[Federal Register Volume 59, Number 176 (Tuesday, September 13, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-22611]


[[Page Unknown]]

[Federal Register: September 13, 1994]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 1250

[Docket No. PY-94-004]

 

Referendum on Amendment to Egg Research and Promotion Order To 
Increase the Rate of Assessment

AGENCY: Agricultural Marketing Service, Agriculture.

ACTION: Proposed rule and notice of referendum.

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SUMMARY: This proposed rule would amend the Egg Research and Promotion 
Order to increase the assessment rate from 5 cents to 10 cents per 30-
dozen case of commercial eggs. This proposal would also make a 
conforming amendment to regulations. Notice also is hereby given that 
the Agricultural Marketing Service will conduct a referendum to 
determine whether egg producers favor an increase in the assessment 
rate under the egg research and promotion program. Ballots and 
instructions will be mailed directly to all known egg producers owning 
over 75,000 laying hens.

DATES: The representative period for purposes of the referendum is May 
1 through July 31, 1994. The referendum will be conducted between 
September 26 and October 14, 1994.

FOR FURTHER INFORMATION CONTACT: Angela C. Clonts at 202-720-3506.

Supplementary Information:

Executive Orders 12866 and 12778

    This rule is exempt from Executive Order 12866 review.
    This proposed rule has been reviewed under Executive Order 12778, 
Civil Justice Reform. It is not intended to have retroactive effect. 
This rule would not preempt any State or local laws, regulations, or 
policies, unless they present an irreconcilable conflict with this 
rule.
    The Act provides that administrative proceedings must be exhausted 
before parties may file suit in court. Under section 14 of the Act, a 
person subject to an order may file a petition with the Secretary 
stating that such order, any provisions of such order or any 
obligations imposed in connection with such order are not in accordance 
with law; and requesting a modification of the order or an exemption 
therefrom. Such person is afforded the opportunity for a hearing on the 
petition. After a hearing, the Secretary would rule on the petition. 
The Act provides that the district court of the United States in any 
district in which such person is an inhabitant, or has his principal 
place of business, has jurisdiction to review the Secretary's ruling on 
the petition, if a complaint is filed within 20 days after date of the 
entry of the ruling.

Effect on Small Entities

    The Administrator of the Agricultural Marketing Service has 
determined that this proposed rule will not have a significant economic 
impact on a substantial number of small entities, as defined by the 
Regulatory Flexibility Act (5 U.S.C. 601 et seq.).
    Currently, 618 egg producers pay assessments to the American Egg 
Board (AEB). A proposed rule to increase the exemption level from 
30,000 to 75,000 laying hens was published in the Federal Register on 
March 22, 1994 (59 FR 13460). The increased exemption level would 
exempt 253 small egg producers who represent 41 percent of the egg 
producers currently paying assessments, but only 4 percent of AEB's 
total assessment income. It is anticipated that the 75,000-hen 
exemption level would be in place before the referendum on the 
assessment rate increase. Therefore, a change in the assessment rate 
would affect only egg producers owning more than 75,000 laying hens.
    There are an estimated 365 producers who own more than 75,000 hens. 
Currently, egg producers must pay a mandatory assessment of 5 cents per 
30-dozen case of eggs marketed to fund the research and promotion 
activities authorized by the Act. The present 5-cent assessment is 
equivalent to approximately 0.231 percent of the wholesale price of a 
1-dozen carton of Large eggs. An assessment rate of 10 cents per 30-
dozen case would be equivalent to approximately 0.463 percent of the 
wholesale price of a 1-dozen carton of Large eggs. This is based on the 
Economic Research Service's 3-year average wholesale price for New York 
City Grade A Large cartoned eggs (1991-93) of 72 cents per dozen. AEB 
collects approximately $7.5 million annually from the 5-cent 
assessment, and it is estimated that it would collect $14 million for a 
10-cent assessment. It is estimated that any additional costs would be 
offset by the benefits to be derived from strengthened research and 
promotion programs.

Paperwork Reduction

    Information collection requirements and recordkeeping provisions 
contained in 7 CFR Part 1250 have been previously approved by the 
Office of Management and Budget and assigned OMB Control No. 0581-0093 
under the Paperwork Reduction Act of 1980.
    No additional recordkeeping requirements would be imposed as a 
result of this proposed rule. It has been estimated that it will take 
an average of about 30 minutes for each of the approximately 380 egg 
producers to participate in the voluntary referendum balloting.

Background and Proposed Changes

    The Egg Research and Consumer Information Act (7 U.S.C. 2701 et 
seq.) was amended December 14, 1993 (Pub. Law 103-188. The amendments 
raised the maximum rate of assessment paid by egg producers to the 
American Egg Board (AEB) from 10 cents to 20 cents per 30-dozen case of 
commercial eggs. The actual rate is prescribed by the Egg Research and 
Promotion Order and is currently 5 cents per case. Any increase from 
the 5 cents must be approved by producers voting in a referendum.
    A proposed rule to increase the assessment rate in the Order from 5 
cents to 10 cents per case was published in the Federal Register on 
June 17, 1994 (59 FR 31174). Comments were solicited from interested 
persons through August 16, 1994. Two comments were received; one from a 
major egg producer organization in support and one from an egg producer 
in opposition to the increase.
    The commenter who opposed the increase cited the decline in number 
of egg producers from 10,000 to 400 since AEB has been in existence and 
that AEB programs have not halted the decline. However, the decrease in 
the number of producers paying assessments is the result of several 
factors. First, when AEB was first implemented in 1976, more than 6,000 
producers owning over 3,000 laying hens were on record. By 1989, the 
number had decreased to approximately 2,000 due to consolidations and 
bankruptcies during a time when the economic situation was poor. In 
1990, the exemption level was changed to 30,000 laying hens, decreasing 
the number of producers by 36 percent. The exemption level was changed 
again on August 1, 1994, to 75,000 hens, reducing the number to just 
under 400 producers.
    The commenter also expressed disapproval that a large percentage of 
the proposed increase in funds might be used for advertising, resulting 
in a temporary boost in demand and that such demand would be quickly 
swallowed up by expanded production. The commenter also noted that AEB 
has a function in the industry but must remain lean to ensure funds are 
spent wisely. The commenter expressed concern that AEB not look for 
budget expenditures to justify the increased assessment. AEB's 
administrative costs have steadily remained at approximately 3 percent. 
Further, as required by the 1993 amendments to the Act, AEB submitted 
to the Department a marketing analysis showing the need for an 
assessment increase.
    The commenter was also opposed to the referendum voting rules. The 
commenter indicated that the rules allow the number of hens owned to 
give more weight to the vote, thereby granting larger producers more 
voting power. The Act provides that a referendum vote will pass if 
approved by not less than two-thirds of the producers voting or by a 
majority of producers voting if they represent not less than two-thirds 
of the commercial eggs produced.
    The commenter further was of the view that the assessment rate 
should remain at its current level of 5 cents, that producers should be 
allowed to voluntarily give an extra 5 or 10 cents, and that refunds 
should be available. The Act was amended in 1993 to provide that AEB 
may recommend an increased assessment rate to the Secretary. In 
accordance with the provisions of the Act, AEB has done so, and the 
assessment increase as proposed herein will be subject to a referendum 
vote.
    It is directed that, in accordance with the procedures for the 
conduct of referenda (7 CFR 1250.200 et seq.), a referendum will be 
held beginning September 26, 1994, and ending on October 14, 1994, to 
determine whether producers favor the increase to 10 cents per case as 
proposed.
    Section 9 of the Act requires approval by eligible egg producers 
engaged in commercial egg production during the representative period 
and at the time of voting. The representative period for the conduct of 
the referendum is determined to be May 1, 1994, through July 31, 1994.
    For the Order amendment to be approved, it must be favored by at 
least two-thirds of the producers voting in this referendum or by a 
majority of the producers voting if such majority represents not less 
than two-thirds of the commercial eggs produced by those voting.
    The agents of the Secretary to conduct the referendum are hereby 
designated to be Janice L. Lockard and Angela C. Clonts, both of the 
Poultry Division, Agricultural Marketing Service, USDA. The agents may 
appoint subagents to assist them in performing their duties.
    Ballots, instructions, eligibility requirements, and other 
information pertinent to the referendum will be mailed to all known 
eligible egg producers. In accordance with Public Law 103-188 and 
recent amendments to the implementing Order (59 FR 38875), producers 
owning 75,000 or fewer laying hens are exempt from paying assessments 
under the Act and are therefore not eligible to vote in the referendum.
    If any eligible voter does not receive a ballot by September 26, 
the beginning date of the referendum period, such individual may obtain 
a ballot from the Chief, Standardization Branch, Poultry Division, AMS, 
USDA, Room 3944-South, P.O. Box 9456, Washington, D.C. 20090-6456. 
Copies of the complete text of the Egg Research and Promotion Order, as 
amended, may also be obtained from the Poultry Division.

List of Subjects in 7 CFR Part 1250

    Administrative practice and procedure, Advertising, Agricultural 
research, Eggs and egg products, Reporting and recordkeeping 
requirements.

    For the reasons set forth in the preamble, Title 7, CFR Part 1250 
is proposed to be amended as follows:

PART 1250--EGG RESEARCH AND PROMOTION

    1. The authority citation of Part 1250 continues to read as 
follows:

    Authority: Pub. L. 93-428, 88 Stat. 1171, as amended, 7 U.S.C. 
2701-2718.

    2. Section 1250.347 is revised to read as follows:


Sec. 1250.347  Assessments.

    Each handler designated in Sec. 1250.349 and pursuant to 
regulations issued by the Board shall collect from each producer, 
except for those producers specifically exempted in Sec. 1250.348, and 
shall pay to the Board at such times and in such manner as prescribed 
by regulations issued by the Board an assessment at a rate of not to 
exceed 10 cents per 30-dozen case of eggs, or the equivalent thereof, 
for such expenses and expenditures, including provisions for a 
reasonable reserve and those administrative costs incurred by the 
Department of Agriculture after this subpart is effective, as the 
Secretary finds are reasonable and likely to be incurred by the Board 
and the Secretary under this subpart, except that no more than one such 
assessment shall be made on any case of eggs.
    3. In section 1250.514, the first sentence is revised to read as 
follows:


Sec. 1250.514  Levy of assessments.

    An assessment rate of 10 cents per case of commercial eggs is 
levied on each case of commercial eggs handled for the account of each 
producer. * * *

    Dated: September 8, 1994.
Lon Hatamiya,
Administrator.
[FR Doc. 94-22611 Filed 9-12-94; 8:45 am]
BILLING CODE 3410-02-P