose. Reviews of Infectious Disease.
4(6):1096-1106.
Buchanan, R.L. & R.C. Whiting. 1996. Risk assessment and
predictive microbiology. J. Food Protection. 31-36.
Burmaster, D.E. & P.D. Anderson. 1994. Principles of good
practice for the use of Monte Carlo techniques in human health and
ecological risk assessments. Risk Analysis. 14(4):477-481.
Council for Agricultural Science and Technology (CAST). 1994.
Foodborne pathogens: Risks and consequences, Report No. 122, p. 87.
Haas, C.N. 1983. Estimation of risk due to low doses of
microorganisms: A comparison of alternative methodologies. Am. J.
Epidemiol. 118:573-582.
National Research Council. 1983. Committee on Institutional
Means for Assessment of Risks to Public Health. Risk Assessment in
the Federal Government: Managing the Process. National Academy
Press, Washington, DC p. 191.
Tappero, J.W. et al. 1995. Reduction in the Incidence of Human
Listeriosis in the United States; Effectiveness of Prevention
Efforts? Journal of the American Medical Association. 273(14):1118-
1122.
Gellin, B., C.V. Broome, R. Weaver and A.W. Hightower.
[Listeriosis Study Group.] Geographic Differences in Listeriosis in
the U.S. (Abstract). In Program and Abstracts of the twenty-seventh
International Conference on Antimicrobial Agents and Chemotherapy.
p. 155. Washington, DC: American Society for Microbiology, 1987.
V. Cost Analysis
A. Introduction
The final HACCP rule includes several regulatory components all
directed at improving process control in meat and poultry operations in
order to reduce the risk of foodborne illness associated with meat and
poultry products. The requirements of the final rule are organized
around the following three sections:
<bullet> Requirements that all inspected establishments develop and
implement sanitation Standard Operating Procedures (SOP's) within 6
months.
<bullet> Requirements that all inspected establishments develop and
implement HACCP programs within the 18 to 42 month time period
following publication. Scheduling will be based on establishment size.
<bullet> Requirements that (1) all establishments slaughtering
cattle, swine, chickens, or turkeys, or producing a raw ground product
from beef, pork, chicken or turkey comply with new pathogen reduction
performance standards for Salmonella and (2) all establishments
slaughtering cattle, swine, chicken or turkeys implement microbial
testing programs using generic E. coli within 6 months. Compliance with
the pathogen reduction performance standards for Salmonella will be
required at the time the establishment is required to implement HACCP.
This cost analysis is presented in three sections. The first
section describes the methodology used in generating cost estimates.
The next section addresses the regulatory flexibility designed to
reduce the burden on small business. The last section presents the cost
estimates for each regulatory requirement. For each broad requirement,
the discussion of the cost estimates is organized using the following
five topics:
<bullet> Summary of the requirements in the final rule identifying
any changes from the proposal.
<bullet> Review of the cost estimates from the preliminary RIA.
<bullet> Summary of the comments related to the preliminary cost
estimates.
<bullet> Response to the comments.
<bullet> Final cost estimates.
B. Methodology for Cost Analysis
The final pathogen reduction/HACCP rule includes regulatory
requirements that are directed at improving the control over food
processing operations. In general, compliance with these requirements
requires expenditures of time, i.e., employee hours to develop plans,
monitor critical control points, record findings and collect and
analyze samples. This final RIA is based on time required by four
categories of employees that were defined in the supplemental cost
analysis. These include the following:
<bullet> Quality Control manager earning $25.60 per hour.
<bullet> Supervisors or QC technicians that review findings and
records at $18.13 per hour.
[[Page 38969]]
<bullet> Laboratory technicians earning $18.13 per hour.
<bullet> Establishment employees/production workers that would
monitor sanitation and HACCP programs or collect samples at $12.87 per
hour.
The four categories of wages are based on 1993 data adjusted for
1994 dollar inflation from the Bureau of Labor Statistics and Meat and
Poultry Magazine and include a 33 percent overhead requirement for
benefits such as health insurance and retirement contributions. Unless
otherwise noted, the analysis assumes that all establishments and
employees work a standard 52 week, 260 day, 2080 hour work year.
This final cost discussion is based on retracing the steps and/or
calculations of the preliminary analysis and discussing related public
comments in the appropriate sections. Other comments that are related
to the analysis but do not reflect directly on the methodology are
summarized at the end of the analysis in Appendix A.
This analysis makes frequent references to the Enhanced Economic
Database. In 1994, the Research Triangle Institute (RTI) took a
compilation of existing FSIS databases containing establishment
production or inspection data and added data on annual sales and
employment from sources that included Dun and Bradstreet and American
Business List databases. Actual estimates for annual sales and number
of employees were available for approximately 80 percent of the
establishments. In other cases, estimates for sales and number of
employees were developed using the employment/sales data for
establishments producing the same type and volume of product.
The enhanced database includes production data (number of head
slaughtered, pounds of product produced) from 1993 for all federally-
inspected establishments in operation as of August 1994. The
preliminary analysis and this final RIA combine 1993 production data
with the population of federally and state- inspected establishments
that were in operation as of August 1994. As of August 1994, there were
6,186 federally inspected and 2,893 state inspected establishments.
These 9,079 establishments include a total of 11,719 ``operations''--
2,597 red meat slaughter operations, 364 poultry slaughter operations
and 8,758 further processing operations.
This final analysis assumes a constant level of 9,079 inspected
establishments. The analysis does not attempt to account for costs
associated with exits from or entries into the marketplace. For
operations that are entirely new, or include a new processing
operation, the requirements for HACCP plans and sanitation SOPs will
increase the one-time, up-front cost of entering the market. If
marketplace entry involves the purchase of an existing business, the
business will already have an existing HACCP plan and sanitation SOP.
In these cases, the acquisition cost of the business would include the
value of the existing HACCP plan and SOP.
There should be minimal additional cost for HACCP and SOP plan
development for new construction that expands a firm by replicating an
existing operation in a new location. This type of new establishment
can apply HACCP and SOP plans that have been developed for a similar
existing establishment. This analysis has assumed that each
establishment is independent and has not reduced cost estimates to
account for firms that operate several similar establishments.
The preliminary analysis developed cost estimates for three sizes
of manufacturing establishments. Most of the costs that involve
employee time are influenced by a number of factors including the
physical size of the establishment, the volume of production, the type
of production practices and the number or production lines. The
preliminary analysis used the data on annual sales developed by RTI
because the sales data correlated reasonably well with size and
production volume data and the Agency had an estimate of sales for
6,186 federally inspected establishments.
For the preliminary analysis the Agency defined a large
establishment as one with over $50 million in annual sales, a medium
establishment as one with between $2.5 and $50 million and a small
establishment as one with less than $2.5 million in annual sales. For
calculating costs, the Agency collected data from the field based on
these three size categories. Public comments provided good reason to
change size definitions for implementation (regulatory flexibility)
purposes and the Agency has done so for the final rule. This does not
affect the accuracy of proposed or current cost estimates based on
previously collected data. The final analysis uses the old categories
for presenting cost data to facilitate comparisons and minimize
confusion. To summarize, this cost analysis uses the terms high, medium
and low volume producers for cost presentation that involves average
establishment costs and uses the terms large, small and very small
business for discussing regulatory flexibility. The cost and
flexibility principles do not overlap in this analysis.
Commenters pointed out that in comparing total costs with the value
of current production, the preliminary analysis did not address impacts
on producers, i.e., the costs that would be passed back to livestock
producers. FSIS recognizes that some costs will be passed back to
producers in terms of lower prices for live animals and other costs
will be passed forward in terms of higher consumer prices. Other costs
may have to be absorbed by slaughter and processing establishments.
Because the necessary knowledge of empirical cost structures and supply
and demand elasticities is inadequate, FSIS does not offer any
quantitative estimates of the distribution of costs of this rule on
various sectors of the production and marketing chain. The aggregate
cost estimate establishes an upper bound on the costs any sector might
ultimately bear.
There are two types of potential costs that were not addressed in
the preliminary cost analysis. The first type of cost is the cost of
taking corrective action when routine monitoring of a CCP finds a
deviation from a critical limit. The critical limit could be associated
with assuring compliance with existing regulatory requirements or it
could be a limit set to assure compliance with the new pathogen
reduction standards for Salmonella or the criteria established for
generic E. coli. Corrective action would also occur when FSIS would
find a problem with either a HACCP plan or a sanitation SOP.
The second type of potential cost is related to the question of
whether existing processing methods are adequate to meet the pathogen
reduction performance standards for Salmonella and the criteria for
generic E. coli. It is expected that some establishments will have to
make permanent changes to their existing production practices to have a
HACCP-based program that assures compliance with the new standards and
criteria. The final rule raises a third type of potential cost when it
outlines the Agency's plans for using the results of its own Salmonella
testing program for regulatory purposes. Whether or not this testing
leads to industry testing costs depends on whether the government
testing indirectly forces an establishment to regularly conduct its own
testing.
The preliminary analysis did address a fourth category of potential
costs that includes the cost of necessary materials, such as
thermometers and test kits, that establishments will need to
[[Page 38970]]
systematically monitor their processes. Recognizing that the rule does
not make any equipment obsolete, the preliminary analysis suggested
costs of from $10 to $20 per establishment. These costs were not
included in the overall cost summary.
Potential costs are addressed in this final analysis under Section
V.D.2., Costs of Meeting Pathogen Reduction and Microbial Sampling
Requirements.
C. Regulatory Flexibility
The Regulatory Flexibility Act (P.L. 96-354) requires analyzing
options for regulatory relief for small businesses. This section
reviews the regulatory relief provided in the proposal, responds to
comments related to the definition of small business used in the
proposal and summarizes the regulatory relief for small business
provided for in the final rule. In Section II, this analysis addressed
the option of providing an exemption for small business noting that
comments on an exemption were mixed with a substantial number of
comments from small businesses strongly opposing an exemption.
The proposed rule intended to spread the implementation of HACCP
over a three year period. To minimize the burden on small
establishments, they would be given a maximum time of 36 months to
develop and implement their HACCP plans. A small establishment was
defined as one with annual sales of less than $2.5 million.
The decision to use the above definition generated a large number
of comments. ``Very small'' establishments commented that they could
not compete with a relatively ``large'' business with annual sales of
$2.5 million. For example one commenter stated that: ``calling an
establishment, small, that produces $2,500,000 worth of product
annually is not fair to those establishments producing far less.''
Other comments suggested that by defining small at the $2.5 million
level, the Agency demonstrated that it does not understand what a small
business is. Comments from businesses with annual sales of $2.5 to
$10.0 million or even $25.0 million stated that they should also be
considered small businesses. Commenters also pointed out that other
Federal agencies use different definitions. For example, one commenter
noted that OSHA uses 50 employees as their criterion for a ``small
business.'' Others commented that FSIS should or must use the existing
definition of fewer than 500 employees published by the Small Business
Administration (SBA).
Several comments promoted a set of requirements distinguishing
``small'' from ``very small'' establishments. ``Very small''
establishments would only be required to implement the proposed
provisions on sanitation standard operating procedures, antimicrobial
treatment of carcasses, and time and temperature provisions. They would
be exempt from routine microbial testing and long-term provisions of
HACCP as long as annual sales do not exceed $1 million (not counting
``pass through''). The establishments would still be subject to
incidental sampling for microbial testing as determined by the
Administrator. Required implementation of the three near-term
initiatives would be 12 months after publication of the final rule.
The ``small'' establishments (between $1.0 and $2.5 million) would
be required to implement SOPs, antimicrobial treatment, time and
temperature provisions, and limited routine sampling, in proportion to
the number of slaughtered animals and/or poundage of processed
products. The establishments would still be subject to incidental
sampling for microbial testing as determined by the Administrator. They
would be exempt from long-term provisions of HACCP as long as annual
sales, as defined above, do not exceed $2.5 million. The required
implementation of all near-term initiatives would be six months.
There were other comments that suggested variations on the above
definitions and requirements for ``small'' and ``very small''
establishments. For example, one State department of agriculture
recommended the same requirements for ``small'' and ``very small''
establishments but suggested that size criteria based on head
slaughtered or pounds produced would be more practical. Another State
department of agriculture recommended that a ``every small'' plant be
defined based on the number of employees (no more than 20 full-time),
slaughter volume (no more than 2,500 animals per year), or processing
volume (100,000 pounds of meat and/or poultry products per year). The
recommendation suggested that a plant in this category would be
required to implement the provisions of the proposed rule pertaining to
sanitation SOP's and time-temperature requirements. Antimicrobial
treatment of carcasses would be voluntary, and such a plant would be
exempted from microbial testing as proposed. Implementation of a HACCP
program would be initially voluntary, and phased in with considerations
in the areas of documentation and record-keeping for the limited work
force.
FSIS has considered the above regulatory framework for ``small''
and ``very small'' establishments. Some of the suggestions are no
longer applicable because major provisions of the proposed rule have
been dropped. FSIS believes it has addressed the other concerns in more
appropriate ways.
FSIS was aware of SBA Size Standards during the development of the
proposed rule. If FSIS used the size standard for meat and poultry
``manufacturing'' firms, over 94 percent of the federally inspected
establishments would meet the criterion of having fewer than 500
employees. FSIS is also aware that there are six different SBA size
standards that apply to the 6,415 FSIS official establishments. FSIS
determined the SBA size standards by themselves are not appropriate for
meeting FSIS's need to sequence HACCP implementation.
Table 7 shows the distribution of 6,415 official establishments by
Standard Industrial Classification (SIC) code. The SIC codes were
developed to promote the comparability of statistics describing various
facets of the Nation's economy. The SIC codes were used as part of the
Enhanced Economic Analysis Database developed by Research Triangle
Institute to represent all FSIS inspected establishments. As can be
seen from Table 7, a significant portion of official establishments are
not in an SIC Code for manufacturing. Food manufacturing establishments
have a 4-digit SIC Code beginning with 20. The Census of Manufacturers
published by the Department of Commerce characterizes the meat and
poultry manufacturing industry by summarizing data for SIC Code 2011--
Meat Packing Establishments, SIC Code 2013--Sausages and Other Prepared
Meats, and SIC Code 2015--Poultry Slaughtering and Processing. The SBA
Size Standards in Table 7 are published in the Code of Federal
Regulations--13 CFR, Chapter 1, Section 121.601.
In a written comment, the Office of Advocacy, Small Business
Administration claimed that FSIS was wrong in concluding that one-third
of federally inspected establishments would have the maximum time for
compliance with HACCP requirements using the criterion of $2.5 million
in annual sales. In supporting their claim, they cited U.S. Census
Bureau data. However, Census data do not accurately describe the
federally inspected meat and poultry industry. As shown in Table 7, the
problem is that less than half of the firms are classified in the three
4-digit SIC Codes identified above that define meat and poultry
manufacturing. FSIS addressed this data
[[Page 38971]]
problem by contracting with RTI to develop a more accurate economic
profile of federally inspected meat and poultry establishments.
Table 7.--Establishments Standard Industrial Classification
----------------------------------------------------------------------------------------------------------------
Cumulative
SIC code Standard industrial Number of number of SBA size standard
classification establishments establishments
----------------------------------------------------------------------------------------------------------------
2011.............. Meat packing 1,503 1,503 500 employees.
establishments.
5147.............. Meats and meat products. 1,312 2,815 100 employees.
2013.............. Sausages and other 939 3,754 500 employees.
prepared meats.
2015.............. Poultry slaughtering and 438 4,192 500 employees.
processing.
4222.............. Refrigerated warehousing 356 4,548 $18,500,000.
and storage.
5421.............. Meat and fish markets... 309 4,857 $5,000,000.
5144.............. Poultry and poultry 268 5,125 100 employees.
products.
5141.............. Groceries, general line. 238 5,363 100 employees.
5812.............. Eating places........... 156 5,519 $5,000,000.
2038.............. Frozen specialities, nec 139 5,658 500 employees.
5142.............. Packaged frozen foods... 130 5,788 100 employees.
5411.............. Grocery stores.......... 95 5,883 $20,000,000.
5149.............. Groceries and related 65 5,948 100 employees.
products, nec.
9999.............. Not applicable.......... 63 6,011
2032.............. Canned specialities..... 61 6,072 1,000 employees.
2099.............. Food preparations, nec.. 55 6,127 500 employees.
Other............. All other SIC codes..... 288 6,415
----------------------------------------------------------------------------------------------------------------
Note: The Enhanced Economic Analysis Database uses the number of active establishments as of August, 1994 and
identified 6,415 establishments as active official establishments. Of these 6,415, a total of 229 were
identified as cold storage/ID warehouses, universities or churches. From the 6,415 total, 6,186 federal
establishments were classified as processing, slaughter or combination operations. nec--(Not Elsewhere
Classified).
The final rule provides for sequencing HACCP implementation by
establishment size, using the SBA definition of a small manufacturing
business, i.e., a small business is an establishment with fewer than
500 employees. Those establishments with 500 or more employees will be
referred to as large establishments. In addition, in response to
comments that there are hundreds of ``very small'' or ``micro''
establishments, the Agency will classify an establishment as ``very
small'' if it has either fewer than 10 employees or annual sales of
less than $2.5 million.
This sequencing of HACCP responds to a large number of comments
requesting that small businesses be given a longer period of time to
implement HACCP requirements. Many small businesses stated they did not
want to be exempt, but asked for more flexibility in implementing
HACCP. Some commenters specifically requested five, eight or 10 years
to implement HACCP.
While the final rule does not provide for longer periods of five,
eight or 10 years, it does substantially extend the implementation
period for hundreds of small and very small establishments.
To illustrate, the proposed rule would have required HACCP plans
in over 2,100 establishments producing raw ground product within 12
months. Under the final rule, over 1,800 of those establishments will
have either 30 or 42 months to implement HACCP. The smallest 5,127
establishments (2,893 state and 2,234 federal) will have an additional
six months. The proposed rule called for implementation of a HACCP
system in all ``small'' establishments by 36 months; the final rule
allows 42 months for the newly defined ``very small'' category.
Table 8 illustrates the distribution of 6,186 federally-inspected
slaughter, processing, and combination establishments used for the
sequencing of HACCP implementation in the proposed rule and in the
final rule. There are 496 more establishments in the two smaller
categories than there were in the proposal. As shown in Table 8, there
are 353 large, 2,941 small and 2,892 very small federally-inspected
establishments.
Table 8.--Size Categories for Federally Inspected Establishments
------------------------------------------------------------------------
No. of
Establishment category Definition establishments
------------------------------------------------------------------------
Proposed Rule
------------------------------------------------------------------------
High volume....................... >$50 million........ 849
Medium volume..................... $2.5-$50 million.... 3,103
Low volume........................ <$2.5 million....... 2,234
Total........................... .................... 6,186
------------------------------------------------------------------------
Final Rule (Sequencing of HACCP)
------------------------------------------------------------------------
Large............................. <gr-thn-eq>500 353
Employees.
Small <SUP>a........................... 10-499 Employees.... 2,941
Very small <SUP>b...................... <10 Employees or 2,892
<$2.5 Million.
Total........................... .................... 6,186
------------------------------------------------------------------------
<SUP>a New definition of small includes 2,445 establishments that were medium
volume establishments plus 496 that were high volume for the
preliminary analysis.
<SUP>b New definition of very small includes the 2,234 establishments that
were low volume establishments plus 658 that were medium volume
establishments for the preliminary analysis.
D. Final Cost Estimates
1. Sanitation Standard Operating Procedures
a. Summary of Requirements. The final rule requires that all
inspected establishments develop and implement Sanitation SOP's within
6 months after publication of the final rule. The proposed rule would
have required the implementation of SOP's within 90
[[Page 38972]]
days. To facilitate the development of SOP's and to provide maximum
flexibility, the Agency will not prescribe any specific format or
content but will provide guidelines to assist inspected establishments
in developing written SOP's. There will not be any FSIS approval of the
written documents. With the exception of the implementation schedule,
the requirements for SOP's in the final rule are the same as those in
the proposed rule.
b. Review of Preliminary Cost Estimates. The preliminary cost
analysis identified separate costs for SOP plan development and SOP
recordkeeping where recordkeeping was defined as observing or verifying
procedures, recording findings, reviewing records and maintaining
files. FSIS assumed that the Sanitation SOP's would be developed by a
quality control manager at a cost of $25.60 per hour. FSIS estimated
that it would cost an average of $128, $256 and $640 for low, medium
and high volume establishments to develop Sanitation SOP's.
The preliminary cost analysis assumed that Sanitation SOP's
observation and recording for low, medium and high volume
establishments would take 15, 25 and 45 minutes per day by an employee
earning $12.87 per hour and that supervisory review of records would
take 5, 10, and 20 minutes by an employee earning $18.13 per hour. In
developing these time estimates for recording and reviewing records,
FSIS recognized that the time required would be influenced by a number
of factors including the physical size of the establishment, the volume
of production, the type of production practices and the number of
production lines. The estimates are based on program judgement of the
time required to conduct two sets of sanitation observations per day,
one for preoperational sanitation procedures and one for operational
sanitation.
Using the above inputs, the annual costs for recording and
reviewing Sanitation SOP's records for low, medium and high volume
establishments would be approximately $1,230, $2,180 and $4,080,
respectively, based on a 260-day, 2,080 hour work year. These costs
were adjusted upward to approximately $1,242, $2,204 and $4,104 to
account for the cost of maintaining records.
The preliminary analysis also included training costs of $62, $155
and $372 for low, medium and high volume establishments. Instructing an
employee in verification and recording procedures was assumed to take
2, 5 and 12 hours, respectively involving both a QC technician ($18.13
per hour) and a production worker ($12.87 per hour). Total training
cost was, therefore, $31 per hour. Total per establishment Sanitation
SOP's costs, as estimated in the preliminary analysis, are summarized
in Table 9.
Table 9.--Summary of Sanitation SOP Costs Per Establishment
[Dollars]
----------------------------------------------------------------------------------------------------------------
Total
Plan Annual Training first Recurring
Establishment category development recordkeeping cost year annual
cost cost cost cost
----------------------------------------------------------------------------------------------------------------
Low.............................................. 128 1,242 62 1,432 1,242
Medium........................................... 256 2,204 155 2,615 2,204
High............................................. 640 4,104 372 5,116 4,104
----------------------------------------------------------------------------------------------------------------
Using the per establishment costs from Table 9, total aggregate
costs were calculated for all inspected establishments as shown in
Table 10. Establishments with an existing written sanitation program
were assumed to have only 50 percent of the plan development costs
because these establishments would have to modify an existing plan
rather than start from the beginning. Establishments with existing
sanitation plans include the 287 establishments with TQC programs and
46 slaughter establishments with PQC sanitation programs. It was also
assumed that these 333 establishments would not require training to
implement a sanitation SOP.
Table 10.--Costs of Sanitation SOP's
[Dollars in thousands]
------------------------------------------------------------------------
First
Establishment category No. of year Recurring
establishments costs costs
------------------------------------------------------------------------
High................................ 849 $4,276 $3,484
Medium.............................. 3,103 8,079 6,839
Low................................. 2,234 3,185 2,775
-----------------------------------
Subtotal.......................... 6,186 15,540 13,098
===================================
State............................... 2,893 4,143 3,593
-----------------------------------
Total............................. 9,079 19,683 16,691
------------------------------------------------------------------------
Note: For preliminary RIA, all State establishments were assumed to be
low volume establishments.
c. Comments on Preliminary RIA. Comments on proposed requirements
for sanitation Standard Operating Procedures (Sanitation SOP's) focused
on the cost of recordkeeping. In the preliminary cost analysis,
recordkeeping included observation (i.e., verifying the procedures),
recording findings, supervisory review of records and maintenance of
files. One commenter stated that the cost of recordkeeping for their
company would be approximately $10,000 annually.
A state inspected establishment, currently participating as a pilot
establishment for HACCP/sanitation plans in their state program,
indicated that they spend several hours each week verifying procedures
and have weekly costs of at least $50 to keep the paperwork for their
sanitation plan current. Their annual cost for keeping paperwork
current would, therefore, be at least $2,600. This state establishment
also stated that they had used an estimated $3,000 to $4,000 designing
an SOP and that was with the assistance of two universities, several
suppliers and their state inspection program. It took nine months to
put the plan together.
Comments at public hearings indicate that there is a lot of
uncertainty as to what FSIS expects in Sanitation SOP's. At one of the
public hearings the owner of a ``small'' establishment stressed the
importance of guidance and training with respect to what is expected in
terms of recordkeeping.
d. Response to Comments.
[[Page 38973]]
The Agency recognizes that the costs reported by the state
establishment participating in a pilot program are substantially higher
than the costs used in the preliminary analysis. The reported
development time of nine months is also longer than the allowed
implementation period. FSIS believes that the reported pilot project
involving two universities, several suppliers and a state program has
far exceeded the expectations of the rule. The same is true for the
comment suggesting recordkeeping costs of $10,000 per year.
FSIS has now developed model Sanitation SOP's and a guideline for
developing Sanitation SOP's. These documents should clarify FSIS
expectations. FSIS believes that these documents are consistent with
the cost estimates used in the preliminary analysis.
There is some reason to believe that the estimated cost for
Sanitation SOP's in the preliminary analysis is conservative, that is,
a possible overstatement of costs. Whether the costs associated with
Sanitation SOP's are totally new or just how they may be modified over
time can only be determined in individual establishment situations. For
example, task verification and recordkeeping are costs that can be
reduced through efficient management and allocation of resources and
should decrease with experience. In many cases the tasks can be
integrated with current duties.
For many establishments, the cost of Sanitation SOP's should be
offset by changes in the approach to sanitation. Under current
procedures, slaughter operations can not begin until inspection
personnel have given their approval. Under the new procedures all
establishments will be able to commence daily operations without USDA
approval upon successful completion of the preoperational portion of
their Sanitation SOP. When operational sanitation problems are
identified, corrected and documented as they occur by the
establishment, establishment officials will spend less time interacting
with inspectors or responding to inspection findings. For example,
federally inspected establishments currently provide written responses
to approximately 700,000 to 800,000 Processing Deficiency Records
(PDRs) per year. Over 70 percent of these PDRs are for sanitation
deficiencies.
Finally, while FSIS recognizes that keeping sanitation records will
be a new task, FSIS does not necessarily view the time spent verifying
sanitation procedures as a new regulatory cost. FSIS is not changing
any sanitation requirements. It is also true that FSIS has had an
ongoing problem getting all establishments to comply with existing
sanitation requirements. It can, therefore, be argued that some
establishments have not conducted the necessary verification to assure
compliance with existing regulations or have used FSIS employees to
conduct sanitation verification.
e. Final Cost Estimates. After considering the comments, FSIS does
not see a need to adjust the cost estimates shown in Tables 9 and 10.
The final aggregate cost estimates for SOP's are those shown in Table
10. The costs in Table 10 assume that the requirement for SOP's does
not lead to new compliance costs associated with new regulatory
obligations apart from paperwork and recordkeeping. The analysis
assumes that satisfactory sanitation is achieved one way or another
under current procedures and that the changes that will occur with
SOP's have more to do with issues of responsibility and efficient use
of inspection resources. It follows that, for the most part, this
provision of the rule will have no direct effect on the rate, extent or
severity of pathogenic contamination, and thus will also have no effect
on the rate, extent, or severity of foodborne illness. This is not
saying there will be no change in establishment or employee conduct. In
fact, FSIS expects to see more sanitation activities conducted at the
firm's initiative rather than following inspection findings.
2. Costs of Meeting Pathogen Reduction and Microbial Sampling
Requirements
a. Summary of Requirements. The final rule implementing HACCP-based
programs establishes pathogen reduction performance standards for
Salmonella. The rule both establishes the standards and defines the
procedures the Agency will use to measure and assure compliance with
the standards. The rule does not specify a minimum testing requirement
for Salmonella. The pathogen reduction performance standards apply to
an estimated 5,522 inspected establishments, 2,682 establishments that
slaughter cattle, hogs, chicken or turkeys and another 2,840
establishments that do not slaughter, but produce raw ground product
from beef, pork, chicken or turkey. If an establishment slaughters two
species, e.g. cattle and hogs, the establishment would be subject to
the standards for both cattle and hogs. The Agency's testing program
would, however, be directed at the predominant species. If an
establishment both slaughters and processes a raw ground product from
that same species, the Agency will test the ground product. If an
establishment produces more than one variety of ground product, the
Agency intends to sample each.
The proposed rule included the same standards but contained a
different approach for enforcement. The proposed rule included the
requirement that each of the 5,522 affected establishments would
collect and analyze one sample for each species or variety of raw
ground product for Salmonella on a daily basis. The establishments
would maintain records from these tests that would be reviewed by
inspection program personnel to determine compliance. The proposed rule
did not include a discussion of how the Agency would use the test
results in a program for regulatory enforcement.
Under the proposal, the results from each establishment's
Salmonella testing program were also to be used as a measure of process
control. This final rule requires that all 2,682 slaughter
establishments implement sampling programs using generic E. coli as a
measure of process control for slaughter and sanitary dressing
procedures.
b. Review of Preliminary Cost Estimates. As discussed earlier under
methodology, the preliminary RIA did not attempt to analyze the overall
impact of complying with the new pathogen reduction standards. The
preliminary RIA did include a detailed analysis of the costs associated
with the requirement that slaughter and raw ground processing
establishments collect and analyze samples for Salmonella on a daily
basis. The laboratory analysis required only a positive-negative
finding, i.e., the proposed rule did not require the analysis necessary
to determine the number of bacteria present in the sample. The cost of
meeting the proposed requirement would vary depending on whether or not
the establishment had an inhouse laboratory. It was assumed that
approximately 20 percent of samples would be collected in
establishments with in-house laboratories. For an establishment without
a laboratory the total cost for each sample was estimated as shown in
Table 11.
Table 11.--Cost of a Salmonella Sample Analysis for Establishments With
No In-House Laboratory
(Dollars)
------------------------------------------------------------------------
Component Cost
------------------------------------------------------------------------
Average Private Laboratory Cost................................. 22.60
Shipping........................................................ 7.00
[[Page 38974]]
Collecting and Packaging........................................ 3.75
-------
Total......................................................... 33.35
------------------------------------------------------------------------
The establishment without an in-house laboratory would also be
required to train an individual to perform aseptic sampling. The cost
components for a Salmonella test at an in-house laboratory were
estimated for the preliminary RIA as shown in Table 12.
Table 12.--Cost of a Salmonella Sample Analysis For Establishments with
An In-House Laboratory
[Dollars]
------------------------------------------------------------------------
Component Cost
------------------------------------------------------------------------
Laboratory Supplies............................................. 5.90
Collecting and Preparing Sample................................. 5.28
Laboratory Analysis (0.5 hours at $18.13 per hour).............. 9.07
-------
Total..................................................... 20.25
------------------------------------------------------------------------
Since the requirements in the final rule have changed
substantially, this section will present only a brief summary of what
was a relatively complex analysis to estimate the total industry
sampling costs associated with the proposed requirements. The costs
associated with the proposed Salmonella testing requirement are
summarized in Tables 13 and 14. Table 13 shows the different cost
components.
Table 13.--Component Costs for Microbial Sampling as Proposed
[$ Thousands]
----------------------------------------------------------------------------------------------------------------
Sample
Training Sampling collection Recording
Establishment category for aseptic plan and and review
sampling development analysis time
----------------------------------------------------------------------------------------------------------------
High........................................................ 10 508 5,267 242
Medium...................................................... 514 1,473 20,555 887
Low......................................................... 604 959 18,624 606
---------------------------------------------------
Subtotal.............................................. 1,128 2,939 44,446 1,735
===================================================
State....................................................... 998 1,588 21,150 688
---------------------------------------------------
Total................................................. 2,126 4,527 65,597 2,423
----------------------------------------------------------------------------------------------------------------
Table 14.--Aggregate Costs of Microbial Sampling as Proposed
[$ Thousands]
----------------------------------------------------------------------------------------------------------------
Number of raw
Establishment category product First year Recurring
operations costs costs
----------------------------------------------------------------------------------------------------------------
High............................................................ 793 6,027 5,509
Medium.......................................................... 2,301 23,429 21,443
Low............................................................. 1,498 20,792 19,230
-----------------------------------------------
Subtotal.................................................. 4,592 50,248 46,181
===============================================
State........................................................... 2,481 24,424 21,838
-----------------------------------------------
Total..................................................... 7,073 74,672 68,020
----------------------------------------------------------------------------------------------------------------
Note: All state establishments were assumed to be low volume producers. Columns may not add to totals due to
rounding.
Table 14 summarizes the first year and annual recurring costs.
Training and sampling plan development costs are one-time first year
costs. Sample analysis and recording costs are both recurring annual
costs. The following notations help characterize the estimated costs
from the preliminary analysis:
<bullet> Training and plan development costs were based on a total
of 7,073 raw product operations. This total is based on a count of meat
slaughter, poultry slaughter and raw ground processing operations.
Sample collection and analysis and recording and record review costs
were based on a count of 8,329 species-specific operations, i.e., the
total of beef slaughter, pork slaughter, raw ground processing, etc.
Thus, an establishment with beef slaughter, pork slaughter and raw
ground processing would count as two operations for training and plan
development, but three operations for sampling and recordkeeping.
<bullet> The proposed requirement of one sample per day per species
resulted in low volume federal establishments and state establishments
accounting for over 60 percent of the estimated first year costs (See
Table 14).
<bullet> The analysis underestimated costs in that with existing
data it was necessary to assume that the 3,029 establishments with raw
ground product operations produced only one product. The proposal would
have required 2 samples per day if an establishment produced both raw
ground beef and raw ground pork on a daily basis.
<bullet> The analysis overestimated costs in that it counted
operations for minor species or kind ( e.g. sheep and goats). The
proposal did not cover sheep, goats, equine, ducks, geese, etc.
<bullet> The analysis overestimated costs in that it assumed that
every establishment
[[Page 38975]]
with multiple operations was running each operation every day (260 days
per year).
<bullet> Each of the 7,073 operations would require a sampling
plan--25 hours for a QC manager at $25.60 per hour for a total of $640
per plan. At $640 per plan, 7,073 plans totaled $4.53 million as shown
in Table 13.
<bullet> The analysis assumed that 5,275 (approximately 75 percent)
of the 7,073 operations would have to train an individual to perform
aseptic sampling. The total of 5,275 includes all 1,498 low volume raw
operations, 1,275 (55.4%) of the 2,301 medium volume raw operations, 25
(3.2%) of the 793 high volume operations and 2,477 (99.8%) of the State
inspected raw product operations. Training was estimated at $403 per
operation--8 hours with a trainer at $37.50 per hour and a trainee at
$12.87 per hour. Training for 5,275 operations at $403 per operation
would cost $2.13 million as shown in Table 13.
<bullet> Recording and review time was estimated at 5 minutes per
day for each of the 8,329 species-specific operations. Five minutes per
day equals approximately 21.7 hours per year or an average of
approximately $291 per year per operation based on wages of $18.13 and
$12.87 per year (average of $13.43). The total is $2.42 million as
shown in Table 13. Since the requirement was one sample per day per
species, the cost estimates could also be viewed as 5 minutes per
sample.
c. Comments on the Preliminary RIA. Similar to the preliminary
analysis, the public comments focused on the cost of required
Salmonella sampling and did not address the overall impact of meeting
the proposed pathogen reduction performance standards for Salmonella.
The proposed regulation would have required daily sampling for each
species or kind slaughtered and each type (meat or poultry) of raw
ground product per establishment per day. Comments from individual
establishments indicated that some small establishments could be
required to take 5 or more samples per day. A ``small'' establishment
currently slaughtering three different species (beef, swine and lamb)
and producing multiple raw ground products estimated they would need
approximately 2,200 samples per year at a cost of approximately $77,000
per year. That is over eight per day based on a 260 day work year. A
``small'' ground meat processing establishment estimated they would
need over 500 samples from approximately 350,000 pounds of annual
production.
Several comments from ``small'' establishments pointed out that the
proposed sampling program placed a disproportionate burden on small
establishments from two perspectives. First, ``small'' establishments
have less production over which to spread the cost of sampling. Second,
smaller establishments tend to be the ones that slaughter more species
or kind and produce more varieties of raw ground product. Other
comments pointed out that the proposed Salmonella testing would not
provide a good procedure to validate process control.
There were also comments that referred to the cost of the product
that is lost or damaged during sample collection. A turkey processor
noted that the value of a 40 pound tom is $63.60 at wholesale price.
The same comment pointed out that shipping costs could be very high,
especially if next day service is required.
Several comments noted that the IFSE study estimated costs for
microbiological testing that were far higher than the cost estimates
provided by FSIS. Another commenter noted that microbiological testing
is being proposed to correct a deficiency of an inspection system that
is currently unable to detect microbial contamination of meat. If
mandatory inspection is a federally funded program, why not the
``correction'' of the system?
Most of the comments referred to the cost of the proposed
requirement and were not comments on the methodology used to determine
costs in the preliminary analysis. One comment that did address the
cost methodology had calculated the cost of a Salmonella test at $38.00
to $44.50 per test where FSIS used a cost of approximately $33.00 to
$34.00. There was some confusion concerning the proposed requirements.
Some comments indicated the establishments believed that they would
have to test every product line. Other comments based estimates on a
far costlier test for Salmonella indicating they assumed the test would
require information concerning the number of bacteria present, not just
a positive-negative result.
There were also comments that suggested that FSIS has overestimated
the cost of microbial sampling because, as the amount of laboratory
analysis increases, the cost per sample will probably decrease. Other
commenters pointed out that demand will lead to simpler and less costly
new methods development.
d. Response to Comments. The changes in the final rule eliminate
the issues raised by most of the comments. The comments concerning the
burden on ``small'' establishments made a convincing argument that
``small'' establishments could not afford to implement the microbial
sampling program as proposed. The final rule does not include a minimum
testing requirement for Salmonella. Each individual establishment can
conduct the level of testing they deem necessary to provide assurance
that they are meeting the pathogen reduction performance standards for
Salmonella.
The Agency agrees with public comments and conclusions reached at
technical conferences that the proposed Salmonella testing would not
have provided a good measure of process control. The final rule
requires that all slaughter establishments implement testing programs
using generic E. coli to validate control of slaughter and sanitary
dressing procedures. After reviewing all public comments and other
materials made available during the comment period, FSIS concluded that
using generic E. coli is more practical. Generic E. coli is generally
present in the feces of mammals and birds and is, therefore, an
excellent indicator of fecal contamination. It has a higher frequency
than Salmonella and can be tested and quantified relatively less
expensively and, therefore, provides a more efficient measure of
control of slaughter and sanitary dressing procedures. Testing for
generic E. coli is also easier for in-house establishment laboratories.
By basing E. coli sampling programs on production volume, the
Agency is responding to small establishment concerns over equity of the
regulatory burden. In addition, establishments with very low production
will be required to conduct sampling for only a limited time period
each year. Sampling will only be required for slaughter establishments.
Establishments slaughtering more than one kind of poultry or species of
livestock will be required to sample only the kind or species
representing the most production. There will also be provisions for
decreasing the number of samples after implementation of HACCP plans
and provisions for using alternative generic E. coli sampling programs
in cases where the establishment can present data demonstrating control
of slaughter and sanitary dressing procedures.
The comments referring to the value of lost product identified a
cost that was not addressed in the preliminary analysis. Such costs
will not be a factor for the final rule because beef and pork samples
collected by FSIS will use the wet sponge swab technique and poultry
samples will be collected using a whole
[[Page 38976]]
bird rinse. In both cases, no product will be damaged or lost.
With respect to comments referring to high microbial sampling costs
identified by the IFSE study, FSIS notes that the Agency's preliminary
cost estimates were based on the proposed regulatory requirement of one
test per species (carcass or raw ground product) per day for
Salmonella. The IFSE study based their per establishment costs on a
microbiological testing program currently being used in a beef
slaughter establishment. The cost estimates generated by the IFSE study
were not related to the testing program outlined in the proposed rule.
The comments were correct that FSIS based the preliminary cost
analysis on existing laboratory methods and on current laboratory cost
estimates. The comments suggesting less expensive methods are only
speculative. There is no way to estimate potential new methods. While
there is no way to predict the effect of increased demand on costs, it
seems reasonable to expect that, in the long run, laboratory analysis
costs per sample will go down as more firms implement microbial
sampling programs. FSIS notes that short run costs could actually
increase as demand goes up faster than the supply of laboratory
capability. In the long run, however, establishments should benefit
from quantity discounts and lower fixed costs per sample as the total
number of analyses increases.
e. Final Cost Estimates. The final rule requires that all
establishments slaughtering cattle, hogs, chickens or turkeys or
producing a raw ground product from these species or kind meet a new
pathogen reduction performance standard for Salmonella. This
requirement applies to an estimated 5,522 establishments as shown in
Table 15. Because the standard has been established using the baseline
studies that estimate a national prevalence by carcass, the Agency does
not have an estimate for the number of establishments that are
currently meeting the standard. The baseline studies do not provide
data on how pathogen levels vary between establishments and include
data from only the larger establishments that represent most of the
production.
Table 15.--Establishments Affected by the Pathogen Reduction Performance
Standard
------------------------------------------------------------------------
Very
Category small Small Large Total
------------------------------------------------------------------------
Cattle and hog slaughter............ 1,876 376 66 2,318
Poultry slaughter................... 100 121 143 364
Raw ground processing............... 1,413 1,358 69 2,840
-----------------------------------
Total......................... 3,389 1,855 278 5,522
------------------------------------------------------------------------
This analysis of how the Salmonella standards will impact the 5,522
establishments will, by necessity, be primarily a qualitative
discussion. The analysis will, however, develop two scenarios that can
be used to present a range of potential impacts.
Since the focus of this rule is about reducing pathogens in or on
raw meat and poultry products, it is anticipated that the potential
costs are greatest for those slaughter establishments that are
currently not meeting the new pathogen reduction performance standards.
For slaughter establishments, the potential costs take one of two
forms.
First, even though the rule does not require establishments to test
for Salmonella, the Agency recognizes that some establishments may
conduct their own Salmonella testing programs to avoid failing a series
of tests conducted by the Agency. Thus, it can be argued that the
Agency's intent to implement establishment specific testing for
Salmonella is indirectly requiring the industry to routinely monitor
their Salmonella levels to assure they will be in compliance.
The manner in which FSIS will implement its Salmonella testing
program should help keep establishment costs down. During the first
phase, referred to as pre-implementation testing, FSIS will test
product from each slaughter or raw ground operation and share those
results with the establishment. Thus, before FSIS begins the actual
enforcement of the Salmonella performance standards, the Agency will
provide each establishment with a status report on Salmonella
incidence. This pre-implementation testing will precede HACCP
implementation, which occurs from 18 to 42 months after publication of
the final rule. The pre-implementation results will assist the
establishments in preparing for implementation of HACCP and the
pathogen reduction performance standards. Establishments with low
incidence of Salmonella will have some level of assurance that they are
already meeting the new Salmonella standards.
The second type of potential cost relates to the question of
whether firms will have to make permanent changes in their processing
or production practices in order to comply with the pathogen reduction
performance standards for Salmonella. Reducing pathogens for slaughter
establishments involves either modifying the incoming animals or birds,
improving the dressing procedures so as to reduce contamination during
procedures such as hide removal and evisceration, or using
interventions such as antimicrobial treatments to kill or remove the
pathogens following contamination. For many establishments, the process
of implementing HACCP programs may, by itself, improve the dressing
procedures sufficiently to meet the new standard. Other establishments
may have to choose between slowing production lines, modifying some
attribute of their incoming live animals or birds, or adding post-
dressing interventions such as the new steam vacuum process or
antimicrobial rinses.
This analysis will examine the two types of costs for the three
industry segments of poultry slaughter, meat slaughter and raw ground
processing. The analysis develops two cost scenarios to estimate the
impact of the new pathogen reduction standards for Salmonella. As
discussed earlier, the Agency does not have an estimate for the number
of establishments that are currently meeting the standards.
The two cost scenarios are based on three general premises. The
first premise is that a certain portion of large establishments will
take whatever action is necessary to provide assurance that they are
meeting all regulatory requirements. The second premise is that the
establishments that are typically having problems controlling
operations today will also have problems meeting the Salmonella
standards. The low cost scenario is based on these first two premises.
FSIS has historically found serious control problems in from 5 to 10
[[Page 38977]]
percent of establishments. The recent 1,000 establishment review found
serious control problems in 8.9 percent of 358 randomly selected
establishments. The 1993 review of establishments with the New Turkey
Inspection System found 3 of 26 establishments with problems with
product ready for shipment. A 1991-1992 survey of poultry reprocessing
found that while only 2 percent of poultry is reprocessed off-line,
from 5 to 10 percent of the establishments had very high reprocessing
rates.
The high cost scenario is based on a third premise that (1)
approximately half of the affected establishments are currently not
meeting the standards and that (2) most large establishments and the
majority of smaller establishments will take some action to assure
compliance with the Salmonella standards.
As shown in Table 15, there are 2,318 cattle or swine slaughter
establishments that must meet the pathogen reduction performance
standards for Salmonella. The Agency does not have information that
would indicate that Salmonella testing is routinely conducted by a
major segment of the beef or pork industry. The baseline studies have
shown a one percent positive rate for steers and heifers and a 2.7
percent positive rate for cows and bulls. In addition, the Agency does
not know how, or if, beef and pork establishments would respond to the
Agency's Salmonella testing initiative. Given the relatively low levels
of Salmonella, most establishments will probably choose to depend on
the assurance provided by a validated, well functioning HACCP program.
To develop a low cost scenario, the Agency assumes that the 66
large establishments would initiate daily testing using in-house
laboratories ($20.25 per analysis--$347,490 per year) and that half of
the 376 small establishments would conduct weekly testing at outside
laboratories ($33.35 per analysis--$326,030 per year). Under a high
cost scenario, the large establishments would conduct 8 tests per day
($2.78 million per year), the small establishments would all conduct
one test per week ($652,059 per year) and half (938) of the very small
establishments would conduct a test each month ($375,388 per year). The
low and high Salmonella sampling costs for cattle and hog slaughter
operations are summarized in Tables 16 and 17, respectively.
Beyond testing, there is the issue of whether the required actions
of developing and implementing process control procedures will, by
themselves, be sufficient to meet the Salmonella standards or whether
changes in processing methods will also be required. FSIS recognizes
that beef and pork dressing procedures involve a lot of manual steps
and, therefore, it is reasonable to assume that substantial pathogen
reduction can be accomplished through training and careful monitoring
of the dressing procedures. This is especially true for the low volume
establishments that do not have automated lines and use what is known
as the ``bed kill'' dressing process.
For slaughter establishments that do have to make process
modifications, there are several options available. First, FSIS is
aware of establishments that are testing live animal washing systems.
Second, the preliminary analysis included estimates for the cost of
using different antimicrobial treatments for varying sizes of cattle or
hog slaughter establishments. The lowest cost option was a hot water
spray system with no cabinet. The cost for that system was estimated at
$.08 per carcass or approximately $8.78 million annually for all cattle
and hog establishments. In contrast, a pre-evisceration acid spray
system with both a pre-wash spray cabinet and a sanitizing cabinet was
estimated at $.79 per carcass for a low volume establishment. A TSP
system for cattle was estimated at $.85 per carcass for a low volume
establishment.
The preliminary analysis noted that 23 establishments were already
using acetic or lactic acid sprays on carcasses either before or after
evisceration. Other establishments had requested approval for citric
acid, TSP, or hot water.
Third, FSIS has now approved the new steam vacuum systems for beef
and pork operations. The installation of a steam vacuum system is
estimated at $10,000 per establishment, with expectations that
increased use will result in lower prices. Annual increased utility
costs to run a steam vacuum system are estimated at $4,000. Maintenance
cost is estimated at 5 percent or $500 per year.
For a low cost option, it is assumed that 10 percent of the large
establishments must install a steam vacuum system to meet the new
requirements and that half of 376 small establishments must use a hot
water rinse at $.08 per carcass. The initial costs for the steam
systems would be $70,000. Annual operating costs would be $31,500.
Annual operating costs for hot water rinses on half the small
establishment production would be $915,000.
Under a high cost option, it is assumed that half (33) of the large
establishments would have to install steam systems and that all small
and very small establishments would use hot water rinses. The initial
cost for steam systems would be $330,000. Annual operating costs would
be $148,500. Annual costs for hot water rinses would be $2,075,387. The
low and high process modification costs for cattle and hog slaughter
operations are summarized in Tables 16 and 17, respectively.
As shown in Table 15, there are an estimated 2,840 establishments
that produce raw ground products using ingredients from other
establishments. These establishments do not have the same opportunities
to reduce Salmonella levels as do slaughter establishments. They can
control growth by avoiding temperature abuse and can limit cross-
contamination, but basically they must depend on the Salmonella levels
of their incoming product in order to meet the performance standards.
These establishments may choose to test incoming product in order to
eliminate suppliers whose product is found to be positive. Larger
establishments that are important customers of other suppliers may
choose to include pathogen requirements in their purchase
specifications.
For a low cost scenario, this analysis assumes that the 69 large
firms would analyze one sample per day using in-house laboratories
($20.25 per analysis) and that 10 percent (136) of the small firms
would test one sample per week using an outside laboratory ($33.35 per
analysis). Under a high cost scenario, this analysis assumes that half
(679) of the small firms would test one sample per week and that the
large firms would double their sampling. Under each scenario, it is
assumed that the large establishments would begin testing 12 months
after publication and the small establishments 24 months after
publication. These starting dates correspond with the end of the
Agency's pre-implementation testing. The low and high Salmonella
sampling costs for raw ground processors are summarized in Tables 16
and 17, respectively.
As shown in Table 15, there are 364 poultry slaughter operations
that will be required to meet the new pathogen reduction performance
standards for Salmonella. FSIS believes that almost all of the larger
establishments in the poultry industry currently conduct routine or
periodic analyses for Salmonella and will use their ongoing testing
programs to (1) establish and validate their HACCP controls to assure
they will initially comply with the new pathogen reduction performance
[[Page 38978]]
standard, and (2) periodically verify continuing compliance. Therefore,
the costs for additional Salmonella testing in the poultry industry
will be minimal.
For cattle and hog operations, this analysis used the cost of
antimicrobials from the preliminary analysis in estimating possible
process modification costs. In contrast, for the poultry industry,
meeting the pathogen reduction performance standards is clearly not
analogous to meeting the proposed antimicrobial requirement. The
preliminary analysis assumed that 90 percent of all high volume poultry
processors and 70 percent of all low or medium volume processors
already meet that proposed requirement.
FSIS recognizes that many poultry establishments may have to modify
existing procedures to meet the new standards for Salmonella. Where
cattle and hog dressing operations still include many manual procedures
that can be easily controlled by improved training and monitoring, the
poultry slaughter industry is highly automated, increasing the
probability that process control may require modifications of
equipment, facilities, or incoming product. However, because there is
extensive vertical integration in the poultry industry, many firms have
the added option of controlling Salmonella in the live birds. There is
evidence that controlling Salmonella in feed and controlling rodents in
poultry houses can have a substantial impact on the level of Salmonella
in birds entering the slaughter facility.
In the late 1980's, FSIS tested some alternative processing methods
at an establishment in Puerto Rico. Two methods included a counterflow
scalder and a hot rinse immediately following the scald tank. At the
time, FSIS recognized that it may be expensive to retrofit an existing
establishment with a counterflow scalder because of the physical space
and plumbing required.
Recognizing that other options are available, this analysis
develops potential cost estimates based on the addition of TSP rinses.
TSP rinse systems for the poultry industry are relatively expensive. It
is currently estimated that a TSP installation would cost $40,000 per
line with an operating cost of $0.003 per broiler or $0.014 per turkey.
As a low cost option, FSIS assumes that 36 large poultry
establishments (27 broiler and 9 turkey establishments) will add TSP
systems. Average broiler production is estimated at 35 million and
average turkey production at 6 million. Annual average operating cost
are, therefore, $105,000 for a chicken slaughter operation and $84,000
for a turkey slaughter operation. Each large poultry establishment is
assumed to have 2 lines. Small establishments were assumed to average
1.5 lines.
As a high cost option, FSIS assumes that 182 (100 large and 82
small) poultry establishments will have to add TSP systems to meet the
new requirements. The 182 establishments include 136 chicken and 46
turkey slaughter establishments. The total low cost scenario for
poultry slaughter operations is summarized in Table 16. The high cost
scenario is summarized in Table 17.
Table 16.--Salmonella Testing and Process Modification Costs
[Low Cost Scenario--$000]
----------------------------------------------------------------------------------------------------------------
Industry sector cost category Year 1 Year 2 Year 3 Year 4 Year 5+
----------------------------------------------------------------------------------------------------------------
Sampling by Raw Ground Processors............................. 0 363 599 599 599
Process Changes for Cattle and Hog Slaughter Operations....... 0 86 489 947 947
Sampling by Cattle and Hog Slaughter Operations............... 0 347 674 674 674
Process changes for poultry slaughter operations.............. 0 4,676 3,591 3,591 3,591
-------------------------------------------------
Total................................................... 0 5,472 5,353 5,811 5,811
----------------------------------------------------------------------------------------------------------------
Table 17.-- Salmonella Testing and Process Modification Costs
[High Cost Scenario--$000]
----------------------------------------------------------------------------------------------------------------
Industry sector cost category Year 1 Year 2 Year 3 Year 4 Year 5+
----------------------------------------------------------------------------------------------------------------
Sampling by raw ground processors............................. 0 $727 $1,904 $1,904 $1,904
Process changes for cattle and hog slaughter operations....... 0 404 1,063 2,101 2,224
Sampling by cattle and hog slaughter operations............... 0 2,780 3,807 3,807 3,807
Process Changes for Poultry Slaughter Operations.............. 0 12,988 18,979 18,144 18,144
-------------------------------------------------
Total................................................... 0 16,899 25,753 25,956 26,079
----------------------------------------------------------------------------------------------------------------
After the initial implementation years, the annual cost for all
three industry sectors is approximately $5.8 million for the low cost
scenario. Under the high cost scenario, the total recurring industry
cost of meeting the new performance standards is $26.1 million per
year.
The high and low cost scenarios have addressed the potential costs
of process modification when establishments find they are not meeting
critical limits set to assure compliance with the new pathogen
reduction standards for Salmonella. While the scenarios have addressed
permanent process modifications, it is also reasonable to assume that
meeting the Salmonella standards would involve some day-to-day process
adjustments, i.e., corrective actions that do not involve adding new
procedures or new equipment. One example would be the decision to
reduce line speeds on a day when the incoming live animals are
particularly dirty. The Agency believes that many establishments
already take this type of precautionary action.
Under HACCP, there will presumably also be some costs associated
with corrective actions related to critical limits set for the purpose
of meeting existing regulatory limits. As discussed earlier under
methodology, the preliminary analysis did not include any costs for
taking corrective actions when such deviations from critical limits
occur. If this rulemaking were implementing a new regulatory program
where none had previously existed, one might expect to see
establishments experiencing considerable additional costs due to
temporary production down-time, the need to rework or condemn product
or the need to
[[Page 38979]]
investigate the causes of deviations and develop corrective action
plans. Meat and poultry inspection is, however, an existing regulatory
program with a broad range of requirements that are well understood by
the regulated industry and enforced by the daily presence of an
inspector. The system already includes procedures whereby
establishments are (1) implementing corrective actions for almost a
million written Processing Deficiency Records (PDRs) annually, (2)
developing written Establishment Improvement Programs (PIPs) when
continuing problems with facility maintenance are observed, and (3)
developing Corrective Action Plans when establishments experience
serious ongoing problems in complying with existing sanitation or other
regulatory requirements. In addition, the regulations already include a
wide array of time and/or temperature requirements for cooking and
chilling processed products. Many of the existing regulations have been
developed with the standards of food safety in mind that are
represented by critical limits under HACCP.
Within this existing regulatory framework establishments already
experience down-time and expend considerable resources discussing
causes of problems and plans for preventing future occurrences. Thus,
from the perspective of looking at the existing system, FSIS does not
envision that establishments will experience a significant increase in
the costs of corrective action and believes the new system can help
establishments avoid situations that currently cost them resources to
correct. FSIS views the new program as a more effective way of assuring
that establishments meet already established health and safety related
requirements. For example, the requirement that establishments develop
and implement sanitation SOPs does not include any change in existing
sanitation standards. Under the existing system, FSIS takes
responsibility for determining when establishments meet the standard
and when they can operate. Under the new program, establishments will
have to document their procedures and take responsibility for
implementing those procedures before they begin operations. FSIS
recognizes that some establishments will have to spend more time
cleaning facilities and equipment. Today, many establishments conduct
sanitation procedures only after inspection has identified a problem.
FSIS does not, however, view such increased costs of sanitation as a
cost of this rulemaking. If this rule imposes such additional costs, it
is because the HACCP-based program will inherently provide improved
enforcement procedures in situations where firms have been substituting
the inspector's sanitation review for their own production control.
In summary, under the broader cost category of process modification
and corrective action, FSIS has concluded that the cost of this rule is
most appropriately addressed under the subject of potential costs
associated with meeting the new pathogen reduction standards. The low
and high cost scenarios provide the estimates for these potential
costs. As will be discussed under the next topic of generic E. coli
testing, these low and high cost scenarios include the types of actions
establishments would take if they were also experiencing continuing
difficulty in meeting criteria established for generic E. coli.
The final rule also requires that all establishments that slaughter
cattle, swine, chickens or turkeys implement testing programs for
generic E. coli to validate control of slaughter and sanitary dressing
procedures. All samples will be analyzed for quantity, i.e., number of
bacteria present. These testing programs will use production volume as
the basis for determining the frequency at which establishments will
conduct testing for generic E. coli. The frequencies for E. coli
testing for each slaughter species are as follows:
cattle--1 test per 300 carcasses
swine--1 test per 1,000 carcasses
chickens--1 test per 22,000 carcasses
turkeys--1 test per 3,000 carcasses
These frequencies were selected so that, in the subgroup of
establishments accounting for 99 percent of total production for each
species, the 5 percent of establishments with the highest production
volume would each have to conduct a minimum of 13 E. coli tests, or one
test window, each day. With these frequencies, 90 percent of all
cattle, 94 percent of all swine, 99 percent of all chicken, and 99
percent of all turkeys will be slaughtered in establishments conducting
a minimum of one E. coli test per day.
The above frequencies notwithstanding, all slaughter establishments
must conduct sampling at a minimum frequency of once per week.
Establishments with very low volumes, slaughtering at or below 6,000
cattle, 20,000 swine (or a combination of such livestock not to exceed
a total of 20,000, with a minimum of 6,000 cattle), 440,000 chickens,
or 60,000 turkeys annually, will only be required to sample once per
week until a sampling window has been completed where the results
indicate that the slaughter and dressing process is under control. Once
these criteria have been met, these establishments will be required to
complete a new sampling window once each year, or when a change has
been made in the slaughter process or personnel. This cost analysis
assumes that the average low volume establishment will have to complete
two windows (26 samples) each year before they meet the established
criteria, recognizing that some establishments will meet the criteria
on their first window and others may require three or more.
The final rule also provides that slaughter establishments
operating under a validated HACCP system may use a sampling frequency
other than that provided for in the regulation if the alternative
sampling frequency is an integral part of the establishment's HACCP
verification procedures and if FSIS does not determine, and notify the
establishment in writing, that the alternative frequency is inadequate
to verify the effectiveness of the establishmen's slaughter and
sanitary dressing controls. In addition, the final rule allows an
establishment to use an existing generic E. coli sampling program if it
can provide the data necessary to show that the existing plan is
assuring adequate control. This analysis has not attempted to account
for alternative sampling frequencies. It is likely that any reduction
in generic E. coli sampling would be offset by alternative verification
procedures.
The estimated component costs for collecting, shipping and
analyzing a generic E. coli sample at a commercial laboratory are shown
in Table 18.
Table 18.--Cost of a Generic E. coli Sample Analysis Commercial
Laboratory
[Dollars]
------------------------------------------------------------------------
Component Cost
------------------------------------------------------------------------
Average private laboratory cost................................. 13.00
Shipping........................................................ 7.00
Collecting and packaging........................................ 3.75
-------
Total..................................................... 23.75
------------------------------------------------------------------------
The component costs for collecting and analyzing a generic E. coli
sample at an FSIS field laboratory are shown in Table 19.
[[Page 38980]]
Table 19.-- Cost of a Generic E. coli Sample Analysis FSIS Field
Laboratory
[Dollars]
------------------------------------------------------------------------
Component Cost
------------------------------------------------------------------------
Sample collection supplies...................................... 1.45
Sample collection (0.5 hrs/$18.60 per hr)....................... 9.30
Laboratory supplies............................................. 2.90
Laboratory analysis (0.5 hrs/$18.60 per hr)..................... 9.30
-------
Total..................................................... 22.95
------------------------------------------------------------------------
Based on the above average cost estimates, this final RIA uses a
per sample cost of $24 per analysis, recognizing that establishments
with in-house laboratories will be able to conduct sample analysis at
lower costs. In using the average cost of $24 per sample, FSIS is
providing an upper bound estimate. The corresponding cost per sample
for Salmonella was $33.35 at a commercial laboratory. Thus, using
generic E. coli instead of Salmonella for process control validation
has reduced the per sample cost by approximately 30 percent.
Aggregate annual sampling costs were estimated by applying the
sampling frequencies to annual production data recorded by the Animal
Disposition Reporting System (ADRS), an existing Agency database. The
ADRS includes the total annual production in terms of number of
livestock or poultry slaughtered for each federally inspected
establishment. Table 20 summarizes estimates for the number of samples
that will need to be collected and analyzed each year by the 364
inspected poultry slaughter operations. As shown in Table 20, the 364
establishments will be required to analyze 419,123 samples annually.
Table 21 summarizes estimates for the number of samples that will need
to be collected and analyzed each year by the 2,318 inspected cattle
and swine slaughter operations. As shown in Table 21, the 2,318
establishments will be required to analyze 252,640 samples annually.
The smallest 2,098 slaughter operations (less than 6,000 cattle,
20,000 swine, 60,000 turkeys and 440,000 chickens) will be required to
analyze one sample per week until they demonstrate compliance with
established criteria. This analysis assumes an average of 26 samples
per establishment per year, recognizing that some may need more and
others less. These 2,098 smaller slaughter operations (over 78 percent
of the total 2,682) will not be required to conduct any further
analyses within a given year unless major changes to facilities,
equipment or personnel occur.
Tables 20 and 21 were constructed assuming that all establishments
operate on a 52 week, 260 day, 40 hours per week, 2,080-hour work-year.
As discussed above, this final RIA does not attempt to account for
possible reductions in sampling frequency in establishments where the
establishment can demonstrate an existing acceptable alternative
program or where alternative frequencies are an integral part of
successful HACCP verification procedures.
Tables 20 and 21 incorporate data from the preliminary analysis
showing that there are 1,328 state-inspected slaughter establishments,
with an estimated 1,270 slaughtering cattle or swine and 58
slaughtering poultry. Based on additional data collected in July 1995,
FSIS anticipates that 50 of the state-inspected cattle or swine
slaughtering establishments will exceed the limits of 6,000 cattle or
20,000 hogs and will be required to conduct a minimum of one sample per
week on an ongoing basis. It is further assumed that none of these
establishments will have to conduct more than one per week, i.e.,
cattle slaughter is under 15,600 (300 x 52) and swine slaughter is
under 52,000 (52 x 1,000). The other 1,220 state-inspected cattle or
swine establishments would average 26 samples per year (2 windows). The
July 1995 data indicate that all 58 state-inspected establishments
slaughtering poultry process fewer than 60,000 turkeys and 440,000
chickens annually.
Table 20.--Required E. Coli Sampling for Poultry Slaughter Establishments
----------------------------------------------------------------------------------------------------------------
Annual slaughter production Number Average sampling rate Annual
category establishments Sampling range per day per establishment samples
----------------------------------------------------------------------------------------------------------------
Chickens over 45.8 million......... 60 Over 8 per day........ 10.9 Per Day.......... 170,300
Chickens 5.72 to 45.8 million...... 125 1-8 per day........... 4.7 per day........... 152,230
Chickens 440,000 to 5,720,000...... 23 1 per week-1 per day.. 1.9 per week.......... 2,215
Turkeys over 6.24 million.......... 18 Over 8 per day........ 12.7 per day.......... 59,540
Turkeys 780,000 to 6,240,000....... 25 1-8 per day........... 4.8 per day........... 31,330
Turkeys 60,000 to 780,000.......... 5 1 per week-1 per day.. 2.7 per week.......... 700
Chickens under 440,000 and Turkeys 108 NA.................... One per week (26 2,808
under 60,000. weeks).
----------------------------------------------------------------------------
Total........................ 364 NA.................... NA.................... 419,123
----------------------------------------------------------------------------------------------------------------
NA--Not applicable.
Table 21.-- Required Generic E. coli Sampling for Swine and Cattle Slaughter Establishments
----------------------------------------------------------------------------------------------------------------
Annual slaughter production Number of Average sampling rate Annual
category establishments Sampling range per establishment samples
----------------------------------------------------------------------------------------------------------------
Cattle over 780,000................ 16 10 or more per day.... 14.8 per day.......... 61,750
Cattle between 78,000 and 780,000.. 50 1-10 per day.......... 3.2 Per Day........... 41,340
Hogs over 2,080,000................ 17 8 or more per day..... 11.6 per day.......... 51,090
Hogs between 260,000 and 2,080,000. 29 1-8 per day........... 4.0 Per Day........... 30,290
Cattle between 6,000 and 78,000 and/ 216 One per week--one per 1.5 per week.......... 16,430
or hogs between 20,000 and 260,000. day.
Under 6,000 cattle and under 20,000 1,990 NA.................... One per week (26 51,740
Hogs. weeks).
----------------------------------------------------------------------------
Total........................ 2,318 NA.................... NA.................... 252,640
----------------------------------------------------------------------------------------------------------------
NA--Not applicable.
[[Page 38981]]
The total costs for meeting the final requirements for generic E.
coli sampling in poultry and livestock slaughter establishments are
summarized in Tables 22 and 23. These tables use the same cost
estimates as the preliminary analysis for requirements such as plan
development, training and recording and reviewing analytical results.
Plan development is $640 per plan. The preliminary analysis assumed
that 75 percent of operations will require training for aseptic
sampling at $403 per operation. Recording and reviewing laboratory
results averages 5 minutes per sample at an average wage of $13.43.
As shown in Table 22, implementation costs (training and sampling
plan development) for generic E. coli sampling in poultry
establishments will be $286 thousand. For cattle and swine
establishments, the implementation costs are $2.34 million as shown in
Table 23. Annual recurring costs total $10.5 million for for the 364
poultry establishments and $6.35 million for the 2,318 cattle and swine
establishments. The total implementation costs for all 2,682 slaughter
establishments are $2.63 million. The total recurring costs are $16.85
million.
In addition to the required sampling costs, there is the question
of whether there will be additional compliance costs for establishments
where test results indicate the performance criteria generic E. coli
are not being met. In addressing this question, FSIS considered several
factors. First, FSIS acknowledges that some establishments will find
they are in compliance with the pathogen reduction standards for
Salmonella, but are not meeting the performance criteria for generic E.
coli. Second, the fact that the performance criteria are not
established as enforceable regulatory standards does not mean that
there will not be compliance costs. Third, the compliance actions
identified for meeting the Salmonella standards (steam vacuum system,
TSP systems and hot water rinses), are the same actions establishments
would likely employ to achieve compliance with the performance
criteria.
Table 22.--Costs for Implementing Generic E. coli Sampling Programs in Poultry Slaughter Establishments
[Dollars in Thousands]
----------------------------------------------------------------------------------------------------------------
Number of Samples
establishments Training Sampling collection Recording
Production Category (number of for aseptic plan and and review
annual sampling development analysis (recurring)
samples) (recurring)
----------------------------------------------------------------------------------------------------------------
Turkeys Under 60,000; Chickens Under 440,000 108
(2,808) 44 69 67 3
Turkeys Between 60,000 and 780,000; Chickens
Between 440,000 and 5,720,000.............. 28
(2,915) 6 18 70 3
Turkeys over 780,000; Chickens over
5,720,000.................................. 228
(413,400) 3 146 9,992 463
-------------------------------------------------------------------
Total................................. 364
(419,123) 53 233 10,059 469
----------------------------------------------------------------------------------------------------------------
Table 23.--Costs for Implementing Generic E. coli Sampling Programs for Cattle and Swine Slaughter
Establishments
[Dollars in Thousands]
----------------------------------------------------------------------------------------------------------------
Number of Samples
establishments Training Sampling collection Recording
Production category (number of for aseptic plan and and review
annual sampling development analysis (recurring)
samples) (recurring)
----------------------------------------------------------------------------------------------------------------
Cattle Under 6,000; Hogs Under 20,000....... 1,990
(51,740) 802 1,274 1,242 58
Cattle Between 6,000 and 78,000; Hogs
Between 20,000 and 260,000................. 216
(16,430) 54 138 394 18
Cattle over 78,000; Hogs over 260,000....... 112
(184,470) 1 72 4,427 206
-------------------------------------------------------------------
Total................................. 2,318
(252,640) 857 1,484 6,063 283
----------------------------------------------------------------------------------------------------------------
After considering the above factors, FSIS concluded that if the low
cost scenario for compliance with Salmonella standards proves to be
more accurate, there will likely be more separate compliance costs for
generic E. coli. As the costs for Salmonella compliance go up, the
likelihood of separate generic E. coli costs goes down. It is important
to note that under the high cost scenario, all cattle and swine
slaughter establishments are using the steam vacuum system or a hot
water rinse and half of all poultry slaughter establishments are using
TSP systems. Under this scenario, it is difficult to imagine that any
establishments would
[[Page 38982]]
still be failing to meet the performance criteria for generic E. coli.
FSIS considered the possibility that the smaller establishments
conducting only seasonal testing would increase testing to cover the
whole year to provide better assurance of control over sanitary
dressing procedures. However, FSIS rejected this possibility after
considering the cost pressures on small businesses. FSIS would
certainly not expect to see these establishments use both expanded
testing and hot water rinses.
3. HACCP Programs--Plan Development and Annual Reassessment Costs
a. Summary of Requirements. The proposed rule included a
requirement that each inspected establishment develop a written HACCP
plan for each distinct ``process'' conducted on the premises. The
proposed rule identified nine process categories that would require
separate HACCP plans. Each plan would include: identification of the
processing steps which present hazards; identification and description
of the CCP for each identified hazard; specification of the critical
limit which may not be exceeded at the CCP (and if appropriate a target
limit); a description of the establishment monitoring procedures; a
description of the corrective action to be taken if the limit is
exceeded; a description of the records which would be generated and
maintained regarding this CCP; and a description of the establishment
verification activities and the frequency at which they are to be
conducted.
The requirements in the final rule for HACCP plans are essentially
the same. The final rule requires that each establishment conduct a
hazard analysis and then develop a comprehensive HACCP plan that covers
each hazard identified. The final rule has eliminated the nine process
categories because the sequencing of HACCP implementation will be based
on establishment size and not on process categories. The final rule
also includes the provision that each plan be reassessed on an annual
basis.
b. Review of Preliminary Cost Estimates. Using existing databases
(PBIS and ADRS) FSIS estimated that the 6,186 federally inspected
establishments would require 16,899 HACCP plans, an average of 2.73
plans per establishment. It was assumed that each of the 2,893 state
inspected establishments would have 2.1 plans per establishment for a
total of 6,120 plans. The total number of plans for all establishments
is, therefore, 23,019. The Agency requested specific comments on the
assumptions used to estimate the number of state plans, but received
none. In estimating the cost of HACCP plan development for federally
inspected establishments, FSIS used the following cost estimates as
shown in Table 24.
Table 24.--HACCP Plan Development Costs
------------------------------------------------------------------------
Plan sequence
Plan difficulty --------------------------
First Second Third
------------------------------------------------------------------------
Easy......................................... 4,000 2,000 1,000
Moderate..................................... 8,000 4,000 2,000
Difficult.................................... 12,500 6,250 3,125
------------------------------------------------------------------------
Table 24 accounts for both the complexity or difficulty of the plan
and the experience gained by developing previous plans. The table was
developed from several sources including discussions with a number of
private sector food consultants and the results of the HACCP Pilot
Program Cost Findings study which was conducted by RTI and completed in
August 1994. The RTI Study found that the nine pilot establishments
reported plan development costs ranging from $607 to $15,750.
For state establishments, FSIS assumed an average cost of $2,000
for 6,120 plans. For the federally-inspected establishments, the above
table generated an average cost of approximately $2,020 per plan. The
resulting average cost is relatively low because the preliminary
analysis credited each establishment with having developed one plan
prior to HACCP because of the need to develop plans for sanitation
SOPs, microbial sampling and time-temperature controls. It was assumed
that the experience gained in developing plans for these three near-
term interventions could be applied to their first HACCP plan.
<bullet> The total cost for developing 23,019 plans was estimated
at approximated $46.4 million ($34.14 million federal and $12.24
million state) spread over a 3 year implementation period.
c. Comments on the Preliminary RIA. There were several specific
comments on the cost of developing a HACCP plan. Examples include:
<bullet> To write each plan would cost around $9,000.
<bullet> Average time to draft a plan is 300 hours.
<bullet> Average time of 300 hours at $125 per hour ($37,500).
<bullet> An average of $5,000 per establishment.
<bullet> Approximately $1,000 to $1,500 per establishment.
More general comments stated that FSIS had underestimated or
overestimated the cost of plan development or that FSIS should develop
or pay for the cost of developing plans. There were also comments that
indicate that some establishments believed that they would be required
to have a separate plan for each product they produce.
d. Response to Comments. The comments that suggested FSIS had
overestimated costs or had developed an upper limit on implementation
costs, pointed out that a market driven response to the rule would
likely cut costs. The market would increase the number of consultants
which would be available at reduced costs, especially for small
establishments that are most likely to employ outside consultants.
While FSIS agrees that the number of available consultants will
increase and that the hourly cost for outside assistance will likely
decrease, the Agency notes that Table 24 was developed with those
factors in mind. The discussions with private sector food consultants
focused on projected costs, recognizing that costs would decrease as
more consultants became available and the overall level of industry
expertise and experience increased.
The comments included a wide range of estimates for the cost of
developing a HACCP plan. Most of the specific cost estimates contained
in the comments were within the ranges presented in Table 24. The
comments do not provide a compelling reason to modify Table 24,
especially since FSIS has an ongoing effort to develop implementation
aids for establishments that will help keep plan development costs
down. In addition to generic models that will be available at least six
months before any mandatory requirement, FSIS is developing or
considering: (1) Information publications, such as a HACCP Handbook
that explains how a establishment can effectively and economically
incorporate the seven principles into its operations; (2) training
videos and computer programs that present HACCP implementation guidance
in alternative formats; (3) models for onsite HACCP training of
establishment employees; and (4) a catalog of hazards with examples of
control measures and generic plans for each slaughter and processing
category described in the proposed rule. FSIS is also planning to
sponsor in-establishment demonstration projects to generate real-world
information and guidance about near-term and HACCP implementation
issues in small businesses.
FSIS will also continue its technical assistance to state programs
by including states' training officials in
[[Page 38983]]
Federal training efforts, by facilitating state access to and use of
federal computer support systems, and by expansion of state/federal
cooperative efforts through the Conference for Food Protection, the
National Association of State Departments of Agriculture, the
Association of Food and Drug officials, and the Meat and Poultry
Inspection Advisory Committee. Also, FSIS' plans for in-establishment
demonstration projects referenced above will focus on small
establishments under State regulation as well as those under Federal
regulation.
The findings from the nine pilot establishments reported in the RTI
study were based on conditions existing in the 1991-1992 time period.
Many factors have changed since then including the number of available
HACCP consultants, the number of trained individuals, the number of
courses available and the general level of knowledge concerning the
implementation of HACCP principles in food processing establishments.
These factors should help drive plan development cost down.
The 1994 RTI study noted that: ``Several participants commented
that there is a lot more discussion and information about HACCP in the
trade press and elsewhere today than there was even three years ago.
Without exception, participants felt that USDA could reduce the costs
of HACCP--especially training and HACCP plan development costs--by
making as much information about HACCP available as possible.''
In response to comments that FSIS should develop or pay for the
development of plans, FSIS believes that these suggestions would
diminish the principle of having industry take ownership and
responsibility for the production process. This principle is a key
factor in HACCP. If FSIS developed or paid for the plans, it would
detract from the establishment's assuming ownership and responsibility
for the HACCP plans. FSIS also believes that government funding of the
plans would set a bad precedent. If the government assumes the cost of
compliance with regulatory actions which ultimately benefit the
regulated industry, establishments will campaign for additional actions
leading to greater government outlays. Government funded plans would
also require an increase in the FSIS budget requiring a corresponding
increase in taxes and also likely lead to more expensive plans. By
bearing the costs, establishments will have a stronger incentive to
control plan development costs than FSIS. Finally, FSIS expects that
market forces will permit establishments to shift some of the costs to
producers and consumers which is a more equitable allocation of costs
than placing the burden on taxpayers in general.
In response to comments expressing concern that each product would
require a HACCP plan, FSIS notes that there is a major distinction
between requiring that ``each product must be covered by the
establishment's HACCP plan'' and requiring that ``each product have a
unique HACCP plan.'' The final complexity of an establishment's HACCP
plan is related to the number of distinct processes used by the
establishment and not the number of products produced.
e. Final Cost Estimates. Although the final rule has eliminated the
process categories and requires a single, comprehensive HACCP plan for
each establishment with hazards, the final cost estimates are based on
the earlier estimates of 16,889 plans for federally inspected
establishments and 6,120 plans for state inspected establishments.
Since final cost is still a function of the number and complexity of
processes, FSIS sees no reason to change the methodology for estimating
HACCP plan development costs. Furthermore, it is reasonable to assume
that establishments may develop their plans in segments beginning with
relatively simple processes and then proceeding to more complex
processes.
The final cost estimates for 23,019 HACCP plans are shown in Table
25. The final cost estimate for federally inspected establishments is
based on Table 24 which presents different costs, depending on the
sequence, for easy, moderate and difficult plans. The final cost
estimate does not, however, assume that the first HACCP plan is
actually the second plan because of experience gained in developing
sanitation SOP plans and microbial sampling plans. The result is that
the average cost for the 16,899 plans for federally inspected
establishments is now $3,240, up from the preliminary analysis average
of $2,020 per plan. The average cost for 6,120 plans in state inspected
establishments is $2,000, the same per plan cost used in the
preliminary analysis.
It is assumed that HACCP validation is an integral part of HACCP
plan development and that the requirement for annual reassessment will
be a minimal cost for establishments that do not modify their products
or processes and are not experiencing difficulty in meeting all
critical limits. The analysis assumes that the average annual
reassessment will take two hours per plan at a quality control
manager's salary of $25.60 per hour. Thus, the average annual
reassessment will cost $51.20 per plan.
Table 25.--Cost Of HACCP Plan Development and Annual Reassessment
----------------------------------------------------------------------------------------------------------------
Average
Number Number Total cost per Annual
Establishment category establishments plans cost plan reassessment
($000) (dollars) ($000)
----------------------------------------------------------------------------------------------------------------
Low.................................................. 2,234 5,106 17,762 3,479 261
Medium............................................... 3,103 8,712 28,075 3,223 446
High................................................. 849 3,081 8,911 2,892 158
==========================================================
Subtotal....................................... 6,186 16,899 54,748 3,240 865
State................................................ 2,893 6,120 12,240 2,000 313
----------------------------------------------------------
Total.......................................... 9,079 23,019 66,988 2,910 1,179
----------------------------------------------------------------------------------------------------------------
As discussed above under methodology, this cost analysis assumes a
static number of establishments and processes while recognizing that
the rule will add to the cost of new establishments or processes. One
such
[[Page 38984]]
cost would be the annual reassessment for establishments that add new
processes or substantially modify existing production practices.
4. HACCP Programs--Recordkeeping Costs
a. Summary of Requirements. The final rule requires that all
establishments record observations when monitoring critical control
points and document any deviations and corrective actions taken. The
rule also requires a certification review of records by an employee not
involved in recording observations. Such recording and certification
review of observations at critical control points is a fundamental
HACCP principle.
FSIS is requiring that the records involving measurements during
slaughter and processing, corrective actions, verification check
results, and related activities contain the identity of the product,
the product code or slaughter production lot, and the date the record
was made. The purpose of this requirement is to assure that both the
company and the regulator can readily link a record to a product and
the timeframe in which it was processed. FSIS is also requiring that
the information be recorded at the time that it is observed and that
the record be signed by the operator or observer.
FSIS is also requiring that the HACCP records be certified by a
company employee other than the one who produced the record, before the
product is distributed in commerce. The purpose of this review is to
verify that the HACCP system has been in operation during the
production of the product, that it has functioned as designed and that
the company is taking full responsibility for the product's meeting
applicable regulatory requirements. The employee conducting the
certification review must sign the records.
FSIS is also requiring that HACCP plans and records be available
for review by program personnel. Records access is necessary to permit
verification of all aspects of a HACCP system.
b. Review of Preliminary Cost Estimates. In the preliminary cost
analysis, recordkeeping cost was defined to include the time it takes
to make observations and record the results of those observations plus
the cost of certifying and maintaining records. Several key variables
were involved in the estimates for HACCP recordkeeping costs for the
preliminary RIA. First, it was established that recordkeeping costs are
related to the number of processing lines operating simultaneously and
not the number of HACCP plans. That is, an establishment may have
several HACCP plans but never have more than one operating at any given
time. To estimate recordkeeping costs it was necessary to collect data
on the average number of production lines operating per shift. To
estimate product lines, data was collected for a sample of low, medium
and high volume establishments from each of the FSIS Regional Offices.
The data on average number of simultaneous operating lines was
collected for processing operations, red meat slaughter operations and
poultry slaughter operations for both first and second shifts. Costs
were then estimated based on 7,639 federal and 4,080 state inspected
operations as shown in Table 26.
Table 26.--Operations in Federal and State Inspected Establishments
------------------------------------------------------------------------
Federal State
Manufacturing operation inspected inspected Total
establishments establishments
------------------------------------------------------------------------
Processing................... 6,006 2,752 8,758
Meat slaughter............... 1,327 1,270 2,597
Poultry slaughter............ 306 58 364
------------------------------------------
Total.................... 7,639 4,080 11,719
------------------------------------------------------------------------
It was further assumed that each State establishment was a single
shift establishment and that State establishments would have the same
number of production lines as the first shift of a low volume federal
establishment.
Other variables included the average number of CCP's per plan and
the average amount of time for recording and reviewing records per CCP.
For federally inspected establishments, the analysis assumed that
processing HACCP plans have an average of 7.4 CCP's and slaughter plans
have an average of 5 CCP's. It was assumed that State inspected
establishments will average 5 CCP's per HACCP plan. Recording time was
estimated at an average of 5 minutes per CCP per shift. Review time for
certification was estimated at an average of 2 minutes per CCP per
shift. Recording cost was estimated based on an employee earning $12.87
per hour. Certification cost was based on a supervisor or QC technician
earning $18.13 per hour. All storage costs were based on a national
survey of storage costs showing an average annual cost of $8.40 per
square foot.
Total recordkeeping costs are the sum of the costs for three
components: Monitoring CCP's and recording findings, certifying
records, and storing records. The following calculation for the annual
costs of recording the findings from monitoring CCP's in State
processing operations illustrates how the above estimates were used in
estimating total recordkeeping costs:
Recording Costs For State Processing Operations =
(2,752 operations) x (1.1 average production lines)
x (5 minutes per CCP per day <divide> 60 minutes per hour)
x (5 CCP's per line)
x ($12.87 per hour) x (260 days per year)
= Sec. 4.22 million
The total costs per establishment for recordkeeping, as estimated in
the preliminary analysis, are summarized in Table 27. The total
aggregate costs are shown in Table 28. The average cost per
establishment and the total aggregate costs were reduced to account for
the recordkeeping that already occurs in TQC, NELS and SIS
establishments.
Table 27.--Summary of Recordkeeping Costs per Establishment
[Dollars]
----------------------------------------------------------------------------------------------------------------
Recurring
Establishment category Recording Certifying Maintaining annual
observations records records cost
----------------------------------------------------------------------------------------------------------------
Low........................................................... 2,560 1,442 28 4,030
Medium........................................................ 4,202 2,368 52 6,621
High.......................................................... 10,994 6,195 90 17,279
State......................................................... 2,163 1,219 33 3,415
----------------------------------------------------------------------------------------------------------------
Table 28.--HACCP Recordkeeping Costs
[$ Thousands]
------------------------------------------------------------------------
Number of Annual
Establishment category establishments costs
------------------------------------------------------------------------
Low.......................................... 2,234 9,003
Medium....................................... 3,103 20,545
High......................................... 849 14,669
==========================
Subtotal............................... 6,186 44,217
State........................................ 2,893 9,880
Total.................................. 9,079 54,097
------------------------------------------------------------------------
With the methodology used for estimating recordkeeping costs, it is
also possible to look at annual recording and certification cost per
operating line. Assuming a line runs 52 weeks, 40 hours per week, 2,080
hours per year,
[[Page 38985]]
the average annual recordkeeping cost (excluding any storage costs) for
a processing line in a federally inspected establishment would be
$3,226.23 ($2,063.40 recording plus $1,162.74 certification). The
average annual cost for a federally inspected slaughter line would be
$2,179.88 ($1,394.25 recording plus $785.63 certification). All lines
in State inspected establishments were assumed to have an annual cost
of $2,179.88.
c. Comments on the Preliminary RIA. Most of the comments referring
to HACCP recordkeeping costs were general comments that the costs would
be extremely burdensome. The comments did not question the methodology
used in the preliminary analysis to estimate either recording,
reviewing or storage costs. The comments included at least two proposed
modifications that would substantially reduce costs. One comment
suggested that small establishments record only deviations from the
HACCP plan and responses to them. At one of the public hearings a
representative from a consumer organization suggested that inspectors
could conduct the recordkeeping in small establishments.
d. Response to Comments. FSIS believes that while both of the above
suggestions would reduce cost, they both do damage to the concept of
HACCP. Having the industry take ownership and responsibility of the
production process is a key component of HACCP. Having inspectors
conduct the recordkeeping would severely detract from ownership.
Furthermore, a fundamental HACCP principle requires that observations
be recorded and reviewed at critical points in the manufacturing
process on an ongoing basis. Recording only deviations does not meet
this principle.
The discussion of sanitation SOP recordkeeping costs identified
three factors that affect how one views such costs. At least two of
those factors apply here. HACCP recordkeeping is a cost that can be
reduced through good management and efficiency and should also decrease
with experience. If recordkeeping can be conducted by employees working
at a CCP location, the additional cost should be minimal. HACCP should
also substantially reduce the time establishment officials currently
spend interacting with or responding to inspection findings. In
addition to responding to the approximately 700,000 to 800,000
Processing Deficiency Records (PDRs) per year, establishments have
thousands of meetings with program officials following reviews
conducted by area and regional officials or reviewers from the Program
Review Division in Lawrence, Kansas. FSIS believes strongly that
establishment officials will find some recordkeeping time from reducing
inspection interaction time.
e. Final Cost Estimates. After considering the comments, FSIS does
not see a need to adjust the costs estimates shown in Tables 27 and 28.
The final aggregate cost estimates for recordkeeping are those shown in
Table 28.
5. HACCP Programs-Training Costs
a. Summary of Requirements. The final rule requiring that each
establishment have access to a HACCP-trained individual remains
identical to the training requirement as proposed. The final rule does
not, however, include the proposed requirement that the name and resume
of the HACCP-trained individual be on file at the establishment.
b. Review of Preliminary Cost Estimates. The proposed rule included
the requirement that each establishment have access to a HACCP-trained
individual. In the preliminary cost analysis FSIS pointed out that
establishments would have options for meeting that requirement. For
example, establishments could train an existing employee or use a
consultant on an as-needed basis. To provide a cost estimate, FSIS
assumed that each slaughter or processing operation would send one
employee to a recognized HACCP course for approximately three days.
The preliminary analysis assumed a combination establishment would
require training for both slaughter and processing operations. The
preliminary analysis identified 11,719 separate meat slaughter, poultry
slaughter and processing operations. The analysis assumed that 5
percent of these operations currently have a trained individual and
11,133 would require training.
Training would be a one-time, up-front expense. The cost of
training 11,133 establishment employees at $2,514 each would be
approximately $28 million. The $2,514 included tuition for a three-day
course, travel expenses and wages. In estimating these costs, FSIS used
a listing of 1994 HACCP courses compiled by the USDA Extension Service.
c. Comments on the Preliminary RIA. Most of the comments relating
to the cost of training industry personnel were of a general nature
(e.g., FSIS underestimated the cost of training) or suggested that all
training be funded by USDA. Many small processors lumped training with
other requirements and indicated that the cost of implementing HACCP
would force them to close. A couple of comments indicated that the
commenter believed they would have to hire an additional HACCP-trained
employee. Several comments noted that the training costs estimated in
the IFSE study were far higher than the costs estimated by FSIS.
d. Response to Comments. With respect to the comments that referred
to the higher training costs estimated in the IFSE study, FSIS notes
that the IFSE study assumed that training was both an up-front and a
continuing annual expense. They also assumed that HACCP training was
necessary for top management, supervisors and relevant hourly
employees. Since the IFSE study was written with a beef slaughter
establishment in mind, it is assumed that the authors believed it is
necessary to train some or all of the employees working the dressing
line. Under their assumptions, a high turnover would require
substantial recurring annual costs.
The FSIS cost estimate was tied to meeting the proposed regulatory
requirements. The IFSE estimates are the authors' judgment of what
would be required to ``successfully'' implement an effective HACCP
program. The IFSE study did not provide any rationale for the cost
estimates used. For example, the authors assumed that annual training
costs for 5,127 small businesses would be $10,000 each for a total
annual cost of $50 million. That estimate would appear high considering
the large number of establishments with fewer than five employees.
The IFSE study does raise the issue of whether a single three-day
course for one employee is adequate to ensure an effective HACCP
program. A low cost ongoing training program may be better. FSIS now
plans on having training videos and/or correspondence courses available
for each establishment. This will present an easier burden for very
small establishments because it will not require having an employee
leave on travel to receive training. As the number of available courses
and locations increases, travel costs will also decrease. Trade
associations can help provide local training for all establishments
near large metropolitan areas.
FSIS also recognizes that employee turnover will require some level
of recurring cost. The necessity of training new hires should, however,
decrease over time as the available pool of HACCP-trained individuals
increases. FSIS will, however, include a 10 percent recurring cost in
the final cost estimate.
[[Page 38986]]
e. Final Cost Estimates. The final training cost estimates are
shown in Table 29. The one-time cost of $27,988 thousand is the same
cost as estimated for the preliminary analysis. In response to
comments, an annual recurring cost of $2.8 million has been added.
Table 29.--HACCP--Training Costs
[$ Thousands]
------------------------------------------------------------------------
Recurring
Establishment category Number of One-time costs
employees cost (10%)
------------------------------------------------------------------------
Low.................................... 2,610 6,562 656
Medium................................. 3,593 9,033 903
High................................... 1,054 2,650 265
--------------------------------
Subtotal............................... 7,257 18,244 1,824
State.................................. 3,876 9,744 974
--------------------------------
Total.................................. 11,133 27,988 2,799
------------------------------------------------------------------------
6. HACCP Programs--Impact on Total Quality Control/Overtime Issues
a. Summary of Requirements. The proposed rule did not include
proposed revisions to existing Total Quality Control (TQC) regulations.
However, the preamble stated that FSIS is considering having HACCP be
the only Agency recognized health and safety related process control
system. The preliminary RIA published with the proposed rule stated
that: ``With the publication of the rule, TQC establishments could lose
their authority to produce and ship product after their normal shift
production time. As a result, 287 active TQC establishments could begin
to incur annual overtime charges.''
The final decisions on TQC regulations have not been made. This
final analysis uses the impact on overtime as a conservative estimate
of the potential impact of pending decisions.
b. Review of Preliminary Cost Estimates. The Agency's supplemental
cost analysis recognized that there are 287 TQC establishments that
would incur overtime costs to continue their current operating
schedules if the TQC regulations were eliminated. The total cost for
these 287 establishments was estimated at $2.1 million per year. The
preliminary analysis estimated that the total of 287 included 112 low,
124 medium and 51 high volume producers.
c. Comments on the Preliminary RIA. A TQC establishment commented
that under the proposed rule they would have to pay an additional
$32,308.80 per year in overtime charges. The establishment commented
that these additional overtime charges would equate to a substantial
portion of their annual net profit.
d. Response to Comments. The comment from the TQC establishment is
consistent with the preliminary analysis that was based on the premise
that TQC establishments would lose their authority to produce and ship
products after their normal shift production time. If such authority is
withdrawn establishments would have to incur overtime charges if they
want to continue their present operating schedules.
The establishment estimated its potential overtime cost based on an
assumption of 100 percent coverage. If the establishment's overtime
hours were covered by a patrol assignment, they would be subject to the
provisions of proportional coverage and the actual level of overtime
charges could be substantially lower.
Inspection assignments cover 8 hours of regular time and may also
include scheduled overtime inspection. An assignment may specify 8
hours in one establishment or direct the inspector to cover multiple
establishments, i.e., a patrol assignment where the inspector would
spend a portion of each day in each establishment. In cases where an
inspector spends 8 hours in a single establishment and that
establishment decides to operate for 2 hours of overtime on a routine
basis, inspection coverage may be provided by having the assigned
inspector work 2 hours of overtime. This type of coverage would be
likely if the establishment was located in an isolated area. In this
type of case, the establishment would be charged for 2 hours of
overtime inspection each day. This type of overtime situation would
lead to maximum costs as suggested by the commenter.
If the establishment was part of a patrol assignment and there were
two establishments working 2 hours of overtime, the overtime production
could be covered by having the inspector work 2 hours of patrol
overtime, but each establishment would only be billed for one hour,
i.e., proportional overtime coverage.
Because the majority of establishments are covered by patrol
assignments, proportional coverage is employed frequently. Thus, the
establishments' estimate of $32,308.80 is a maximum level. The actual
level of charges could probably be substantially lower.
e. Final Cost Estimates. This final analysis has included a cost of
$2.1 million for annual overtime charge. The analysis has assumed that
the additional overtime charges will occur on the same timeframe as the
sequencing of HACCP implementation.
E. Summary of Costs for Low Volume Producers
Because there has been particular interest in the impact of this
rule on small business, this final section summarizes the overall costs
for low volume producers. Table 30 illustrates the costs faced by a
typical low volume producer over the four-year implementation period.
Because there are less than 100 low volume poultry slaughter
establishments, the costs for generic E. coli sampling was not included
in Table 30. The costs illustrated in Table 30 apply to the majority of
inspected establishments, an estimated 2,234 federally inspected
establishments and all but a few of the 2,893 state inspected
establishments. These 5,000-plus establishments all meet the regulatory
flexibility definition for a very small establishment and have the full
42 months to implement mandatory HACCP systems. There are another 658
establishments (medium volume production) that will have slightly
higher costs, but will also have 42 months to implement HACCP because
they meet the regulatory flexibility criteria for a very small
establishment. All establishments meeting the regulatory flexibility
criteria for small establishments will have 30 months to implement
HACCP. The 353 large establishments (more than 500 employees) will be
required to implement HACCP 18 months after publication.
Table 30.--Summary of Costs for a Typical Low Volume Establishment
[Dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Cost category Year 1 Year 2 Year 3 Year 4 Year 5+
--------------------------------------------------------------------------------------------------------------------------------------------------------
I. Sanitation SOPs Plans and Training......................... <SUP>a 190 <SUP>................ <SUP>................ <SUP>................
Observation and Recording................................. 1,242 1,242 1,242 1,242 1,242
II. Compliance With Salmonella Standards...................... ................ ................ ................ <SUP>b 0-1,200 <SUP>b 0-1,200
[[Page 38987]]
III. HACCP Plan Development................................... ................ ................ ................ 4,231-7,952
Annual Plan Reassessment.................................. ................ ................ ................ ................ 177
Initial Training.......................................... ................ ................ ................ <SUP>d 2,937-3,368
Recurring Training........................................ ................ ................ ................ ................ 294-337
Recordkeeping............................................. ................ ................ ................ 2,015 4,030
IV. Additional Overtime....................................... ................ ................ ................ <SUP>e 0-3,702 <SUP>e 0-7,404
-----------------------------------------------------------------------------------------
Total................................................. 1,432 1,242 1,242 10,425-11,625 5,743-6,986
--------------------------------------------------------------------------------------------------------------------------------------------------------
<SUP>a This cost for the 112 low volume TQC establishments would be $64.
<SUP>b The estimate of $1,200 is based on monthly testing for two products and an antimicrobial rinse for one.
<SUP>c The Cost Analysis is based on estimates that low volume federally inspected establishments will require an average of 2.29 plans each, at a cost of
$3,479 per plan (see Table 25) for a total average plan development cost of $7,952. The number of plans for federally inspected establishments is
based on data from existing FSIS data bases. It was assumed that state plans have an average of 2.12 plans each for a total cost of $4,231 per
establishment ($2,000 per plan).
<SUP>d Average training costs for state establishments ($3,368 per establishment) were estimated to be slightly higher than the average federally inspected
low volume establishments ($2,937 per establishment) because the state programs have a higher percentage of combination slaughter and processing
establishments. The cost analysis assumed that plans would train one individual for each processing, red meat slaughter and poultry slaughter
operation.
<SUP>e The preliminary analysis estimated that 112 of 287 active TQC establishments are low volume producers. The average TQC establishment avoids an annual
overtime charge of $7,404. The cost estimates in Table 30 for additional overtime costs apply only to those 112 establishments and assume that TQC
provisions will be phased out as HACCP is phased in--42 months after publication for the low volume establishments. Because the overtime costs apply
to only 112 establishments, they are not included in the Table 30 totals.
The average costs shown in Table 30 will be a burden for many of
the low volume producers. However, there are factors that should help
diminish the burden. Most of the costs and essentially all of the
recurring costs are labor costs for monitoring sanitation procedures,
monitoring HACCP critical control points and keeping both HACCP and
sanitation records. As the above analysis points out, these are costs
that can be reduced through efficient management and allocation of
resources and should decrease with experience. The Agency also views a
portion of these costs as a shift in resources, i.e., establishment
management should spend more resources monitoring establishment
operations and less time interacting with program personnel.
Another way of illustrating costs to small businesses is to look at
the costs for one or more specific examples. Table 31 illustrates the
costs for a small, single-shift, processing establishment (no TQC or
sanitation PQC program) with two distinct production operations other
than raw ground product (overall average was estimated at 2.29 based on
data shown in Table 25).
Table 31.--Costs for Typical Single-Shift Processing Establishment
[Dollars]
------------------------------------------------------------------------
Development
and Recurring
Requirement Implementation Annual
costs Costs
------------------------------------------------------------------------
Sanitation SOP's............................ 190 1,242
HACCP Plan Development...................... 6,958 0
Annual Plan Reassessment.................... 0 102
Training.................................... 2,514 251
Recordkeeping............................... 0 6,480
---------------------------
Total................................... 9,662 8,075
------------------------------------------------------------------------
If one of the two production operations produced a raw ground
product, the establishment would have to meet the pathogen reduction
performance standard for that product. As noted earlier in the
development of the low and high cost scenarios for meeting the new
Salmonella standards, raw ground operations do not have the same
opportunities to reduce Salmonella levels as do slaughter
establishments. They can control growth by avoiding temperature abuse
and can limit cross-contamination, but basically they must depend on
the Salmonella levels of their incoming product in order to meet the
performance standards. These establishments may choose to test incoming
product in order to eliminate suppliers whose product is found to be
positive. The final analysis has assumed that the low volume producers
would not test incoming ingredients.
Table 32 illustrates the costs for a small, single-shift,
combination (slaughter and further processing) establishment that
slaughters cattle or swine, but not both, and has a single further
processing operation other than raw ground product. The establishment
is not under TQC inspection.
Table 32.--Costs for Typical Single-Shift Combination Establishment
[Dollars]
------------------------------------------------------------------------
Development
and Recurring
Requirement implementation annual
costs costs
------------------------------------------------------------------------
Sanitation SOP's............................ 190 1,242
Compliance with Salmonella Standards........ 0 800
E. coli Sampling............................ 1,043 653
HACCP Plan Development...................... 6,958 0
Annual Plan Reassessment.................... 0 102
Training.................................... 5,028 503
Recordkeeping............................... 0 5,434
---------------------------
Total................................... 13,219 8,734
------------------------------------------------------------------------
The cost of meeting the pathogen reduction performance standards
assumes that the establishment will use a hot water antimicrobial rinse
and have one sample per month analyzed at an outside laboratory ($33.35
per sample-$400 per year). The average number of head slaughtered in a
low volume establishment is approximately 5,000
[[Page 38988]]
annually. The annual cost for the rinse is $400.
The development costs for E. coli sampling in the small
establishment includes $640 for developing a sampling plan and $403 to
train an individual to conduct aseptic sampling. The recurring costs
are based on the assumption that an average low volume slaughter
establishment will have to complete two sampling windows (26 samples)
before they demonstrate compliance with established criteria.
The cost of HACCP training has doubled for the combination
establishment because the FRIA assumed that slaughter and processing
operations are significantly different, so that the establishment must
either train two employees or send one employee to two separate
training courses.
The HACCP recordkeeping costs (monitoring CCP's and recording
findings, reviewing records and storing records) in the above two
examples assume that the establishments are operating each process
continuously over a standard 52-week, 260-day, 2,080-hour work year.
Data collected during the preliminary analysis indicates that many low
volume establishments frequently have only a single production line
operating at a given time. As shown in Tables 27 and 30, the final
analysis estimates an average annual cost for HACCP recordkeeping of
$4,030 for low volume establishments.
Appendix A to Final Regulatory Impact Assessment
Response to Comments Related to the Preliminary Regulatory Impact
Analysis But Not Addressed Directly in the Text of the Final Analysis
1. A comment noting that the ``data in Tables 1 and 2, (60 FR 6781)
for Toxoplasma gondii are confusing or in error'' is correct. The
tables as published contained typographical errors that have been
corrected for this analysis. The number of cases of foodborne illness
from toxoplasmosis should be 2,056 cases, not 3,056 cases. The total
number of cases from the foodborne illnesses considered also needs to
be adjusted to correct for the above typographical error. Specifically,
the total number of cases should be 3,605,582 to 7,132,823, and not
3,606,582 to 7,133,823.
2. The same comment questioned whether it is true that the
``estimated medical costs for the 2,056 cases (toxoplasmosis) and 41
deaths is $2,7000,000,000?'' This estimate is correct but these costs
include the estimated costs of lost productivity and costs of
residential care as well as the estimated medical costs of
toxoplasmosis.
3. There were several comments that indicated that while attempting
to reduce the overall public health risk, the Agency could be
increasing the risk to farmers and small producers that now have
livestock custom-slaughtered at inspected establishments. If a large
number of these small diverse businesses go under, the comments
predicted an increase in at- home slaughter under very marginal
conditions. These comments imply at-home slaughter is a high risk
practice using terms such as barn yard butchering or shade tree
butchering or back shed butchering.
Changes in the final rule should allow most small businesses to
continue to operate successfully under inspection. There are some small
businesses that are currently primarily custom-exempt/retail exempt
operations that may choose to withdraw from inspection. These types of
facilities will still be available for their custom slaughtering
services.
4. A comment referred to the FSIS assertion that consideration of
the costs of the various alternatives under examination is not relevant
because the alternatives do not meet the Agency's goal of achieving the
maximum pathogen reduction possible. The commenter concluded that this
is an entirely inappropriate analytical framework for the examination
of regulatory alternatives. By starting from the assumption that only
the maximum benefit attainable will suffice, FSIS effectively renders
its consideration of available regulatory alternatives a complete sham.
The purpose of a regulatory impact assessment should be to examine both
the benefits and the costs attributable to each available alternative,
and to consider whether there is an alternative to the Agency proposal
that is a more cost-effective means of addressing the problem at hand.
5. One commenter stated that the Agency must include the costs
attributable to the retained requirements as well. These retained costs
will significantly increase the operational costs of the combined,
layered system. FSIS does not agree that the RIA needs to include the
cost of existing requirements.
6. Comments expressed concern that the proposed rule was an
experiment to collect the data needed to determine whether it was a
good idea. These comments stated that industry should not bear the cost
of a government research project. FSIS has clearly stated the public
health objective of this rule.
7. There are several comments that referred to a study conducted by
the Research Triangle Institute for FSIS. In that study, HACCP Pilot
Programs Cost Findings, August 31, 1994, RTI collected cost information
during personal interviews at all nine establishments that had
participated in USDA's HACCP Model Pilot Program.
One comment noted that the pilot establishments used for the study
are establishments that are larger than most of the establishments that
are going to be affected. The RTI study noted that none of the
voluntary participants have annual sales under $3 million. The RTI
study was one source of information for the FSIS cost analysis. The
Agency did not use the information in a way that suggested it was
representative of all establishments or in any way imply that it was.
Another comment stated that USDA relied very heavily on the nine
pilot establishment studies. The data collected by RTI was one source
of information used for the preliminary cost analysis. The analysis
clearly cites the RTI study as one of several data sources.
A comment during the public hearing attributed a cost of $23,000 or
$27,000 to the RTI study for a hazard analysis, plan development and
validation for a small business that doesn't need any equipment or
establishment upgrade. The RTI study reported costs for plan
development ranging from $607 to $15,750. FSIS assumes that the hazard
analysis is part of plan development. The RTI study did not address a
separate cost component for validation.
8. One comment indicated that the source of the estimates for total
cases and deaths for E. coli O157:H7 does not support the number used
in the benefit estimates. The preliminary analysis was based on 10,000-
20,000 total cases and an estimate of from 200-500 total deaths.
Sources identified were the AGA conference and CDC communications. The
``CDC comm.'' citation mentioned in the FSIS proposal refers to both
the Ostroff et al. (1989) and the McDonald et al. (1988) articles as
described in the comment. These references provide an incidence rate
for E. coli O157:H7 of 2.1/100,000 to 8/100,000. The AGA conference
suggests there are 10,000 to 20,000 cases of E. coli O157:H7 each year
in the United States. This translates to a rate of approximately 4/
100,000 to 8/100,000, which is higher on the lower estimate. ERS chose
to use the consensus numbers because they reflect the current thinking
of a nonadvocate panel of experts. FSIS agrees with the commenter that
better data on
[[Page 38989]]
foodborne disease incidence is needed but believe that the preliminary
analysis used the best estimates available.
9. Commenter stated FSIS relied on faulty data. FSIS responds that
there is a difference between saying data are limited and saying data
are faulty. Existing food safety data are limited and more thorough
data may not be available for a long time.
10. A commenter noted that FSIS did not address the ``cost'' of the
development of a highly susceptible population because some exposure is
necessary to establish immunity. The same commenter suggested there
might be a ``nutritional health'' cost penalty, i.e., the rule would
increase the cost of food so much that consumers would not be able to
afford nutritional food. FSIS notes that the commenter did not provide
support for these ``costs.''
11. A commenter noted that their low annual insurance premium of
$150 strongly suggests that the insurance industry considers their
existing safety record commendable and worthy of a low liability rate.
FSIS notes that another comment has suggested that lower rates are
being offered in conjunction with improved process control systems.
[FR Doc. 96-17837 Filed 7-18-96; 8:45 am]
BILLING CODE 3410-DM-P