[Federal Register Volume 62, Number 21 (Friday, January 31, 1997)]
[Proposed Rules]
[Pages 4662-4664]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-2404]


 ========================================================================
 Proposed Rules
                                                 Federal Register
 ________________________________________________________________________
 
 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
 
 ========================================================================
 

  Federal Register / Vol. 62, No. 21 / Friday, January 31, 1997 / 
Proposed Rules  

[[Page 4662]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Parts 56 and 70

[Docket No. PY-97-001]


Egg, Poultry, and Rabbit Grading Increase in Fees and Charges

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

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

SUMMARY: The Agricultural Marketing Service (AMS) proposes to increase 
the fees and charges for Federal voluntary egg, poultry, and rabbit 
grading. These fees and charges need to be increased to cover the 
increase in salaries of Federal employees, salary increases of State 
employees cooperatively utilized in administering the programs, and 
other increased Agency costs.

DATES: Comments must be received on or before March 3, 1997.

ADDRESSES: Send written comments, in duplicate, to Douglas C. Bailey, 
Chief, Standardization Branch, Poultry Division, Agricultural Marketing 
Service, U.S. Department of Agriculture, room 3944-South, P.O. Box 
96456, Washington, DC 20090-6456. Comments received may be inspected at 
this location between 8:00 a.m. and 4:30 p.m., Eastern Time, Monday 
thru Friday, except holidays. State that your comments refer to Docket 
No. PY-97-001.

FOR FURTHER INFORMATION CONTACT: Rex A. Barnes, Chief, Grading Branch, 
(202) 720-3271.

SUPPLEMENTARY INFORMATION: This proposed rule has been determined to be 
not significant for purposes of Executive Order 12866 and has not been 
reviewed by the Office of Management and Budget (OMB).
    This proposed rule has been reviewed under Executive Order 12988, 
Civil Justice Reform. This action is not intended to have retroactive 
effect. This rule will not preempt any State or local laws, 
regulations, or policies, unless they present an irreconcilable 
conflict with this rule. There are no administrative procedures which 
must be exhausted prior to any judicial challenge to the provisions of 
this rule.
    Pursuant to the requirements set forth in the Regulatory 
Flexibility Act (RFA), the AMS has considered the economic impact of 
this action on small entities.
    There are more than 400 users of the Poultry Division's grading 
services. Many of these users are small entities under the criteria 
established by the Small Business Administration (13 CFR 121.601). This 
proposed rule will raise the fees charged to businesses for voluntary 
grading services for eggs, poultry, and rabbits. The AMS estimates that 
overall this rule would yield an additional $1.2 million during fiscal 
year 1998. Even though fees will be raised, the hourly resident rate 
for grading services will increase approximately 5.5 percent and will 
not significantly affect these entities. These businesses are under no 
obligation to use these grading services, and any decision on their 
part to discontinue the use of the services would not prevent them from 
marketing their products.
    The AMS has certified that this action will not have a significant 
impact on a substantial number of small entities, as defined in the RFA 
(5 U.S.C. 601).
    The information collection requirements that appear in the sections 
to be amended by the proposed rule have been previously approved by OMB 
and assigned OMB Control Numbers under the Paperwork Reduction Act of 
1980 as follows: Sec. 56.52(a)(4)--No. 0581-0128; and 
Sec. 70.77(a)(4)--No. 0581-0127.

Background and Proposed Changes

    The Agricultural Marketing Act (AMA) of 1946 authorizes official 
grading and certification on a user-fee basis of eggs, poultry, and 
rabbits. The AMA provides that reasonable fees be collected from the 
user of the program services to cover, as nearly as practicable, the 
costs of services rendered. AMS regularly reviews these programs to 
determine if fees are adequate and if costs are reasonable. This 
proposal would amend the schedule for fees and charges for grading 
services rendered to the egg, poultry, and rabbit industries to reflect 
the costs currently associated with the program.
    In 1995 the egg products inspection program was transferred to the 
Food Safety and Inspection Service. In order to offset the loss of 
efficiencies and to avoid an increase in user fees for the remaining 
shell egg and poultry grading programs, AMS took several streamlining 
actions in supervisory and support activities. These actions included 
reducing the number of supervisory visits; consolidating and closing 
submanagement offices; consolidating the billing and support functions 
into two regional offices; realigning regional boundaries; and 
substantially reducing the Washington, D.C. headquarters staff. As a 
result, no fee increase was necessary due to the reorganization. 
However, increased salaries and other costs and a substantial shift 
from resident to nonresident grading services now require an increase 
in fees.
    Employee salaries and benefits are major program costs that account 
for approximately 82 percent of the total operating budget. A general 
and locality salary increase for Federal employees, ranging from 3.09 
to 6.25 percent depending on locality, effective January 1995, and an 
additional general and locality salary increase, ranging from 2.39 to 
2.87 percent depending upon locality, effective January 1996, has 
materially affected program costs. Another general and locality salary 
increase is scheduled in January 1997. The general salary increase will 
be 2.3 percent. Also, from November 1994 through September 1997, 
salaries and fringe benefits of federally licensed State employees will 
have increased by about 7 percent. Further, since October 1993, 
standardization program costs must be recovered from user fees. As a 
result, the hourly resident rate for grading services will increase by 
approximately 5.5 percent. The hourly resident rate covers graders' 
salaries, fringe benefits, and related costs.
    Another factor affecting the current fee structure is the shift 
from resident to nonresident grading services.
    Historically, the majority of shell egg and poultry grading has 
been done on a resident basis according to the official U.S. quality 
grade standards. Today, however, a growing volume of shell eggs and 
poultry is being traded according to product-specific purchase 
requirements where USDA certification is required, work done 
increasingly on a

[[Page 4663]]

nonresident fee basis. This shift has increased the proportion of 
overhead costs necessary to administer the nonresident services. As a 
result, users of nonresident services are not supporting their share of 
the program's overhead costs under the present fee structure.
    A recent review of the fee schedule, effective November 1, 1994, 
revealed that anticipated revenue will not adequately cover increasing 
program costs. Without a fee increase, projected FY 98 revenues for 
grading services are $21.7 million with costs projected at $23.1 
million, and trust fund balances would be below appropriate levels. 
With a fee increase, projected FY 98 revenues are $22.9 million with 
costs projected at $23.1 million.
    The following table compares current fees and charges with proposed 
fees and charges for egg, poultry, and rabbit grading as found in 7 CFR 
Parts 56 and 70:

------------------------------------------------------------------------
                   Service                       Current      Proposed  
------------------------------------------------------------------------
Resident shell egg and poultry grading--                                
 Administrative charges (supervision, other                             
 overhead and administrative costs) assessed                            
 on the volume of product handled:                                      
    Per pound of poultry....................        .00031        .00033
    Per 30-dozen case of shell eggs.........        .036          .038  
    Minimum per month.......................     215           225      
    Maximum per month.......................   2,150         2,250      
Nonresident shell egg and poultry grading                               
 and Resident rabbit grading--Administrative                            
 charge based on 25% of grader's salary,                                
 minimum per month..........................     215           225      
Nonresident fee basis poultry, shell egg and                            
 rabbit grading:                                                        
    --Regular time, rate per hour...........      33.64         38.96   
    --Saturdays, Sundays, and legal                                     
     holidays, rate per hour................      35.52         43.24   
Appeal grading and Review of grader's                                   
 decision--Rate per hour....................      27.36         30.56   
Inauguration of resident grading service....     310           310      
------------------------------------------------------------------------

List of Subjects

7 CFR Part 56

    Eggs and egg products, Food grades and standards, Food labeling, 
Reporting and recordkeeping requirements.

7 CFR Part 70

    Food grades and standards, Food labeling, Poultry and poultry 
products, Rabbits and rabbit products, Reporting and recordkeeping 
requirements.
    For reasons set forth in the preamble, it is proposed that 7 CFR, 
Parts 56 and 70 be amended as follows:

PART 56--GRADING OF SHELL EGGS

    1. The authority citation for Part 56 continues to read as follows:

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

    2. In Sec. 56.46, paragraphs (b) and (c) are revised to read as 
follows:


Sec. 56.46  On a fee basis.

* * * * *
    (b) Fees for grading services will be based on the time required to 
perform the services. The hourly charge shall be $38.96 and shall 
include the time actually required to perform the grading, waiting 
time, travel time, and any clerical costs involved in issuing a 
certificate.
    (c) Grading services rendered on Saturdays, Sundays, or legal 
holidays shall be charged for at the rate of $43.24 per hour. 
Information on legal holidays is available from the Supervisor.
    3. Sec. 56.47 is revised to read as follows:


Sec. 56.47  Fees for appeal grading or review of a grader's decision.

    The cost of an appeal grading or review of a grader's decision 
shall be borne by the appellant at an hourly rate of $30.56 for the 
time spent in performing the appeal and travel time to and from the 
site of the appeal, plus any additional expenses. If the appeal grading 
or review of a grader's decision discloses that a material error was 
made in the original determination, no fee or expenses will be charged.
    4. In Sec. 56.52, paragraph (a)(4) is revised to read as follows:


Sec. 56.52  Continuous grading performed on resident basis.

* * * * *
    (a) * * *
    (4) An administrative service charge based upon the aggregate 
number of 30-dozen cases of all shell eggs handled in the plant per 
billing period multiplied by $0.038, except that the minimum charge per 
billing period shall be $225 and the maximum charge shall be $2,250. 
The minimum charge also applies where an approved application is in 
effect and no product is handled.
* * * * *
    5. In Sec. 56.54, paragraph (a)(2) is revised to read as follows:


Sec. 56.54  Charges for continuous grading performed on a nonresident 
basis.

* * * * *
    (a) * * *
    (2) An administrative service charge equal to 25 percent of the 
grader's total salary costs. A minimum charge of $225 will be made each 
billing period. The minimum charge also applies where an approved 
application is in effect and no product is handled.
* * * * *

PART 70--VOLUNTARY GRADING OF POULTRY PRODUCTS AND RABBIT PRODUCTS

    6. The authority citation for Part 70 continues to read as follows:

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

    7. In Sec. 70.71, paragraphs (b) and (c) are revised to read as 
follows:


Sec. 70.71  On a fee basis.

* * * * *
    (b) Fees for grading services will be based on the time required to 
perform such services for class, quality, quantity (weight test), or 
condition, whether ready-to-cook poultry, ready-to-cook rabbits, or 
specified poultry food products are involved. The hourly charge shall 
be $38.96 and shall include the time actually required to perform the 
work, waiting time, travel time, and any clerical costs involved in 
issuing a certificate.
    (c) Grading services rendered on Saturdays, Sundays, or legal 
holidays shall be charged for at the rate of $43.24 per hour. 
Information on legal holidays is available from the Supervisor.
    8. Sec. 70.72 is revised to read as follows:


Sec. 70.72   Fees for appeal grading, or examination or review of a 
grader's decision.

    The costs of an appeal grading, or examination or review of a 
grader's decision, will be borne by the appellant at an hourly rate of 
$30.56 for the time spent in performing the appeal and

[[Page 4664]]

travel time to and from the site of the appeal, plus any additional 
expenses. If the appeal grading, or examination or review of a grader's 
decision, discloses that a material error was made in the original 
determination, no fee or expenses will be charged.
    9. In Sec. 70.76, paragraph (a)(2) is revised to read as follows:


Sec. 70.76  Charges for continuous poultry grading performed on a 
nonresident basis.

* * * * *
    (a) * * *
    (2) An administrative service charge equal to 25 percent of the 
grader's total salary costs. A minimum charge of $225 will be made each 
billing period. The minimum charge also applies where an approved 
application is in effect and no product is handled.
* * * * *
    10. In Sec. 70.77, paragraphs (a)(4) and (a)(5) are revised to read 
as follows:


Sec. 70.77  Charges for continuous poultry or rabbit grading performed 
on a resident basis.

* * * * *
    (a) * * *
    (4) For poultry grading: An administrative service charge based 
upon the aggregate weight of the total volume of all live and ready-to-
cook poultry handled in the plant per billing period computed in 
accordance with the following: Total pounds per billing period 
multiplied by $0.00033, except that the minimum charge per billing 
period shall be $225 and the maximum charge shall be $2,250. The 
minimum charge also applies where an approved application is in effect 
and no product is handled.
    (5) For rabbit grading: An administrative service charge equal to 
25 percent of the grader's total salary costs. A minimum charge of $225 
will be made each billing period. The minimum charge also applies where 
an approved application is in effect and no product is handled.
* * * * *
    Dated: January 27, 1997.
Lon Hatamiya,
Administrator.
[FR Doc. 97-2404 Filed 1-30-97; 8:45 am]
BILLING CODE 3410-02-P