Refrigeration and Labeling Requirements for Shell Eggs

DEPARTMENT OF AGRICULTURE

Food Safety and Inspection Service

7 CFR Part 59

[Docket No. 97-069F]

RIN 0583-AC04

Refrigeration and Labeling Requirements for Shell Eggs

AGENCY: Food Safety and Inspection Service.

ACTION: Final rule and request for comments.

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SUMMARY: The Food Safety and Inspection Service (FSIS) is revising its

regulations governing the inspection of eggs and egg products to

implement 1991 amendments to the Egg Products Inspection Act (EPIA).

These amendments require that shell eggs packed for consumer use be

stored and transported under refrigeration at an ambient temperature

not to exceed 45 deg.F (7.2 deg.C). In addition, the amendments require

that these packed shell eggs be labeled to state that refrigeration is

required. Finally, the amendments require that any shell eggs imported

into the United States packed for consumer use include a certification

that the eggs, at all times after packing, have been stored and

transported at an ambient temperature of no greater than 45 deg.F

(7.2 deg.C).

DATES: Effective Date: The effective date of the final rule is August

27, 1999.

Comment Date: As noted below, the proposed rule concerning

refrigeration and labeling requirements for shell eggs was published on

October 27, 1992. Because the proposed rule was published approximately

six years ago, FSIS is requesting comments on this final rule. FSIS

requests comments on the economic impact analysis in these regulations

and on options for monitoring compliance with the refrigeration and

labeling requirements. Comments must be received on or before October

26, 1998.

ADDRESSES: Send an original and two copies of comments to: FSIS Docket

Clerk, Docket #97-069F, Room 102, Cotton Annex, 300 12th Street, SW,

Washington, DC 20250-3700. Reference material cited in the document and

any comments received will be available for public inspection in the

FSIS Docket Room from 8:30 a.m. to 4:30 p.m., Monday through Friday.

FOR FURTHER INFORMATION CONTACT: Ms. Patricia F. Stolfa, Assistant

Deputy Administrator, Regulations and Inspection Methods, Food Safety

and Inspection Service, U.S. Department of Agriculture (202) 205-0699.

SUPPLEMENTARY INFORMATION:

Background

In 1991, as part of the Food, Agriculture, Conservation and Trade

Act Amendments of 1991 (Pub.L. 102-237) (hereafter referred to as ``the

1991 EPIA amendments''), Congress amended the EPIA to require that egg

handlers store and transport shell eggs destined for the ultimate

consumer under refrigeration at an ambient temperature of no greater

than 45 deg.F (7.2 deg.C) (21 U.S.C 1034(e)(1)(A)). (See also 21 U.S.C.

1037(c)). The 1991 EPIA amendments specify that these refrigeration

requirements apply to shell eggs after they have been packed into a

container destined for the ultimate consumer. The 1991 EPIA amendments

also require that egg handlers label the shell egg containers to

indicate that refrigeration is required (21 U.S.C. 1034(e)(1)(B)). In

addition, these amendments require that any eggs packed into a

container destined for the ultimate consumer and imported into the

United States include a certification that the eggs have, at all times

after packaging, been stored and transported at an ambient temperature

that is no greater than 45 deg.F (7.2 deg.C) (21 U.S.C. 1046(a)). The

1991 EPIA amendments specify that these requirements become effective

12 months after promulgation of final regulations implementing the EPIA

amendments (21 U.S.C. 1034 note).

The Agricultural Marketing Service (AMS) proposed a rule in 1992 to

implement the 1991 EPIA amendments (57 FR 48569, October 27, 1992);

however, AMS never published a final rule incorporating these

amendments into the regulations governing the inspection of eggs and

egg products. Following enactment of the Federal Crop Insurance Reform

and Department of Agriculture Reorganization Act of 1994 (Pub.L. 103-

354; 7 U.S.C. 2204e), food safety issues were consolidated in FSIS.

Because these statutorily mandated requirements are intended to improve

food safety, FSIS, rather than AMS, is promulgating this final rule to

revise the regulations governing the inspection of eggs and egg

products to implement the 1991 EPIA amendments. By January 1, 1999,

FSIS and AMS will publish revisions to the regulations transferring the

provisions concerning refrigeration and labeling of shell eggs from 7

CFR, Chapter I, to 9 CFR, Chapter III, so that these provisions will be

in the same title as the Federal meat and poultry products inspection

regulations.

The 1998 Appropriations for Agriculture, Rural Development, Food

and Drug Administration, and Related Agencies (1998 Appropriations)

(Pub.L. 105-86) provides that $5 million of FSIS' annual appropriation

will be available for obligation only after the Agency promulgates a

final rule to implement the refrigeration and labeling requirements

included in the 1991 EPIA amendments. The Agency is thus revising its

regulations to implement these requirements. FSIS is adopting the

proposed regulations published in 1992 concerning refrigeration and

labeling of shell eggs with some technical changes based on its review

of the proposed rule and the comments on that proposal.

In addition to the refrigeration and labeling requirements, AMS's

proposed rule included revisions to 7 CFR Part 56, Grading of Shell

Eggs and U.S. Standards, Grades, and Weight Classes for shell eggs.

FSIS is publishing this final rule on the refrigeration and labeling

requirements but is not revising part 56.

Under the 1991 EPIA amendments, USDA is responsible for enforcing

the refrigeration and labeling requirements at storage facilities and

transport vehicles of shell egg packers (21 U.S.C. 1034(e)(1) and (2)).

The Secretary of Health and Human Services is responsible for enforcing

the labeling and refrigeration requirements at food manufacturing

establishments, institutions, and restaurants, other than plants

packing eggs (21 U.S.C. 1034(e)(3)).

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On May 19, 1998 (63 FR 27502), FSIS and the Food and Drug

Administration (FDA) published an advance notice of proposed rulemaking

(ANPR) concerning Salmonella enteritidis (SE) in eggs. Through this

notice, the Agencies are seeking to identify farm-to-table actions that

will decrease the food safety risks associated with shell eggs. The

ANPR may result in additional Agency actions concerning shell eggs.

Although this final rule may bring about a small reduction in SE risk,

it does not address many of the underlying food safety problems posed

by eggs. These problems can only be dealt with in the context of a

broader process that examines a variety of food safety issues in

addition to ambient air temperatures. Through the ANPR, FSIS and FDA

are looking at how best to address the food safety concerns of shell

eggs as part of their mutual farm-to-table HACCP strategy. Any

additional actions that may result from this process will be considered

in light of identified public health risks and available alternatives.

On June 12, 1998, FSIS completed a risk assessment concerning SE in

shell eggs and egg products in response to an increasing number of

human illnesses associated with consumption of shell eggs (FSIS,

Salmonella Enteritidis Risk Assessment, Washington, DC, June 12, 1998).

The objectives of this risk assessment are to: establish the

unmitigated risk of foodborne illness from SE, identify and evaluate

potential risk reduction strategies, identify data needs, and

prioritize future data collection efforts. This risk assessment

developed a model to assess risk throughout the egg and egg products

continuum. The risk assessment model was used to estimate the possible

benefits of this rule, as discussed below.

Comments

One hundred and fifty-nine comments were submitted in response to

the proposed rule. Thirty-one commenters, including private citizens,

State departments of agriculture, several trade associations, and

several members of the egg industry, supported the proposal. The

remainder of commenters opposed the proposed rule or suggested

alternatives to it. Commenters opposed to the rule included private

citizens, trade associations, and members of the egg industry. The

majority of comments from the egg industry opposed the rule and

suggested alternatives to it. Six comments were received after the

close of the comment period. All of these comments were generally

opposed to the proposed rule.

Size of Establishments Required to Comply With the Rule

Several small producers recommended exempting from the

refrigeration and labeling requirements producers with flocks of 5,000,

10,000, or 50,000 hens, or exempting producers that marketed a

specified number of cases of eggs or a specified number of eggs per

week, such as 500 cases per week or 1,200 eggs per week. These

producers wanted an exemption from the refrigeration requirements

because, they stated, the high costs of complying with the

refrigeration requirements would effectively force them out of

business. In contrast to these comments from small producers, several

other producers and several associations stated that all egg industry

members should be treated equally, and that no producers should be

exempt from the refrigeration and labeling requirements.

Several commenters stated that they had flocks of less than 3,000

layers but packed eggs from other producers. These commenters asked

whether the refrigeration and labeling requirements would apply to

them.

Consistent with current regulations that exempt from inspection egg

handlers with flocks of 3,000 or fewer birds (see Sec. 59.100), the

1991 EPIA amendments specify that any egg handler with a flock of 3,000

layers or less is not subject to inspection for purposes of verifying

compliance with the refrigeration and labeling requirements (21 U.S.C.

1034(e)(4)). Given this consistency, FSIS is responding to Congress's

clear intent and limiting the exemption from the refrigeration and

labeling requirements in Sec. 59.50 to egg handlers with flocks of

3,000 or fewer layers (Sec. 59.50(c)).

In response to the comments suggesting that the refrigeration and

labeling requirements should apply to all producers, the Agency points

out that the statute provides that the refrigeration and labeling

requirements in the 1991 EPIA amendments are not applicable to any egg

handler with a flock of 3,000 or fewer layers. FSIS concludes that, for

clarity, it is appropriate to reflect this fact in its regulations with

an exemption.

Egg packers who obtain eggs from other producers will not be exempt

from the refrigeration and labeling requirements. The exemption will

only apply to egg handlers with a flock of 3,000 or fewer layers who

pack eggs from their own flock. This exemption is consistent with the

exemption from registration requirements for producer-packers with an

annual egg production from a flock of 3,000 hens or less (see

Sec. 59.690).

Costs of the Rule

Approximately half the commenters stated that the rule would impose

major costs on the industry. Many small businesses stated that the

compliance costs associated with this rule could force them out of

business.

Several commenters stated that they believed that the cost

estimates in the 1992 proposed rule were too low and provided their own

cost projections. For example, one small producer stated that it would

cost its family-owned business approximately $200,000 to comply with

the requirements. One association that represents the poultry, egg, and

allied industry received information from its members on the price of

refrigerated trucks: One member estimated that a new 26 foot

refrigerated tractor trailer would cost $92,000, and another producer

stated that a used refrigerated trailer portion costs $25,000. The

association stated that, on the basis of this information, the cost of

replacing and modifying the industry's fleet might exceed the estimates

made by the Department.

In addition, several commenters stated that costs would be

particularly high because at the time the proposed rule was published,

the Environmental Protection Agency (EPA) was revising laws concerning

refrigerants. These commenters believed that, subsequent to purchasing

new refrigeration equipment to comply with the 45 deg.F refrigeration

requirements, they would again be required to replace refrigeration

equipment once the new EPA laws regarding refrigerants went into

effect.

Five members of the industry stated that the proposed rule would be

extremely costly to the entire shell egg industry. These commenters

stated that the cost analysis included in the 1992 proposed rule

ignored major costs, such as new higher powered refrigeration units for

both warehouses and vehicles, greater insulation requirements for

warehouses and vehicles, ongoing depreciation expenses per year on the

new refrigeration equipment, replacement costs of new equipment after

its useful life, yearly maintenance costs, much higher ongoing yearly

energy costs required for higher powered refrigeration units, and the

effects of inflation. These commenters stated that compliance costs

would outweigh any benefits of reducing cases of salmonellosis. In

addition, these commenters stated that the increased compliance costs

would force smaller producers and smaller distributers out of business,

resulting in layoffs and

[[Page 45665]]

higher rates of unemployment. In addition, they stated that the higher

cost of compliance would result in higher consumer prices for eggs.

The same five commenters discussed in the preceding paragraph

stated that the requirements for imported eggs could also have a

negative impact on international trade. These commenters stated that

food products prepared with shell eggs abroad may not meet the U.S.

refrigeration requirements for shell egg production. Thus, they

maintained, the refrigeration requirements would lead to restrictions

on imports of foreign food items prepared with shell eggs if

refrigeration requirements in a particular country did not meet U.S.

standards.

Finally, one association suggested costs to the industry might

increase because of increased taxes on energy consumption.

Although the Agency agrees this rule is likely to result in an

increase in costs to the industry, the 1991 EPIA amendments and the

1998 Appropriations require that FSIS promulgate this final rule. The

Agency's current cost impact analysis is discussed below, under the

heading, ``Incremental Social Costs.'' The original analysis of the

costs of the regulation was conducted in 1992. The current analysis

updates the 1992 cost estimates for inflation and changes in the State

regulatory environment. The comments submitted in response to the

analysis in the proposed rule were based on 1992 costs. For these

reasons, the Agency is providing opportunity for comment on the updated

economic impact analysis.

In the discussion of the cost to the industry, the Agency notes

that many States already have enacted laws that require ambient

temperatures of 45 deg.F for shell egg storage and transportation. As

explained below, producers in these States may not incur any

significant costs as a result of this rule. In the other States, there

is likely to be some increase in costs to the industry.

In regard to EPA laws concerning refrigerants, FSIS notes that

those laws are in effect. At this time, the industry will have met

these EPA requirements. Therefore, these regulations will not affect

industry compliance with EPA requirements.

In response to the comments on international trade, it should be

noted that the requirements in these regulations apply to imported

shell eggs that are not imported under disease restriction and are

destined for the ultimate consumer. The requirements do not apply to

other imported processed food products containing eggs.

Finally, with regard to costs that may be imposed due to taxes on

energy consumed, no significant new taxes have been imposed based on

energy consumed.

Transportation

Many comments from members of the egg industry concerned problems

with complying with the proposed transportation requirements. Some

commenters stated that the cost of complying with the transportation

requirements would be extremely high for them. Others stated that

maintaining 45 deg.F during transportation would not be possible. For

example, one company stated that its trucks average sixteen deliveries

per load, and, in certain situations, the truck doors remain open for

ten to fifteen minutes during delivery. Therefore, the company

explained, on a warm day, it is impossible to maintain the 45 deg.F

temperature in the truck. Another commenter stated that producers

servicing family-owned markets and restaurants use a truck with less

than one ton capacity, and that a truck of this size is not made with a

refrigeration unit with enough cooling capacity to maintain 45 deg.F.

One association explained that many of its members believed that the

constant opening and closing of the truck's storage compartment during

local deliveries would prevent the truck from reaching an ambient

temperature of 45 deg.F.

About 20 commenters offered a variety of alternative options for

exempting small producers from the requirement that shell eggs remain

refrigerated during transportation. These alternative options included

exempting from refrigeration requirements eggs delivered within a

certain radius of the packing facility, eggs delivered in a certain

size truck, and eggs delivered within a certain specified delivery

time.

The specific requirement of the 1991 EPIA amendments is that shell

eggs be refrigerated at 45 deg.F during transportation. Other than the

exemption for egg handlers with 3,000 or fewer layers, the statute does

not provide any exemptions from the requirement that shell eggs be

refrigerated during transportation. Therefore, the Agency has no

discretion concerning this requirement and is not making the changes in

the regulations that were requested by the commenters.

Alternative Temperature Requirements

About 15 commenters suggested that eggs should be held at

temperatures above 45 deg.F, such as 50 deg.F, 55 deg.F, or 60 deg.F.

One commenter noted that the current voluntary grading program

regulations require that eggs be kept at 60 deg.F, and that a change to

45 deg.F would be a significant change. Several commenters stated that

refrigerating eggs at 45 deg.F would cause them to ``sweat'' when they

are exposed to non-refrigerated conditions. These commenters stated

that wet eggs can allow the passage of waterborne bacteria into the

egg.

Several commenters offered suggestions for additional refrigeration

requirements. One member of the industry suggested that the rule might

be enhanced if it specified the time allowed for the shell eggs to

reach an internal temperature of 45 deg.F. Several other commenters

recommended establishing refrigeration requirements that would apply to

eggs prior to packing. For example, one State department of agriculture

suggested that shell eggs should be refrigerated at 55 deg.F or lower,

within 24 hours of being laid, until the egg is washed and packed.

The statute specifically requires that eggs packed for consumer use

be stored and transported at 45 deg.F. Therefore, the Agency has no

discretion concerning the required temperature.

In response to the suggestions concerning additional refrigeration

requirements, the 1991 EPIA amendments do not specify requirements

concerning the internal temperature of eggs or an ambient temperature

requirement for eggs that are not yet packed. However, these actions

may be considered as part of the review that flows from the joint FSIS/

FDA ANPR. FSIS or FDA may take further action in response to these

comments at a later time.

Benefits of the Regulation

Approximately 50 commenters questioned whether this regulation

would result in any health benefits. Commenters stated that safety

problems related to eggs are caused by inadequate food preparation in

restaurants and hotels, and that refrigeration by the producer will not

remedy this problem. Similarly, several commenters noted that problems

often arise because of mishandling by the consumer. Other commenters

stated that the Agency should focus efforts on specific egg production

establishments or particular regions where Salmonella has been

detected.

Five comments from members of the shell egg industry stated that

there was inadequate scientific evidence to justify the proposal, and

that available studies show that relatively few salmonellosis cases can

be attributed directly to shell eggs. Therefore, these commenters

asserted, there is a need for more complete epidemiological studies and

[[Page 45666]]

documentation of actual salmonellosis cases that are directly linked to

inadequate refrigeration of shell eggs held by producers and

distributors. These commenters noted that studies show no growth of SE

in eggs with an internal temperature of 45 deg.F; however, the

commenters explained that the internal temperature of eggs will not

reach 45 deg.F as soon as they are stored under refrigeration. They

also argued that packed eggs may never reach this temperature

throughout the distribution process. Similarly, another commenter

stated that commercial processing plants will be unable to bring eggs

to 45 deg.F before they are transported, especially when they are

packed in cartons, cased, and stacked on pallets. This commenter also

questioned whether the ambient temperature refrigeration requirements

would improve the safety of shell eggs.

In contrast, several commenters stated that they believed that

these regulations would improve the safety of shell eggs. For example,

one medical association stated that existing scientific evidence

provides a sufficient basis for requiring that shell eggs be stored and

transported in refrigerated trucks at an ambient temperature of 45

deg.F, and that this refrigeration requirement would control the

replication of SE. This commenter stated that, once the rule is

effective, reported cases of SE in humans will be markedly reduced. An

epidemiologist employed by a Federal agency stated that most human

outbreaks of SE in which shell eggs were the probable source could have

been prevented if time and temperature abuse had not taken place.

Although there is no consensus concerning the level of health

benefits these regulations may achieve, the 1991 EPIA amendments and

the 1998 Appropriations require that FSIS promulgate this final rule.

In response to concerns regarding food safety problems because of

mishandling of eggs at retail establishments, FDA may propose a rule

addressing refrigeration of eggs at retail, as discussed in the ANPR.

With regard to public education efforts, the Food Safety Education

and Communications Staff within FSIS provides information to the public

concerning numerous food safety issues, including egg-related food

safety issues. This office provides food safety education information

through USDA's Toll-Free Meat and Poultry Hotline (1-800-535-4555),

through public service announcements, printed materials, and a variety

of communication channels. In addition, FSIS makes this information

available over the Internet (URL: http://www.fsis.usda.gov/).

Finally, as noted under the heading, ``Incremental Social

Benefits,'' the Agency has estimated that these regulations would

result in a mean reduction of 1.54 percent in salmonellosis cases

related to SE in shell eggs. To estimate the reduction of the number of

salmonellosis cases that would result from the implementation of these

regulations, FSIS's risk assessment model, discussed below, was

adjusted so that all eggs were exposed to ambient temperatures of 45

deg.F or lower after packing. The risk assessment predicts that

additional measures would result in greater benefits than would result

from the ambient temperature requirements in this rule. For example,

the risk assessment predicts that maintaining ambient temperatures of

45 deg.F throughout processing and distribution (that is, from

processing through retail) will result in an eight percent average

reduction in human SE illnesses. In addition, the risk assessment model

predicts that maintaining internal temperatures of eggs at 45 deg.F

would result in a twelve percent decrease in human SE illnesses (FSIS,

Salmonella Enteritidis Risk Assessment, Washington, DC, June 12, 1998:

26-27). The Agency recognizes that requiring an internal shell egg

temperature of 45 deg.F (7.2 deg.C) would result in greater benefits

than an ambient temperature requirement; however, the statute provides

for an ambient temperature requirement only, and any such additional

requirement will have to be considered in response to the ANPR.

Labeling Requirements

Approximately 30 commenters were opposed to the labeling

requirements. Some of the commenters mistakenly believed ``warning

labels'' would be required. Others stated that the labeling provisions

were unnecessary because they believed consumers know that eggs should

be refrigerated. Finally, many of these commenters believed the

labeling requirements would be costly for producers, and that increased

costs would be incurred by consumers.

Several commenters who supported the labeling requirements

suggested requiring additional information on egg containers, such as a

``pull date'' or expiration date; a statement identifying the flock

that produced the eggs in the container; the phrase, ``keep

refrigerated at 45 deg.F or below''; and the packing date and the

packing plant number.

Three comments were from companies promoting time/temperature

indicators. The companies explained that these indicators are labels

that act as temperature recording devices and change color to indicate

the temperature at which the carton is held and the length of time the

carton is held at a particular temperature. These commenters suggested

that time/temperature indicators should be affixed to egg cartons.

Establishments can meet the labeling requirements adopted in this

rule (see Secs. 59.50(b), 59.410(a), 59.950(a)(4), and 59.955(a)(6))

simply by including the phrase, ``Keep Refrigerated,'' or words of

similar meaning, on the egg containers. Therefore, the labeling

provisions do not require a warning statement. The Agency has

determined that adding this phrase to shell egg labeling will result in

only minimal costs for producers that do not currently include this

labeling on egg cartons. Furthermore, many producers are currently

labeling egg cartons to indicate that the product should be kept

refrigerated.

With regard to the recommendations for additional labeling

requirements, the statute does not specify any additional labeling

provisions, and the Agency is not including additional labeling

requirements in these regulations.

Implementation Details

Several commenters questioned how the rule would be implemented and

provided suggestions concerning methods for measuring the temperature

in transportation vehicles and storage facilities. For example, several

commenters questioned the particular location an inspector would use

inside a cooler or a truck to obtain the ambient temperature. One

commenter recommended that the temperature should be checked at least

10 minutes after all doors are closed. One commenter asked what would

happen during a mechanical breakdown, and whether producers should use

recording thermometers both in cooler rooms and trucks. One association

suggested that inspection of coolers be handled on a case-by-case basis

because, the association explained, no two coolers are alike, and their

configurations and holding capacities differ. The association also

recommended that cooler doors be closed for at least five minutes

before temperature readings are taken, and that readings be taken in at

least three locations. This same commenter recommended that truck

inspections be limited to trucks on property not being loaded, and that

inspection of trucks occur before loading, with the door closed for at

least five minutes and refrigeration equipment operating. Finally, this

same commenter stated that when plants are

[[Page 45667]]

found to be out of compliance with the temperature regulations,

consideration should be given for re-inspection within the annual

quarter before a citation is issued.

Several commenters questioned the intent of proposed

Sec. 59.134(b). They were concerned that the provision stating that

``the perimeter of each cooler room * * * shall be made accessible''

would require that they create a walking aisle around the cooler room,

or that the entire perimeter would need to be accessible for

inspection. The commenters explained that to make the entire perimeter

accessible to an inspector would result in reduced storage capacity and

increased costs.

In response to the concerns about accessibility of the perimeter of

the cooler room, the Agency advises that it does not intend that

producers would be required to reduce storage space or create a walking

aisle. The Agency is specifying that the perimeter must be accessible

because it may often be the warmest area in the cooler, and because the

center of the cooler room is typically accessible. An establishment

could comply with the requirement that the perimeter of the cooler room

be made accessible to inspectors by locating thermometers along the

perimeter or allowing inspectors to use extension devices with attached

thermometers to obtain the temperature along the perimeter.

The rule will not be effective until a year after the publication

date. The Agency is currently considering various policy options for

monitoring industry compliance with the rule. In response to the

question concerning whether producers should use recording devices in

cooler rooms and trucks, producers may install thermometric equipment

and temperature recording devices; however, these regulations do not

require that producers do so. FSIS requests comments on implementation

of this rule.

Longer Phase-In Period

Several commenters recommended that the Department implement the

rule over a phase-in period (two commenters suggested a three-year

phase-in period), explaining that a phase-in period would provide

producers adequate time to bring their equipment into compliance.

Similarly, a small producer that expressed general support for the rule

argued that the effective date for the final rule should be extended

beyond a year from publication to allow the industry more time to meet

the refrigeration requirements.

The EPIA specifies that the refrigeration and labeling requirements

become effective 12 months after promulgation of final regulations

implementing the amendments (21 U.S.C. 1034 note). Therefore, the

Agency does not have the authority to provide for an extended phase-in

period.

Technical Suggestions

A State department of agriculture commented that the proposed

definition of ``immediate container'' is confusing and recommended

changing the phrase ``not consumer packaged,'' as used in the proposed

definition, to ``not packaged by the consumer.''

In response to the comment concerning the definition of ``immediate

container,'' the Agency points out that the phrase, ``not consumer

packaged'' refers to eggs packed for a buyer, such as a restaurant or

hotel, that buys containers of eggs larger than those for household

consumers. This definition simply provides that an immediate container

could be a carton for household consumers or a larger container for a

restaurant or other institution. To clarify the definition, FSIS has

revised it to read, ``Immediate container means any package or other

container in which egg products or shell eggs are packed for household

or other ultimate consumers.''

One commenter questioned the intent of the provision in proposed

Sec. 59.132, which stated that ``access shall not be refused at any

reasonable time to any representative of the Secretary to any plant,

place of business, or transport vehicle subject to inspection.'' This

commenter suggested wording that would provide that access be provided

to any representative of the Secretary at any time business operations

are being conducted.

In Sec. 59.132, as well as in Sec. 59.760, FSIS has removed the

phrase ``at any reasonable time,'' which the commenter questioned, for

greater consistency with the EPIA, which does not limit Agency access

to establishments (see 21 U.S.C. 1034). FSIS is also making these

changes for greater consistency with the Federal meat and poultry

inspection regulations (see 9 CFR 381.32 and 9 CFR 306.2), which do not

restrict Agency access to establishments.

The Final Rule

When these regulations become effective, egg handlers with flocks

of more than 3,000 layers will be required to comply with the new

refrigeration and labeling provisions. Consistent with current

regulations that exempt from inspection egg handlers with flocks of

3,000 or fewer birds (see Sec. 59.100), the 1991 EPIA amendments

specify that any egg handler with a flock of 3,000 layers or less is

not subject to inspection for purposes of verifying compliance with the

refrigeration and labeling requirements (21 U.S.C. 1034(e)(4)).

To monitor temperatures in storage rooms and transport vehicles,

egg handlers with flocks of more than 3,000 layers may choose to

install thermometric equipment and temperature recording devices;

however, these regulations do not prescribe the means by which egg

handlers are to comply with these provisions or to monitor their

compliance. These regulations allow establishments the flexibility to

determine how to meet the statutory requirements and how to monitor and

ensure their compliance. U.S. Department of Agriculture (USDA)

inspectors will verify that storage facilities and transport vehicles

are refrigerated at or below 45 deg.F (7.2 deg.C).

In Sec. 59.5, FSIS is adding new definitions to the regulations to

reflect the terminology in the 1991 EPIA amendments. AMS proposed

adding all of these definitions in the 1992 proposed rule. FSIS has

added the term ``ambient temperature,'' as used in the 1991 amendments,

to clarify that the 45 deg.F (7.2 deg.C) refrigeration requirement

refers to the air temperature maintained in a shell egg storage

facility or transport vehicle.

The regulations include a definition for ``ultimate consumer'' that

reflects how this term is used in the 1991 amendments. The Agency has

defined the ``ultimate consumer'' as any household consumer,

restaurant, institution or any other party who has purchased or

received shell eggs or egg products for consumption. In 1992, AMS

proposed to define this term as a household consumer, retail store,

restaurant, institution, food manufacturer or other interested party

who has purchased or received shell eggs or egg products for use or

resale. After review of the proposed language, FSIS determined that an

ultimate consumer should be defined as a party that purchases shell

eggs or egg products for consumption, rather than for use or resale.

Therefore, FSIS determined that a retail store or food manufacturer

would not be considered an ultimate consumer and has modified the

definition accordingly. The term ``ultimate consumer'' is used in the

existing regulations, and each time it is used, examples of ``ultimate

consumers'' follow the term. As was proposed, FSIS has revised

Secs. 59.28(a)(1) and 59.690 to remove these examples, because the term

will now be included in the definitions section.

[[Page 45668]]

The 1991 EPIA amendments specifically refer to eggs that have been

packed into a ``container'' and establish refrigeration requirements

for shell eggs after packing (21 U.S.C 1037(c)). To implement these

amendments, this final rule adds new language to the definition of

``container or package'' to refer to shell eggs in containers destined

for the ultimate consumer. The current definition for ``container or

package'' does not provide specific examples of a container or package

for shell eggs. Therefore, as was proposed, FSIS has revised the

definition of ``container or package'' to distinguish between

containers for egg products and containers for shell eggs. In the

definition of ``immediate container'', FSIS has modified the language

proposed in 1992 to clarify that an immediate container means any

package or other container in which egg products or shell eggs are

packed for household or other ultimate consumers. The labeling

requirements would apply to all types of containers (that is, both

immediate containers and shipping containers).

As was proposed, FSIS has revised the definition of the term ``egg

handler'' to clarify that the ultimate consumer is not considered an

egg handler.

As was proposed in 1992, FSIS is incorporating the refrigeration

and labeling requirements prescribed by the 1991 EPIA amendments for

domestic shell eggs into its regulations by adding Secs. 59.50 and

59.410(a). In these sections, FSIS has made only minor revisions to the

provisions proposed in 1992. Section 59.410(a) provides that all shell

eggs packed into containers destined for the ultimate consumer be

labeled to indicate that refrigeration is required and includes an

example of labeling that would meet this requirement, ``Keep

Refrigerated.'' The provision also allows establishments to use other

words of similar meaning.

To reflect the fact that the 1991 amendments specify that egg

handlers with flocks of 3,000 or fewer layers are not subject to

inspection for purposes of verifying compliance with refrigeration and

labeling requirements, Sec. 59.50(c) includes new language that

clarifies that producers-packers with a flock of this size are exempt

from these refrigeration and labeling requirements.

As was proposed in 1992, FSIS is amending Secs. 59.132, 59.134, and

59.760 to clarify that inspectors must be granted access to transport

vehicles and cooler rooms to verify that any shell eggs packed into

containers for the ultimate consumer are stored and transported at an

ambient temperature of no greater than 45 deg.F (7.2 deg.C). Transport

vehicles that would be subject to inspection would include containers

holding eggs that are attached to railroad cars or semi-trailer

chassis.

As discussed above, FSIS has revised the provisions proposed in

1992 under Secs. 59.132 and 59.760 to remove the phrase ``at any

reasonable time'' for greater consistency with the EPIA and for greater

consistency with the Federal meat and poultry inspection regulations.

FSIS has also revised the provision proposed in 1992 under

Sec. 59.760 to refer to representatives of the ``Secretary'' rather

than representatives of the ``Administrator.'' In the near future, FSIS

intends to revise the current definition of ``Administrator'' in this

part, which refers to the Administrator of AMS, to refer to the

Administrator of FSIS. Because AMS retains surveillance activities

under Sec. 59.760, FSIS has revised this section to refer to

representatives of the ``Secretary'' rather than representatives of the

``Administrator.'' This revision reflects a change in Agency

organization made in response to the Federal Crop Insurance Reform and

Department of Agriculture Reorganization Act of 1994.

As was proposed in 1992, FSIS has revised Sec. 59.915 to

incorporate the statutory amendment that imported shell eggs packed

into containers destined for the ultimate consumer include a

certification stating that the eggs have, at all times after packing,

been stored and transported under refrigeration at an ambient

temperature of no greater than 45 deg.F (7.2 deg.C). In addition,

Secs. 59.950 and 59.955 require that imported shell egg containers and

imported egg shipping containers be labeled to indicate that

refrigeration is required. In each of these sections, FSIS has made

only minor changes to the language AMS proposed in 1992.

Executive Order 12988

This final rule has been reviewed under Executive Order 12988,

Civil Justice Reform. This rule: (1) Has no retroactive effect; and (2)

does not require administrative proceedings before parties may file

suit in court challenging this rule. Public Law 102-237 provides that

with respect to the temperature requirements contained therein, no

State or local jurisdiction may impose temperature requirements

pertaining to eggs packaged for the ultimate consumer which are in

addition to, or different from, Federal requirements.

Executive Order 12866

FSIS is required to publish these regulations to comply with the

1991 EPIA amendments and the 1998 Appropriations. This rule has been

designated significant and was reviewed by the Office of Management and

Budget under Executive Order 12866. Executive Order 12866 requires USDA

to identify and, to the extent possible, quantify and monetize benefits

and costs associated with the rule. This section estimates these

benefits and costs. As discussed below, because of changes in State

laws concerning the refrigeration of shell eggs, FSIS has changed the

baseline that was used for determining costs in the 1992 proposed rule.

If the Agency had used the original baseline, the estimated costs would

have been higher than the estimates in this rule. In addition, the

benefits in this rule are based on the recently completed SE risk

assessment and data that were not available in 1992. The estimated

annual benefits of this rule are lower than those estimated in 1992

(see 57 FR 48572).

Incremental Social Benefits

The incremental social benefits of the rule are the avoidance of

illnesses and deaths associated with consumption of eggs contaminated

with SE. SE is a serotype of the family of pathogen Salmonella. When

the disease affects humans, it causes salmonellosis, which usually

appears 6 to 72 hours after eating contaminated eggs and egg products

and lasts up to 7 days. Symptoms of this disease include diarrhea,

abdominal cramps, fever, nausea, and vomiting (nausea and vomiting

develop in less than 50 percent of cases). Children, the elderly, and

people with compromised immune systems are particularly vulnerable to

SE infection. Deaths from SE disease occur in these vulnerable groups.

Statistics of outbreaks reported to the Centers for Disease Control and

Prevention (CDC) on foodborne diseases reveal that an increasing number

of salmonellosis cases are associated with SE; however, it should be

noted that the CDC actively contacts each State to obtain information

concerning SE but does not actively contact the States for information

on the other Salmonella serotypes.

From 1985 to 1993, consumption of eggs was associated with 83

percent of SE-related outbreaks where a food vehicle was identified

(CDC, ``Outbreak of Salmonella enteritidis Associated with Homemade Ice

Cream--Florida, 1993,'' Morbidity and Mortality Weekly Report 43(36)

(September 16, 1994): 669-671). The proportion of cases of

salmonellosis reported to CDC attributable to SE increased from 5

percent in 1976 to 26 percent in 1994 (CDC, ``Outbreaks of Salmonella

[[Page 45669]]

Serotype Enteritidis Infection Associated with Consumption of Raw Shell

Eggs--United States 1994-1995,'' Morbidity and Mortality Weekly Report

45(34) (August 30, 1996): 737-742). In 1995 and 1996, salmonellosis

cases attributable to SE represented about 25 percent of salmonellosis

cases reported to the CDC. Preliminary data from the Foodborne Diseases

Active Surveillance Network (FoodNet) indicate that SE represented 17%

of all cases of Salmonella in 1996 (FSIS, FSIS/CDC/FDA Sentinel Site

Study: The Establishment and Implementation of an Active Surveillance

System for Bacterial Foodborne Diseases in the United States, February

1997).

In the discussion below, FSIS assumes that SE cases associated with

the consumption of eggs represent 25 percent of all human salmonellosis

cases. This assumption is based on the percentage of SE cases reported

to the CDC in recent years. FSIS is using this percentage rather than

the 17 percent based on FoodNet data because the FoodNet database is

still being implemented and covers only Minnesota, Oregon, and counties

in Connecticut, Georgia, and California. In addition, only the first

year of data is available from the Foodnet. The CDC surveillance system

has been active for approximately 30 years, all States contribute to

the CDC surveillance data, and States receive incentives for

submissions to the CDC surveillance system.

In 1996, 39,027 confirmed cases of human salmonellosis were

reported to the CDC by State, local, and Federal departments of health.

From 1985 through 1996, there have been 508,673 reported cases of

salmonellosis (Centers for Disease Control and Prevention, Laboratory

Confirmed Salmonella, Surveillance Annual Summary, 1993-1995 and 1996).

Based on CDC outbreak data, the three illness-causing serotypes most

frequently reported--Salmonella typhimurium, Salmonella heidelberg, and

Salmonella enteritidis--are most often traced to poultry and eggs when

a food vehicle is found. A food vehicle is found in only about 25 to 30

percent of cases.

Since the reporting of outbreak statistics to CDC is voluntary, it

is estimated that there are an additional 20 to 100 cases of

salmonellosis for every reported case, or some 800,000 to 4 million

cases per year (R. Chalker and M. Blaser, ``A Review of Human

Salmonellosis: III. Magnitude of Salmonella Infection in the United

States,'' Review of Infectious Diseases 10(1) (1988): 111-124). The

severity of the underreported cases as well as their statistical

distribution is unknown and hence this analysis could not adjust for

such probabilities. The estimate of 800,000 to 4 million is based on

the number of cases reported to the CDC surveillance system through

1996 and is confirmed by the data for the 1988-92 period.

Table 1.--Health and Economic Benefits of Refrigerating Eggs at 45 deg.F Rule: Low Benefits Estimates

----------------------------------------------------------------------------------------------------------------

Upper bound of health costs

Annual number of egg-related human SE Lower bound of health costs associated associated with column 1 in $

cases with column 1 in $ (1996) \1\ (1996) \2\

----------------------------------------------------------------------------------------------------------------

661,633 \3\.......................... $225 million.............................. $900 million.

----------------------------------------------------------------------------------------------------------------

Estimated Reduction in Egg-Related SE Cases due to 45 deg.F Refrigeration \4\

----------------------------------------------------------------------------------------------------------------

Health benefits (number of cases Lower bound of economic benefits Upper bound of economic

avoided) associated with column (1) $ (1996) benefits associated with

column (1) in $ (1996)

----------------------------------------------------------------------------------------------------------------

10,189............................... $3.47 million............................. $13.86 million.

----------------------------------------------------------------------------------------------------------------

\1\ Jean C. Buzby and Tanya Roberts, ``Guillain-Barre Syndrome Increases Foodborne Disease Costs,'' Food Review

(September-December 1997): 36-42. This report provides an estimate of costs of total human Salmonella cases

from all food sources. The costs estimated in this table assume that egg-related SE cases represent 25% of

total human salmonellosis cases. The report estimates the lower bound of the low estimate of health care costs

at $900 million.

\2\ Ibid. The report estimates the upper bound of the low estimate of health care costs at $3.6 billion.

\3\ FSIS, Salmonella Enteritidis Risk Assessment, Washington, DC, June 12, 1998. The number shown in the chart

is the estimated mean number of salmonellosis cases resulting from the consumption of SE-contaminated eggs.

The estimated number of cases per year in the Risk Assessment ranges from 126,374 to 1.7 million.

\4\ FSIS, Salmonella Enteritidis Risk Assessment, Washington, DC, June 12, 1998. The risk assessment model

estimates that refrigeration of eggs at 45 deg.F during storage and transportation will result in a mean

reduction of 1.54% in human SE cases.

Table 2.--Health and Economic Benefits of Refrigerating Eggs at 45 deg. F Rule: High Benefits Estimates

----------------------------------------------------------------------------------------------------------------

Upper bound of health costs

Annual number of egg-related human SE Lower bound of health costs associated associated with column 1 in $

cases with column 1 in $ (1996) \5\ (1996) \6\

----------------------------------------------------------------------------------------------------------------

661,633 \7\.......................... $1.2 billion.............................. $3.075 billion.

----------------------------------------------------------------------------------------------------------------

[[Page 45670]]

Estimated Reduction in Egg-Related SE Cases due to 45 deg.F Refrigeration \8\

----------------------------------------------------------------------------------------------------------------

Health benefits (number of cases Lower bound of economic benefits Upper bound of economic

avoided) associated with column (1) $ (1996) benefits associated with

column (1) in $ (1996)

----------------------------------------------------------------------------------------------------------------

10,189............................... $18.48 million............................ $47.355 million.

----------------------------------------------------------------------------------------------------------------

\5\ Jean C. Buzby and Tanya Roberts, ``Guillain-Barre Syndrome Increases Foodborne Disease Costs,'' Food Review

(September-December 1997): 36-42. This report provides an estimate of costs of total human Salmonella from all

food sources. The costs estimated in this table assume that egg related SE cases represent 25% of all human

salmonellosis cases. The report estimates the lower bound of the high estimate of health care costs at $4.8

billion.

\6\ Ibid. The report estimates the upper bound of the high estimate of health care costs at $12.3 billion.

\7\ FSIS, Salmonella Enteritidis Risk Assessment, Washington, DC, June 12, 1998. The number shown in the chart

is the estimated mean number of salmonellosis cases resulting from the consumption of SE-contaminated eggs.

The estimated number of cases per year in the Risk Assessment ranges from 126,374 to 1.7 million.

\8\ FSIS, Salmonella Enteritidis Risk Assessment, Washington, DC, June 12, 1998. The risk assessment model

estimates that refrigeration of eggs at 45 deg.F during storage and transportation will result in a mean

percent reduction of 1.54% in human SE cases.

Tables 1 and 2 show an estimated number of annual human illnesses

resulting from consumption of SE-contaminated eggs. This number is

based on the mean estimated annual number of cases in the Salmonella

Enteritidis Risk Assessment published by FSIS (June 12, 1998). This

report estimates that the number of cases of illness resulting from

consumption of SE-contaminated eggs ranges from 126,374 to 1.7 million

per year. The Agency is using data from the risk assessment rather than

the number of reported cases because, as noted above, it is estimated

that there are an additional 20 to 100 cases of salmonellosis for every

reported case. Tables 1 and 2 display the mean estimate because the

mean is not unduly affected by a few moderately small or moderately

large values, and this stability increases with the sample size. To

estimate the economic value of the health costs of salmonellosis, the

USDA's Economic Research Service (ERS) related illnesses and deaths to

four types of severity groups of patients. The four severity groups

were: (1) those who did not visit a physician, (2) those who visited a

physician, (3) those who were hospitalized, and (4) those who died

prematurely because of their illness (Jean C. Buzby and Tanya Roberts,

``Guillain-Barre Syndrome Increases Foodborne Disease Costs,'' Food

Review (September-December 1997): 36-42). Similar severity rates are

also used in the risk assessment final report, e.g., treatment by a

physician, hospitalization, and mortality. Both sources use the CDC

data on severity.

Based on the avoidance of medical costs, ERS estimated the economic

values of prevention of these cases. ERS calculated the range of low

estimate of avoidance of all foodborne human salmonellosis-linked

diseases and deaths, at $900 million and $3.6 billion respectively (in

1996 dollars). ERS calculated the range of high estimate of the health

costs at $4.8 billion and $12.3 billion (in 1996 dollars). The wide

variation in this range of estimates is attributed both to the wide

range in estimates of the number of cases and the economic methods used

for the analysis.

The economic methods are the human capital method and the labor

market method. The human capital method yields a lower estimated range

of $0.9 to $3.6 billion because the cost of premature death in this

analysis varies with age and ranged from $15,000 to $2,037,000 (in 1996

dollars). The labor market approach yields the higher range of $4.8 to

$12.3 billion because it values the cost of premature death at $5

million per person (in 1996 dollars) (Jean C. Buzby and Tanya Roberts,

``Guillain-Barre Syndrome Increases Foodborne Disease Costs,'' Food

Review (September-December 1997): 36-42).

Since the ranges of estimates for salmonellosis-related costs

estimated by Buzby and Roberts are based on salmonellosis from all food

sources, it is necessary to adjust the estimates downwards to obtain

only the cases of salmonellosis related to consumption of SE-

contaminated eggs. The medical cost data shown in the first rows of

Tables 1 and 2 represent 25 percent of the ERS estimates because FSIS

assumes that SE-contaminated eggs are responsible for approximately 25

percent of salmonellosis cases. This assumption is based on the

percentage of SE cases reported to the CDC and the fact that eggs are

responsible for the vast majority of these cases. As noted above, from

1985 to 1993, consumption of eggs was associated with 83 percent of SE-

related outbreaks where a food vehicle was found. Also noted above, a

food vehicle is found in only about 25 to 30 percent of cases. Given

the level of uncertainty in this data, for estimation purposes, the

Agency believes it is appropriate to assume that SE-contaminated eggs

are responsible for 25 percent of total salmonellosis cases.

Humphrey and Whitehead (1993) suggest that an egg's contents can

become contaminated with SE before the egg is laid. They also note that

after an infected egg is laid, SE contamination tends to grow inside

the egg (T. Humphrey and A. Whitehead, ``Egg Age and Growth of

Salmonella Enteritidis PT4 in Egg Contents,'' Epidemiological Infection

111 (1993): 209-219). Humphrey suggested that refrigerating during

storage can prevent such growth (T.J. Humphrey, ``Growth of Salmonella

in intact shell eggs: Influence of Storage Temperature,'' Veterinarian

Record (1990): 1236-1292). Other measures for preventing growth include

refrigeration during transportation and retail sales, reducing shelf

life of eggs at retail, thorough

[[Page 45671]]

cooking, pasteurization, and processing shell eggs into frozen, liquid,

or dry egg products (FSIS, Salmonella Risk Assessment, June 12, 1998;

T. Hammack, et al., ``Research Note: Growth of Salmonella Enteritidis

in Grade A Eggs During Prolonged Storage,'' Poultry Science 334 (1993):

1281-1286).

In order to determine the benefits of refrigerating eggs at

45 deg.F, it is necessary to determine the percentage of reduction in

the number of egg-related deaths and illnesses from SE cases referred

to above. To determine these benefits, this analysis relied on input

from a risk assessment model. In June 1998, FSIS completed a risk

assessment concerning shell eggs and egg products in response to an

increasing number of human illnesses associated with the consumption of

shell eggs. The risk assessment developed a model to assess risk

throughout the egg and egg products continuum. The risk assessment

model consists of five modules. The first module, the Egg Production

Module, estimates the number of eggs produced that are infected (or

internally contaminated) with SE. The Shell Egg Module, the Egg

Products Module and the Preparation and Consumption Module estimate the

increase or decrease in the number of SE organisms in eggs or egg

products as they pass through storage, transportation, processing and

preparation. The Public Health Module then calculates the incidences of

illnesses and four clinical outcomes (recovery without treatment,

recovery after treatment, treatment by a physician, hospitalization,

and mortality) as well as the cases of reactive arthritis associated

with consuming SE positive eggs.

Refrigeration of shell eggs at an ambient air temperature of

45 deg.F or below during storage and transportation will retard growth

of SE and hence is likely to reduce the associated illnesses and

deaths. The risk assessment model estimates that refrigeration of shell

eggs at an ambient temperature of 45 deg.F or below can bring about a

mean reduction of 1.54 percent in egg-related human illnesses

associated with SE. This estimate has a 90 percent confidence interval,

with a lower bound of 0 percent and an upper bound of 7 percent.

Therefore, there is a range of possible outcomes. Although a 1.54

percent reduction in illnesses associated with SE is the most likely

outcome, the regulation could result in no reduction in illnesses or in

a reduction as high as 7 percent. This estimate and its confidence

interval are based on a model with the assumption that eggs are

maintained at an ambient temperature of 45 deg.F after processing

through transportation to retail, or other, end users. This result also

assumes complete compliance with the regulation. The effect of the

regulation was modeled by adjusting the baseline model (consisting of

the Production, Shell Egg Processing/Transportation, Preparation/

Consumption, and Public Health modules) to reflect the regulation's

effect. The model adjusted the following temperature variables in the

Shell Egg Processing/Transportation module: Storage temperature after

processing at off-line processor, Storage temperature after processing

at in-line processor, Temperature during transportation to egg users.

In the baseline model, these variables were modeled as extending from a

low of 41 deg.F, in the case of the storage temperature after

processing at in-line processors, to a high of 90 deg.F. The baseline

model assumes that eggs are handled under a variety of different

temperatures. In modeling the regulation, these variables'

distributions were truncated at 45 deg.F. Therefore, all eggs were

exposed to ambient temperatures of 45 deg.F or less after packing in

the regulation model. The effect of the regulation was calculated as

the difference in simulated total human cases between the baseline

model and the regulation model. The percent reduction in human

illnesses was then calculated by dividing this difference in human

cases by the simulated total human cases from the baseline model. It

must be noted that the estimated mean reduction in SE illnesses of 1.54

percent referred to above was estimated in a separate run of the model

for this rule performed by FSIS scientists and is not included in the

risk assessment final report. As noted above, the risk assessment final

report estimates the benefits that would result from maintaining an

ambient temperature of 45 deg.F throughout processing and distribution

(that is, from pre-packing and through retail) and the benefits of

maintaining the internal temperature of eggs at 45 deg.F throughout

processing and distribution.

The last rows in Tables 1 and 2 show the reductions in SE cases

associated specifically with refrigeration of shell eggs based on the

mean value of 1.54 percent reduction in cases referred to above. These

are the incremental social benefits of the rule. These estimates range

from a low of $3.47 million to $13.86 million in Table 1 to a range of

$18.48 million to $47.355 million in Table 2 (in 1996 dollars).

Requiring refrigeration of eggs at an ambient air temperature of

45 deg.F does not address all the food safety risks posed by shell

eggs. Responses to the ANPR will assist FSIS and FDA in the development

of a comprehensive, farm-to-table food safety strategy that will

address a variety of food safety measures in addition to ambient air

temperature. Actions taken subsequent to the analysis of alternatives

identified in the ANPR may provide additional benefits associated with

further reductions in foodborne illness associated with the consumption

of shell eggs.

As noted above, FSIS and FDA have published an ANPR concerning SE

in shell eggs (63 FR 27502; May 19, 1998). The number of cases in

Tables 1 and 2 are larger than those reported in the ANPR (63 FR 27504)

because the figures in the ANPR are based on outbreaks reported to the

CDC, while the data on Tables 1 and 2 take into account the fact that

many of the cases are unreported. In addition, the cost of illnesses in

Tables 1 and 2 differ from those in the ANPR (63 FR 27504) because the

estimates in the ANPR were based on 1991 data. FSIS used 1996 data for

the cost and benefit analysis in these regulations.

Incremental Social Costs

The incremental social costs associated with the rule include the

first year fixed capital costs and the annual recurring costs of

compliance to be incurred by the industry. The first year costs would

include the costs of replacing or retrofitting refrigeration units,

compressors, and coils. These capital costs are required for storing

shell eggs at 45 deg.F or below after washing and packing. The capital

costs to the industry would also include the costs of replacing or

retrofitting transportation vehicles that have refrigeration units

capable of producing air at 45 deg.F or below. The annual recurring

costs would encompass the energy costs of maintaining ambient

temperatures in storage facilities and transportation vehicles at

45 deg.F or below. These capital and recurring costs would be incurred

either by shell egg producers or by their contractors for storage and

transportation. When the storage or transportation services are

contracted out, however, it is very difficult to separate the costs

associated with shell eggs because these contractors store or haul not

only shell eggs but also several other products.

An additional element of the social costs would be the incremental

budgetary costs, if any, to USDA for enforcing this regulation. The

Agency has not determined how it will enforce this rule. AMS may check

the ambient temperature of shell egg storage

[[Page 45672]]

facilities and the labeling of shell egg containers during its

surveillance of egg handlers and during grading activities. FSIS

compliance officers may check the ambient temperature of shell egg

storage facilities and transportation vehicles and the labeling of

shell egg containers once the eggs leave the plant. For example, while

compliance officers are checking meat and poultry products in commerce

outside inspected establishments or at uninspected facilities, if such

facilities store shell eggs, compliance officers may also check

temperatures at these locations and verify that the labeling of egg

containers meets the requirements in this rule.

Whether AMS or FSIS checks the temperature of shell egg storage

facilities and transport vehicles and verifies that the labeling of egg

containers meets the requirements in this rule, these activities are

likely to be in addition to other Agency activities conducted at the

same location. Checking temperatures and labeling will increase the

time required for AMS or FSIS personnel to conduct their oversight

activities. However, FSIS is unable to determine the amount of

additional time that will be required. Therefore, the Agency is unable

to estimate the additional costs (e.g., personnel costs and costs of

equipment such as thermometers) that will be required for monitoring

compliance with the requirements in this rule.

The costs of compliance to the industry are not likely to be

excessive for three reasons. First, the rule exempts small producers

with flocks of 3,000 layers or less. There are approximately 80,000

such small egg producers that would not be required to comply with the

refrigeration and labeling provisions of this rule.

Second, of the approximately 700 producers currently registered

with USDA as of July 1998, 329 are major producers with flocks of

75,000 or more who produce about 94 percent of U.S. table eggs. Most of

these producers are members of United Egg Producers (UEP), an

organization that provides a variety of services to member egg

producers. The UEP already has a quality assurance program that

recommends refrigerating eggs at 45 deg.F or below as quickly as

possible after washing and grading and that the same temperature be

maintained during transportation. A letter from UEP indicated that many

of these producers have already started refrigerating at 45 deg.F or

below. Therefore, these producers are unlikely to incur additional

costs of compliance. (This aspect is elaborated later in a section on

the Regulatory Flexibility Act (RFA).) It is likely that most producers

that are not members of UEP or are not major producers have also begun

refrigerating shell eggs during storage and transportation because of

State requirements (discussed below). With regard to producers that are

not members of the UEP or are not major producers, specific information

regarding whether they store and transport shell eggs at 45 deg.F is

not available. The structure of egg industry is changing toward greater

concentration of large producers. For example, the number of producers

registered with AMS has declined from about 1,200 in 1992 to

approximately 700 in July, 1998. The resulting concentration of larger

producers who refrigerate their supplies is likely to have reduced the

costs of compliance.

Third, many States have already enacted laws requiring specified

ambient air temperatures for shell egg storage and transportation.

Approximately one-half of all States require 45 deg.F or less for

storage and transportation. Approximately ten of these States have

adopted 45 deg.F refrigeration requirements since 1992. Some of these

States are large producers. Many States also require that shell eggs be

refrigerated at 45 deg.F at retail. Approximately ten States retain the

60 deg.F traditionally required under USDA grading standards.

Approximately one dozen States have no refrigeration requirement for

shell egg storage and transportation. Costs of compliance for the shell

egg producers in the States already requiring refrigeration at 45 deg.F

are not likely to increase significantly. Some of the States that

require 45 deg.F refrigeration of shell eggs during storage and

transportation are among States in which major producers are located,

e.g., Ohio, Pennsylvania, and Georgia. However, there are States with

major producers and other producers that do not require 45 deg.F

refrigeration during storage and transportation of shell eggs. The

Agency requests information concerning the costs these regulations may

impose on producers who are currently not refrigerating shell eggs at

45 deg.F during storage and transportation. The Agency also requests

information concerning the size of these establishments.

The rule proposed on October 27, 1992 for refrigerating shell eggs

at 45 deg.F or below estimated the first-year capital investment costs

at $40.67 million (57 FR 48571). The annual recurring operating costs

were estimated at $10 million. The capital investment costs involved

replacing or retrofitting existing refrigeration units with larger

compressors or coils. The recurring annual operating costs involved the

energy costs of maintaining ambient air temperatures in storage

facilities and transport vehicles at 45 deg.F or below. These cost

estimates were based on data obtained from a survey of 80 (7 percent)

out of the 1200 shell egg processing plants located throughout the

country representing about 25 percent of production. 59 plants (75

percent) responded to the survey. The Agency was unable to evaluate the

comments regarding the specific large costs of acquiring trucks and

equipment because the survey did not contain such detailed data.

The costs to comply with this final rule will be lower than the

costs estimated for the proposed rule in 1992 because about ten States

(e.g., Arkansas, Florida, Georgia, Louisiana, Ohio, Oregon, Rhode

Island, and Texas) have already adopted refrigeration requirements at

45 deg.F or below for storage and transportation since 1992. These

States represented 29 percent of shell egg production in 1996. FSIS

updated the 1992 estimates to account for inflation and changes in

State laws. The Agency requests specific information concerning costs

that will be incurred in States that have not enacted refrigeration

requirements.

The costs estimated in 1992 were not adjusted upward for any of the

comments to the proposed rule because about 10 States have implemented

the 45 deg.F refrigeration requirements since 1992. Since about ten out

of fifty States representing 29 percent of production have implemented

the rule since 1992, this analysis reduced the capital and recurring

costs estimated in 1992 by 29 percent. This adjustment reduced the

capital and recurring costs to $28.40 million and $7.1 million

respectively. Therefore, costs were reduced based on shell egg

production data. FSIS reduced costs based on production data because

the 1992 costs were estimated and reported on a production basis (see

57 FR 48571-48572). The fact that the number of producers has declined

since 1992 may further lower the costs to the industry because a

smaller number of larger producers tend to have lower costs due to

scale economies.

The updated costs referred to above were adjusted upwards because

of inflation over the last six years. To adjust for this increase, FSIS

increased the $28.40 million capital costs by 8 percent (based on U.S.

Department of Commerce, Bureau of Economic Analysis, price index of

transportation and related equipment index, 1992 = 100, 1997 = 108.5).

This adjustment increased the capital cost estimate from

[[Page 45673]]

$28.40 million to $30.67 million, or $31 million approximately.

The updated recurring costs of compliance, estimated at $7 million

per year in 1992, were assumed to comprise mostly energy costs of

refrigeration. These estimates were increased for inflation over the

last six years to $7.63 or $8 million approximately (based on U.S.

Department of Commerce, Bureau of Economic Analysis, Price Index of

Electricity and Gas, 1992 = 100, 1997 = 108.98, or by 9 percent). FSIS

requests alternate cost estimates and data to support these estimates

from commenters who disagree with the Agency's cost estimates.

The estimated costs of compliance and the associated social

benefits of this rule are likely to be realized over the next twenty

years. Therefore, these costs and benefits were discounted over this

time span by using a 7 percent mid-year discount rate recommended by

the Office of Management and Budget.

Table 3 reports FSIS estimates of the discounted costs and benefits

of the rule under alternative assumptions about cost of salmonella

induced foodborne illness. Depending on the assumption used, the

estimated net benefits range from -$79.6 million to $401.30 million.

Under the assumption that the cost of foodborne illness varies with

age, the net benefits from the rule range from -$79.6 million to $34.2

million. Alternatively, if it is assumed that the cost of premature

death is $5 million per person, the net benefits from the rule are

higher, from $84.9 million to $401.3 million. In light of the

uncertainty surrounding the benefit estimates and refinements to costs,

FSIS cannot make a definitive statement about the net benefits

associated with the rule.

Table 3.--Discounted Benefit-Cost Estimates of Refrigerating Shell Eggs

[Fixed Costs=$31 million, Recurring Costs=$8 million]

----------------------------------------------------------------------------------------------------------------

Lower bound Upper bound

Lower bound Upper bound of high of high

of low est. of low est. est. est.

----------------------------------------------------------------------------------------------------------------

Recurring benefits: ($ million)............................. 3.47 13.86 18.48 47.36

Discounted Benefits*: ($ m.)................................ 38.03 151.88 202.51 518.93

Discounted Costs*: ($ m.)................................... 117.63 117.63 117.63 117.63

Net Discounted Benefits: (Row 2-Row 3) ($ m.)............... -79.60 34.17 84.88 401.30

Benefit-Cost Ratio: (Row 2:Row 3)........................... 0.32 1.29 1.72 4.41

----------------------------------------------------------------------------------------------------------------

*Discount Rate=7%, Time Period=20 years.

Source: Tables 1 and 2.

The preceding costs are likely to be passed on to consumers by the

industry because of the elasticity of demand and supply of eggs. The

demand for shell eggs is very inelastic, i.e., an increase in the price

of shell eggs is not likely to reduce significantly the demand for

them. For example, Kuo reports that the price elasticity of demand for

shell eggs is only (-0.11), i.e., an increase in price by one percent

is associated with only 0.11 percent decrease in quantity of shell eggs

demanded (Huang S. Kuo, A Complete System of U.S. Demand for Food,

USDA/Economic Research Service, Technical Bulletin No.1821, 1993,

Appendix B and C).

The inelastic demand is due to the fact that there are no good

substitutes for eggs that consumers might use when prices of shell eggs

are increased. Also, a typical consumer spends an insignificant

proportion of the food budget on shell eggs and consumes a limited

number of eggs.

The supply of shell eggs is very elastic because this industry has

hundreds of producers who can increase the supply of eggs with little

increase in costs. This prevents price increases by any single producer

and no producer can increase prices without losing significant market

share. Therefore, egg prices have been stable, if not declining, for

several years. For example, wholesale egg prices declined from 91.5

cents/dozen in 1996 to 83.8 cents/dozen in 1997. In the first quarter

of 1998, this price declined to 82.5 cents/dozen. The average retail

price of grade A large eggs was $1.1063/dozen in 1997 (U.S. Department

of Labor/Bureau of Labor Statistics). Per capita consumption of eggs

increased only slightly, from 237.8 eggs in 1996 to 239.3 eggs in 1997.

Regulatory Flexibility Act (RFA)

The Administrator has determined that this rule will not have a

significant economic impact on a substantial number of small entities.

As noted above, this rule exempts from compliance small producers with

flocks of 3,000 layers or less. Most of the establishments not exempt

from this rule are small establishments with employment of 500 or less.

Also, the compliance costs are likely to be spread over a large volume

of output that will be produced over the life cycles of these capital

assets (e.g., refrigeration equipment). For example, according to the

National Agricultural Statistics Service, 5.456 billion dozen eggs were

produced between January 1, 1997 and December 31, 1997. During that

time, the wholesale price for table eggs, estimated by ERS, was 83.8

cents per dozen, and the gross industry receipts were estimated at

$3.96 billion. Therefore, the compliance costs would represent less

than a penny per dozen eggs or less than one percent of revenues. Since

these first year costs include nonrecurring capital costs for storage

facilities and refrigerated vehicles, the impact on the industry would

be substantially less in subsequent years. For example, the recurring

costs in the subsequent years were estimated at $9 million per year.

This cost would represent primarily the energy cost of generating

refrigeration and the maintenance and replacement costs of storage

facilities. The relative impact on small producers would be

insignificant also because the current structure of the shell egg

industry is more concentrated than in 1992. For example, currently

there are only about 700 producers, compared to about 1,200 producers

in 1992. The smaller number of producers with increased output is

likely to have resulted in a greater concentration of larger firms in

this industry. These larger firms are more likely to absorb the

compliance costs relative to smaller firms. FSIS notes that increased

costs will not be evenly distributed across the industry because some

producers are currently storing and transporting shell eggs at 45

deg.F, while others are most likely storing and transporting shell eggs

at higher temperatures.

The shell egg industry would be able to ``pass through'' this cost

in the form of higher prices to consumers because, as noted earlier,

demand for this product is very inelastic and the supply

[[Page 45674]]

of shell eggs is highly elastic. The inelasticity of the demand follows

from the fact that household expenditures on eggs are a small share of

household budgets and because substitutes for eggs--at least in some

applications--are limited. The high elasticity of supply is based on

the fact that there are hundreds of shell egg producers in the U.S.

with relatively flat marginal cost curves. Thus, producers expand egg

production with little increase in average costs.

The rule would not be burdensome to other small entities such as

State and local governments because they are not in the business of

storage and transportation of shell eggs. However, to the extent State

and local governments are consumers of eggs, they will pay a little

more for eggs.

Alternatives to the Rule

FSIS considered several alternatives to this rule. FSIS found the

alternatives, which are described below, to be inferior to this rule

because of their expected benefits and costs, administrative burden,

efficiency, and equity.

No Action

This alternative would continue the current practice of no Federal

requirement for refrigeration of shell eggs. The public health benefit

would be zero because this alternative would not reduce Salmonella

related illness. FSIS considered and rejected this alternative because,

as noted above, the EPIA amendments mandate promulgation of this rule.

In addition, as noted earlier, the Appropriations Committee has

withheld $5 million of the FSIS appropriated funds for Fiscal Year 1998

until a final rule is promulgated to implement the refrigeration and

labeling requirements included in the 1991 EPIA amendments. A loss of

$5 million in the Agency's appropriation is likely to impair FSIS's

inspection activities, and degrade food safety in general.

Sliding Scale Approach

This alternative does not require maintenance of a specific ambient

temperature, such as the 45 deg.F rule does. Under this approach, a

specific ``sell-by'' date is mandatory, which would vary depending on

the temperatures at which eggs are maintained. To provide an incentive

for processors to chill eggs before shipping, yet retain flexibility to

accommodate reasonable alternatives to an absolute temperature

requirement, a regulation might prescribe a range of ``sell-by'' dates

based on the egg temperature achieved by the packer. Such an approach

is under consideration by the European Union but is not recommended for

the U.S. because of differences in climate, and vast distances in the

U.S. relative to within or even between countries in Europe. This

alternative would be burdensome to the industry and difficult to

implement because it would require detailed recordkeeping by the

industry. Some public health benefits would be expected and would

depend on the sell-by date/temperature matrix. Industry costs would

depend on the matrix and which temperatures producers select. Finally,

this alternative would be very difficult to enforce since USDA

inspectors would have to keep track of hundreds of shell egg producers

and billions of dozens of eggs.

State Rules Instead of Federal Rule

FSIS considered the alternative of actively encouraging State

governments to promulgate their own laws instead of a Federal rule but

did not adopt it for several reasons. First, as noted earlier, about

half of all States currently have laws requiring refrigeration of shell

eggs at 45 deg.F. On the other hand, some States do not have any

refrigeration requirements for shell eggs. Other States require

refrigeration during storage but not during transportation. Some States

require refrigeration of shell eggs at temperatures greater than

45 deg.F. In contrast to these inconsistencies and non-uniformities,

with the exception of shell eggs packed by egg handlers with 3,000 or

fewer hens, this rule requires that all shell eggs packed in containers

for the ultimate consumer be refrigerated during storage and

transportation at 45 deg.F or below. The public health benefits of this

alternative are expected to be zero, since this alternative is

essentially the same as no action except that States would be put on

notice that they should deal with public health risks from eggs.

In view of the disparities within and across the States, FSIS

determined that it would not be appropriate to defer to the States.

Summary and Conclusions

This section analyzed compliance of this rule with Executive Order

12866. It estimated discounted social benefits of the rule and

juxtaposed them against discounted capital and operating costs of

compliance with the rule. The analysis concluded that potential net

social benefits may result from this rule.

This section also analyzed compliance of this rule with the

Regulatory Flexibility Act. It is concluded that the costs of

compliance are not likely to have a significant economic impact on a

substantial number of small entities because the industry's cost of

compliance amounts to less than a penny per dozen eggs, demand for eggs

is inelastic, and the supply of eggs is highly elastic. In short, the

egg producers could easily ``pass through'' the costs of compliance to

consumers without losing their market shares. Other small entities such

as local and State governments are also not likely to be adversely

affected by this rule because they are not in the business of

producing, storing, or transporting shell eggs. To the extent that they

are large buyers of eggs, they would be adversely impacted by the

estimated increase in price of a penny per dozen eggs.

Finally, this section analyzed several alternatives to the rule.

These alternatives included: (1) no action, (2) sliding scale approach,

and (3) State rules instead of a Federal rule. These alternatives were

rejected because of their costs, administrative burden, efficiency, or

equity.

Paperwork Requirements

The paperwork and recordkeeping activities associated with this

rule are approved under OMB control number 0583-0106.

List of Subjects in 7 CFR Part 59

Eggs and egg products, Exports, Food grades and standards, Food

labeling, Imports, Reporting and recordkeeping requirements.

For the reasons set forth in the preamble, FSIS is amending 7 CFR

Part 59 as follows:

PART 59--INSPECTION OF EGGS AND EGG PRODUCTS (EGG PRODUCTS

INSPECTION ACT)

1. The authority citation for part 59 continues to read as follows:

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

2. Section 59.5 is amended by adding alphabetically the definitions

for ``Ambient temperature'' and ``Ultimate consumer'' and revising the

definitions for ``Container or Package'' and ``Egg handler'' to read as

follows:

Sec. 59.5 Terms defined.

* * * * *

Ambient temperature means the air temperature maintained in an egg

storage facility or transport vehicle.

* * * * *

Container or Package includes for egg products, any box, can, tin,

plastic, or other receptacle, wrapper, or cover and for shell eggs, any

carton, basket, case, cart, pallet, or other receptacle.

[[Page 45675]]

(a) Immediate container means any package or other container in

which egg products or shell eggs are packed for household or other

ultimate consumers.

(b) Shipping container means any container used in packing an

immediate container.

* * * * *

Egg handler means any person, excluding the ultimate consumer, who

engages in any business in commerce that involves buying or selling any

eggs (as a poultry producer or otherwise), or processing any egg

products, or otherwise using any eggs in the preparation of human food.

* * * * *

Ultimate consumer means any household consumer, restaurant,

institution, or any other party who has purchased or received shell

eggs or egg products for consumption.

* * * * *

3. Section 59.28 is amended by revising the first two sentences in

paragraph (a)(1) to read as follows:

Sec. 59.28 Other inspections.

(a) * * *

(1) Business premises, facilities, inventories, operations,

transport vehicles, and records of egg handlers, and the records of all

persons engaged in the business of transporting, shipping, or receiving

any eggs or egg products. In the case of shell egg packers packing eggs

for the ultimate consumer, such inspections shall be made a minimum of

once each calendar quarter. * * *

* * * * *

4. A new undesignated centerhead and new Sec. 59.50 are added to

read as follows:

Refrigeration of Shell Eggs

Sec. 59.50 Temperature and labeling requirements.

(a) No shell egg handler shall possess any shell eggs that are

packed into containers destined for the ultimate consumer unless they

are stored and transported under refrigeration at an ambient

temperature of no greater than 45 deg.F (7.2 deg.C).

(b) No shell egg handler shall possess any shell eggs that are

packed into containers destined for the ultimate consumer unless they

are labeled to indicate that refrigeration is required.

(c) Any producer-packer with an annual egg production from a flock

of 3,000 or fewer hens is exempt from the temperature and labeling

requirements of this section.

5. Sec. 59.132 is revised to read as follows:

Sec. 59.132 Access to plants.

Access shall not be refused to any representative of the Secretary

to any plant, place of business, or transport vehicle subject to

inspection under the provisions of this part upon presentation of

proper credentials.

6. Sec. 59.134 is amended by revising the section heading,

designating the existing text as paragraph (a), and adding a new

paragraph (b) to read as follows:

Sec. 59.134 Accessibility of product and cooler rooms.

* * * * *

(b) The perimeter of each cooler room used to store shell eggs

packed in containers destined for the ultimate consumer shall be made

accessible in order for the Secretary's representatives to determine

the ambient temperature under which shell eggs are stored.

7. Section 59.410 is amended by revising the section heading,

designating the existing text as paragraph (b), and adding a new

paragraph (a) to read as follows:

Sec. 59.410 Shell eggs and egg products required to be labeled.

(a) All shell eggs packed into containers destined for the ultimate

consumer shall be labeled to indicate that refrigeration is required,

e.g., ``Keep Refrigerated,'' or words of similar meaning.

* * * * *

8. Section 59.690 is amended by revising the first sentence to read

as follows:

Sec. 59.690 Persons required to register.

Shell egg handlers, except for producer-packers with an annual egg

production from a flock of 3,000 hens or less, who grade and pack eggs

for the ultimate consumer, and hatcheries are required to register with

the U.S. Department of Agriculture by furnishing their name, place of

business, and such other information as is requested on forms provided

by or available from the U.S. Department of Agriculture. * * *

9. Section 59.760 is revised to read as follows:

Sec. 59.760 Inspection of egg handlers.

Duly authorized representatives of the Secretary shall make such

periodic inspections of egg handlers, their transport vehicles, and

their records as the Secretary may require to ascertain if any of the

provisions of the Act or this part applicable to such egg handlers have

been violated. Such representatives shall be afforded access to any

place of business, plant, or transport vehicle subject to inspection

under the provisions of the Act.

10. Section 59.915 is amended by revising the section heading, by

removing the word ``and'' at the end of paragraph (b)(8), by

redesignating paragraph (b)(9) as paragraph (b)(10) and by adding a new

paragraph (b)(9) to read as follows:

Sec. 59.915 Foreign inspection certification required.

* * * * *

(b) * * *

(9) A certification that shell eggs which have been packed into

containers destined for the ultimate consumer have, at all times after

packing, been stored and transported under refrigeration at an ambient

temperature of no greater than 45 deg.F (7.2 deg.C); and

* * * * *

11. In Sec. 59.950, paragraphs (a)(4) through (a)(8) are

redesignated as paragraphs (a)(5) through (a)(9), respectively, and a

new paragraph (a)(4) is added to read as follows:

Sec. 59.950 Labeling of containers of eggs or egg products for

importation.

(a) * * *

(4) For shell eggs, the words, ``Keep Refrigerated,'' or words of

similar meaning;

* * * * *

12. Section 59.955 is amended by redesignating paragraphs (b) and

(c) as paragraphs (c) and (d), respectively, by redesignating the last

sentence of paragraph (a) as new paragraph (b), and by revising

paragraph (a) to read as follows:

Sec. 59.955 Labeling of shipping containers of eggs or egg products

for importation.

(a) Shipping containers of foreign product which are shipped to the

United States shall bear in a prominent and legible manner:

(1) The common or usual name of the product;

(2) The name of the country of origin;

(3) For egg products, the plant number of the plant in which the

egg product was processed and/or packed;

(4) For egg products, the inspection mark of the country of origin;

(5) For shell eggs, the quality or description of the eggs, except

as required in Sec. 59.905;

(6) For shell eggs, the words ``Keep refrigerated'' or words of

similar meaning.

* * * * *

Done at Washington, DC, on: August 20, 1998.

Thomas J. Billy,

Administrator, Food Safety and Inspection Service.

[FR Doc. 98-22890 Filed 8-26-98; 8:45 am]

BILLING CODE 3410-DM-P