Introduction
The Food Safety and Inspection Service (FSIS), an agency within the U.S. Department of Agriculture (USDA), published a notice in the Federal Register on February 6, 2026, announcing the rates it will charge for various inspection and related services in calendar year 2026. These services include voluntary, overtime, and holiday inspection for meat, poultry, and egg products establishments, as well as importers and exporters, along with identification, certification, laboratory services, and export application fees. Notably, FSIS has chosen to keep most rates unchanged from 2025 levels, despite formulas indicating potential increases, to avoid imposing unnecessary costs on industry while the agency reviews its rate calculation methodologies. The exception is the laboratory services rate, which will decrease effective January 11, 2026. This decision reflects FSIS's discretionary authority under statutes like the Federal Meat Inspection Act (FMIA), Poultry Products Inspection Act (PPIA), and Egg Products Inspection Act (EPIA), and aims to balance cost recovery with accurate reflection of operational expenses. The notice underscores ongoing efforts to align fees with actual service costs, potentially signaling broader reforms in how federal agencies compute reimbursable rates.
Background on FSIS Rate Structures
FSIS operates under a framework established by key federal laws that govern inspection services for meat, poultry, and egg products. The FMIA (21 U.S.C. 695) and PPIA (21 U.S.C. 468) mandate that the U.S. government bears the base cost of inspections, except for overtime and holiday work, for which the Secretary of Agriculture has discretion to seek reimbursement under 7 U.S.C. 2219a. The EPIA (21 U.S.C. 1053) similarly grants flexibility in setting rates for overtime and holiday pay. Reimbursement is not mandatory, allowing FSIS to accept partial or adjusted sums based on operational needs.
Rate calculations are governed by regulations finalized in 2011 (76 FR 20220), which introduced formulas based on prior fiscal year data, including salaries, hours worked, benefits, travel, operating costs, overhead, and bad debt allowances. These formulas are updated annually, with rates published in the Federal Register before implementation. A separate update in 2016 (81 FR 42225) refined the export application fee methodology. However, FSIS has not comprehensively reviewed most formulas since 2009, leading to the current decision to pause increases. The notice references a prior announcement (89 FR 106417, December 30, 2024) initiating this review, highlighting how unchanged methodologies may fail to account for recent staffing efficiencies and cost structures.
Details of 2026 Rates and Comparisons
For 2026, FSIS will maintain basetime, overtime, holiday, and export application rates at 2025 levels: basetime at $73.04 per hour, overtime at $89.68 per hour, holiday at $106.32 per hour, and export application at $4.83 per application. Although calculations under existing formulas projected increases—to $78.80, $97.04, $115.28, and $5.02 respectively—the agency opted not to implement them.
The basetime rate formula divides the Office of Field Operations (OFO) prior year's regular direct pay by regular hours, adjusts for cost-of-living increases, and adds rates for benefits, travel, operating costs, overhead, and bad debt. Similar adjustments apply to overtime (multiplied by 1.5) and holiday (multiplied by 2) rates. For export applications, the formula sums labor, non-labor, and overhead costs divided by the estimated number of applications, updated to include transitions like the shift from eAuthentication to Login.gov.
In contrast, the laboratory services rate will decrease to $92.80 per hour, down from an unspecified 2025 level but calculated using the Office of Public Health Science (OPHS) prior year's data under 9 CFR 391.4. This rate is rounded to be divisible by four for quarter-hour billing, the minimum charge unit.
Reasons for Maintaining Most Rates
FSIS's decision stems from concerns that the current formulas may inflate rates artificially. A key factor is a decrease in OFO's prior fiscal year's regular hours—attributed to staffing adjustments and efficiency improvements—which disproportionately raised projected rates without corresponding cost increases. The notice states, 'This reduction may have artificially increased the projected 2026 rates.' FSIS determined that 2025 rates sufficiently cover 2026 costs, avoiding unnecessary burdens on industry.
For export applications, increases were driven by 2025 pay raises and maintenance contract costs for the Public Health Information System Export Module, but FSIS concluded the existing fee adequately funds the service. This discretionary approach aligns with statutory language allowing the Secretary to accept 'any' reimbursement sums, not necessarily full costs. The agency is undertaking a comprehensive methodology review, the first major update since 2009 for most formulas, to ensure future rates reflect true costs.
Laboratory Services Rate Reduction
Unlike other rates, the laboratory services fee follows a distinct formula using OPHS data, which did not experience the same hour reductions as OFO. The calculation yields $92.80 per hour: prior year's regular direct pay divided by regular hours ($20,422,806 / 408,851 = $49.95), adjusted for 1.0% cost-of-living increase to $50.45, plus benefits ($14.12), travel and operating ($2.74), overhead ($25.49), and bad debt ($0.00). This reduction, effective January 11, 2026, demonstrates how targeted formula applications can lower fees when inputs align with lower projected costs.
Implications and Perspectives
This notice has short-term implications for regulated entities, providing rate stability and potential cost savings through the laboratory fee reduction. Establishments relying on overtime or holiday inspections avoid projected hikes of up to 8-9%, which could have increased operational expenses in a sector facing supply chain pressures.
Long-term, the methodology review could lead to more accurate, equitable fee structures, incorporating modern efficiencies like digital systems. Industry stakeholders, such as meat and poultry processors, may welcome the pause, viewing it as responsive to economic realities. Consumer advocates and policymakers might emphasize the need for fees to fully recover costs without subsidizing industry, ensuring public health resources remain robust. Legal experts note this exercise of discretion under FMIA, PPIA, and EPIA sets a precedent for flexible rate-setting in federal agencies.
Different perspectives emerge: some see it as prudent fiscal management, while others question if delayed increases could strain FSIS budgets if costs rise unexpectedly. The review process will likely involve stakeholder input, balancing transparency with administrative efficiency.
Conclusion
In summary, FSIS's 2026 rate notice prioritizes continuity for most services while adjusting laboratory fees downward, reflecting a cautious approach amid an ongoing review of calculation methodologies. This ensures cost recovery without undue industry burden. Looking ahead, the comprehensive review may result in updated formulas that better capture current operational realities, potentially influencing rate stability in future years. Challenges include verifying formula accuracy and incorporating stakeholder feedback, while debates may center on the balance between full reimbursement and discretionary flexibility under governing statutes. Ongoing monitoring of FSIS announcements will be essential for tracking developments in this area.
