[Federal Register Volume 62, Number 243 (Thursday, December 18, 1997)]
[Rules and Regulations]
[Pages 66257-66258]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-33005]



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 Rules and Regulations
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  Federal Register / Vol. 62, No. 243 / Thursday, December 18, 1997 / 
Rules and Regulations  

[[Page 66257]]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 58

[DA-97-13]
RIN 0581-AB50


Grading and Inspection, General Specifications for Approved 
Plants and Standards for Grades of Dairy Products: Revision of User 
Fees

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: The Agricultural Marketing Service (AMS) is increasing the 
fees charged for services provided under the dairy inspection and 
grading program. This rule will yield an estimated $343,000 during 
1998. The program is a voluntary, user fee program conducted under the 
authority of the Agricultural Marketing Act of 1946, as amended. This 
action increases the hourly rate to $51.00 per hour for continuous 
resident services and $56.00 per hour for nonresident services between 
the hours of 6:00 a.m. and 6:00 p.m. The fee for nonresident services 
between the hours of 6:00 p.m. and 6:00 a.m. would be $61.60 per hour. 
These fees represent an increase of four dollars per hour.
    The fees are being increased to cover the costs of recent salary 
increases and locality adjustments, the costs necessary to maintain 
adequate levels of service during changing production and purchasing 
patterns within the dairy industry, the continued full funding for 
standardization activities, and other nonpay operating costs.

EFFECTIVE DATE: January 4, 1998.

FOR FURTHER INFORMATION CONTACT: Lynn G. Boerger, USDA/AMS/Dairy 
Programs, Dairy Grading Branch, Room 2750--South Building, P.O. Box 
96456, Washington, D.C. 20090-6456, (202) 720-9381.

SUPPLEMENTARY INFORMATION: This 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.
    This final rule has been reviewed under Executive Order 12988, 
Civil Justice Reform. This rule is not intended to have preemptive 
effect with respect to any State or local laws, regulations or 
policies. This rule is not intended to have retroactive effect. There 
are no administrative procedures which must be exhausted prior to any 
judicial challenge to this rule or the application of its provisions.
    Pursuant to the requirements set forth in the Regulatory 
Flexibility Act (RFA), 5 U.S.C. 601 et seq., the AMS has considered the 
economic impact of this action on small entities.
    There are more than 600 users of Dairy Grading Branch's inspection 
and grading services. Many of these users are small entities under the 
criteria established by the Small Business Administration (13 CFR 
121.601). This rule will raise the fee charged to businesses for 
voluntary inspection services and grading services for dairy and 
related products. Even though the fees will be raised, the increase is 
approximately 8 percent and will not significantly affect these 
entities. These businesses are under no obligation to use these 
services, and any decision on their part to discontinue the use of the 
services should not prevent them from marketing their products. The AMS 
estimates that overall this rule will yield an additional $343,000 
during 1998. The rule reflects certain fee increases needed to recover 
the cost of inspection and grading services rendered in accordance with 
the Agricultural Marketing Act of 1946.
    The AMS regularly reviews its user fee financed programs to 
determine if the fees are adequate. The existing fee schedule will not 
generate sufficient revenues to cover program costs while maintaining 
an adequate reserve balance (four months of costs) as called for by 
Agency policy (AMS Directive 408.1). Without a fee increase, revenue 
projections for FY 1998 would remain constant at $4.695 million. Costs 
are projected to increase to $5.628 million. The shortfall, if allowed 
to continue, would translate into an approximate 1.6 month operating 
reserve at the end of FY 1998, which is less than Agency policy 
requires.
    The AMS has determined that this action will not have a significant 
impact on a substantial number of small entities, as defined in the 
Regulatory Flexibility Act (5 U.S.C. 601).
    The Agricultural Marketing Act of 1946, as amended, authorizes the 
Secretary of Agriculture to provide Federal dairy grading and 
inspection services that facilitate marketing and help consumers obtain 
the quality of dairy products they desire. The Act provides that 
reasonable fees be collected from the users of the services to cover, 
as nearly as practicable, the cost of maintaining the program.
    FY 1997 revenue was projected to be $4.733 million and costs to be 
$5.240 million. The shortfall during the year reduced the operating 
reserve from 5.6 months at the beginning of the year to 3.8 months at 
the end of August, and is projected to further reduce the operating 
reserve to approximately 1.6 months at the end of FY 1998. With this 
proposed increase, assuming a slightly increased workload, revenue for 
FY 1998 is projected to be $5.540 million with costs totaling $5.628 
million. Of these costs, the general salary increase represents 
$110,000 per year and is scheduled to be effective in January 1998. 
Employee salaries and benefits are major program costs and account for 
approximately 70 percent of the total operating budget. Program travel 
costs (of which approximately 80 percent are reimbursed by the 
industry), general contract obligations and Agency overhead account for 
another 24 percent of the budget. Changing workloads are analyzed on a 
regular basis in order to maximize grading assignment efficiency and to 
minimize grader and supervisory costs. Future increases would be 
proposed as necessary in following years to cover any annual increases 
in program costs and to maintain the capital reserve at four months.
    Since the costs of the grading program are covered entirely by user 
fees, it is essential that fees be increased when necessary to cover 
the cost of maintaining a financially self-supporting program. The last 
fee increase under this program became effective on January 5, 1997. On 
the same effective date, the salaries of

[[Page 66258]]

Federal employees increased by 3 percent, which included locality pay. 
Also, there have been normal increases in other nonpay operating costs 
that include utilities, office space, and reimbursable travel. In 
addition, recent congressional action will result in additional salary 
increases of 3 percent in 1998. Although the program's operating 
reserves were adequate to cover the January 5, 1997, salary increase, 
this will not be the case for 1998 salary increases, and a fee increase 
is needed.
    The grading program fees need to be increased to cover the costs 
associated with maintaining adequate levels of service during shifting 
production patterns within the dairy industry. The industry changes 
include plant consolidations, geographical shifts of dairy production 
areas, and changes in the types of dairy products being manufactured 
and offered for inspection and grading services. To minimize the 
necessary fee increase, the Department has initiated cost-reduction 
efforts which include the reduction of staff and program overhead.
    On October 16, 1997, the AMS published in the Federal Register (62 
FR 53760), a proposed rule for public comment. Only one comment was 
received. A U.S. Senator forwarded a constituent comment from a dairy 
product manufacturer to the Department for its review. That commenter 
opposed the proposed fee increase as harmful to the dairy industry.
    The commenter was of the view that the proposed fee increase 
coupled with the most recent increase made effective on January 5, 1997 
(61 FR 68997), is far out of line with the general economic conditions 
in the United States. The commenter went on to conclude that 
manufacturers who must have USDA inspection to sell their products 
domestically or internationally would bear the brunt of the fee 
increase. The commenter discussed passing the fee increase on to 
customers but stated that it would be unable to pass though the 
increases to its customers. The commenter further stated that it would 
not accept price increases from its suppliers unless it was an absolute 
last resort. As stated previously, the Agricultural Marketing Act of 
1946, as amended, authorizes the Secretary of Agriculture to provide 
Federal dairy grading and inspection services that facilitate marketing 
and help consumers obtain the quality of dairy products they desire. 
The Act provides that reasonable fees be collected from the users of 
the service to cover, as nearly as practicable, the cost of maintaining 
the program. The fees, as proposed in this rulemaking, are consistent 
with the provisions of the 1946 Act. The Agency conducts continuing fee 
analyses and has instituted annual fee increases, when necessary, to 
recover salary and other routine costs. The programs' financial 
situation described herein requires implementation of the fee increase. 
Even so, every effort has been and will continue to be made to operate 
the program as efficiently as possible and to seek cost-cutting 
measures that are consistent with the Agency's mission under this 
program.
    With regard to the commenters passing increases forward or 
backward, such actions are subject to agreement between buyers and 
sellers as is any provision between the parties to require inspection. 
This program is a voluntary program under the 1946 Act. Even though the 
fees will be revised, the increase is approximately 8 percent and will 
not significantly affect the industry. Accordingly, consistent with the 
provisions of the Agricultural Marketing Act of 1946, the fees as 
proposed are made final in this rule.
    Pursuant to 5 U.S.C. 553, it is hereby found that good cause exists 
for not delaying the effective date of this action until 30 days after 
publication of this final rule in the Federal Register. A revenue 
shortfall warrants putting the higher rates into effect as quickly as 
possible. The increase in fees is essential for effective management 
and operation of the program and to satisfy the intent of the 
Agricultural Marketing Act of 1946. A proposed rule setting forth 
proposed fee increases was published in the Federal Register on October 
16, 1997 (62 FR 53760).
    Accordingly, the program fees are being increased as set forth 
below.

Program Changes Adopted in the Final Rule

    This rule document makes the following changes in the regulations 
implementing the dairy inspection and grading program:
    1. Increases the hourly fee for nonresident services from $52.00 to 
$56.00 for services performed between 6:00 a.m. and 6:00 p.m. The 
nonresident hourly rate is charged to users who request an inspector or 
grader for particular dates and amounts of time to perform specific 
grading and inspection activities. These users of nonresident services 
are charged for the amount of time required to perform the task and 
undertake related travel plus travel costs.
    2. Increases the hourly fee for continuous resident services from 
$47.00 to $51.00. The resident hourly rate is charged to those who are 
using grading and inspection services performed by an inspector or 
grader assigned to a plant on a continuous, year-round resident basis.

List of Subjects in 7 CFR Part 58

    Dairy products, Food grades and standards, Food labeling, Reporting 
and recordkeeping requirements.

    For the reasons set forth in the preamble, 7 CFR part 58 is amended 
as follows:

PART 58--GRADING AND INSPECTION, GENERAL SPECIFICATIONS FOR 
APPROVED PLANTS AND STANDARDS FOR GRADES OF DAIRY PRODUCTS

    1. The authority citation for part 58 continues to read as follows:

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

Subpart A--[Amended]

    2. In subpart A, Sec. 58.43 is revised to read as follows:


Sec. 58.43  Fees for inspection, grading, and sampling.

    Except as otherwise provided in Secs. 58.38 through 58.46, charges 
shall be made for inspection, grading, and sampling service at the 
hourly rate of $56.00 for service performed between 6:00 a.m. and 6:00 
p.m. and $61.60 for service performed between 6:00 p.m. and 6:00 a.m., 
for the time required to perform the service calculated to the nearest 
15-minute period, including the time required for preparation of 
certificates and reports and the travel time of the inspector or grader 
in connection with the performance of the service. A minimum charge of 
one-half hour shall be made for service pursuant to each request or 
certificate issued.
    3. Section 58.45 is revised to read as follows:


Sec. 58.45  Fees for continuous resident services.

    Irrespective of the fees and charges provided in Secs. 58.39 and 
58.43, charges for the inspector(s) and grader(s) assigned to a 
continuous resident program shall be made at the rate of $51.00 per 
hour for services performed during the assigned tour of duty. Charges 
for service performed in excess of the assigned tour of duty shall be 
made at a rate of 1\1/2\ times the rate stated in this section.

    Dated: December 12, 1997.
Enrique E. Figueroa,
Acting Administrator, Agricultural Marketing Service.
[FR Doc. 97-33005 Filed 12-17-97; 8:45 am]
BILLING CODE 3410-02-P