[Federal Register Volume 65, Number 188 (Wednesday, September 27, 2000)]
[Rules and Regulations]
[Pages 57939-57941]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-24778]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Parts 56 and 70

[Docket No. PY-00-002]
RIN 0581-AB89


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

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: The Agricultural Marketing Service (AMS) is increasing the 
fees and charges for Federal voluntary egg, poultry, and rabbit 
grading. These fees and charges are 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.

EFFECTIVE DATE: October 1, 2000.

FOR FURTHER INFORMATION CONTACT: David Bowden, Jr., Chief, 
Standardization Branch, (202) 720-3506.

SUPPLEMENTARY INFORMATION:

Background

    The Agricultural Marketing Act (AMA) of 1946 (7 U.S.C. 1621 et 
seq.) authorizes official voluntary grading and certification on a 
user-fee basis of eggs, poultry, and rabbits. The AMA provides that 
reasonable fees be collected from users of the program services to 
cover, as nearly as practicable, the costs of services rendered.
    The AMS regularly reviews these programs to determine if fees are 
adequate and if costs are reasonable. This rule will 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 
them.
    A recent review of the current fee schedule, effective October 1, 
1999, revealed that anticipated revenue would not adequately cover 
increasing program costs. Without a fee increase, FY 2001 revenues for 
grading services are projected at $23.7 million, costs are projected at 
$24.9 million, and trust fund balances would be $11.3 million. With a 
fee increase, FY 2001 revenues are projected at $24.3 million, costs 
are projected at $24.9 million, and trust fund balances would be $11.9 
million.
    Employee salaries and benefits account for approximately 81 percent 
of the total operating budget. A general and locality salary increase 
for Federal employees, ranging from 4.76 to 5.31 percent, depending on 
locality, became effective in January 2000 and has materially affected 
program costs. Another general and locality salary increase estimated 
at 3.7 percent is expected in January 2001. Also, from October 1999 
through September 2001, salaries and fringe benefits of federally 
licensed State employees will have increased by about 6.7 percent.
    The impact of these cost increases was determined for resident, 
nonresident, and fee services. To offset projected cost increases, the 
hourly resident and nonresident rate will be increased by approximately 
4 percent and the fee rate will be increased by approximately 6 
percent. The hourly rate for resident and nonresident service covers 
graders' salaries and benefits. The hourly rate for fee service covers 
graders' salaries and benefits, plus the cost of travel and 
supervision. The hourly rate for an appeal grading or review of a 
grader's decision covers the

[[Page 57940]]

time required to perform such service. Due to changes in the number of 
Poultry Program offices and the resulting reduction in costs, 
administrative charges that cover the cost of supervision for resident 
and nonresident service will remain unchanged as shown in the table 
below.
    The following table compares current fees and charges with the 
revised fees and charges for egg, poultry, and rabbit grading as found 
in 7 CFR parts 56 and 70:

------------------------------------------------------------------------
                 Service                      Current        Proposed
------------------------------------------------------------------------
             Resident Service (egg, poultry, rabbit grading)
------------------------------------------------------------------------
Inauguration of service.................             310             310
Hourly charges:
    Regular hours.......................           28.80           29.96
Administrative charges--Poultry grading:
    Per pound of poultry................          .00035          .00035
    Minimum per month...................             225             225
    Maximum per month...................           2,625           2,625
Administrative charges--Shell egg
 grading:
    Per 30-dozen case of shell eggs.....            .044            .044
    Minimum per month...................             255             225
    Maximum per month...................           2,625           2,625
Administrative charges--Rabbit grading:
 Based on 25 % of grader's salary:
    Minimum per month...................             260             260
------------------------------------------------------------------------
               Nonresident Service (egg, poultry grading)
------------------------------------------------------------------------
Hourly charges:
    Regular hours.......................           28.80           29.96
Administrative charges: Based on 25 % of
 grader's salary:
    Minimum per month...................             260             260
------------------------------------------------------------------------
          Fee and Appeal Service (egg, poultry, rabbit grading)
------------------------------------------------------------------------
Hourly charges:
    Regular hours.......................           48.40           51.32
    Weekend and holiday hours...........           55.76           59.12
------------------------------------------------------------------------

Comments

    Based on an analysis of costs to provide these services, a proposed 
rule to increase the fees for these services was published in the 
Federal Register (65 FR 37298) on June 14, 2000. Comments on the 
proposed rule were solicited from interested parties until July 14, 
2000. The Agency received four comments during the 30-day comment 
period. They were from one producer, one processor, and two industry 
associations. All four opposed the fee increase.
    The producer and the two associations expressed concern that the 
increase was coming at a time of economic hardship and suggested that 
the Agency increase efforts to reduce costs. One of the associations 
suggested that the increase be postponed for 6 months, then re-
evaluated and re-calculated at that time. The processor indicated that 
it wanted to continue using the service, but could not if the cost 
became prohibitive.
    Employee salaries and benefits account for approximately 81 percent 
of the total operating budget, and rates for these expenditures are set 
by various Federal and State governing bodies. Projected increases in 
these costs require the Agency to increase hourly rates to keep the 
programs operating on a sound financial basis. Further, as discussed 
earlier and shown in the previous table, while the hourly rates would 
increase, the administrative charges would remain unchanged. Due to 
changes in the number of Poultry Program offices and the resulting 
reduction in costs, administrative charges that cover the cost of 
supervision for resident and nonresident service will remain unchanged. 
Although the Agency seeks to minimize or negate any fee increases for 
the poultry, rabbit, and egg grading programs, it must operate these 
programs on a sound financial basis. Therefore, the Agency is 
implementing those increases, as proposed, to ensure the financial 
stability of its grading programs.

Executive Order 12866

    This action 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).

Regulatory Flexibility

    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. It is determined that 
its provisions would not have a significant economic impact on a 
substantial number of small entities.
    There are about 400 users of Poultry Programs' grading services. 
These official plants can pack eggs, poultry, and rabbits in packages 
bearing the USDA grade shield when AMS graders are present to certify 
that the products meet the grade requirements as labeled. Many of these 
users are small entities under the criteria established by the Small 
Business Administration (13 CFR 121.201). These entities are under no 
obligation to use grading services as authorized under the Agricultural 
Marketing Act of 1946.
    The AMS regularly reviews its user fee financed programs to 
determine if the fees are adequate. The most recent review determined 
that the existing fee schedule would not generate sufficient revenues 
to cover program costs while maintaining an adequate reserve balance. 
Without a fee increase, FY 2001 revenues for grading services are 
projected at $23.7 million, costs are projected at $24.9 million, and 
trust fund balances would be $11.3 million. With a fee increase, FY 
2001 revenues are projected at $24.3 million, costs are

[[Page 57941]]

projected at $24.9 million, and trust fund balances would be $11.9 
million.
    This action will raise the fees charged to users of grading 
services. The AMS estimates that overall, this rule will yield an 
additional $0.5 million during FY 2001. The hourly rate for resident 
and nonresident service will increase by approximately 4 percent and 
the fee rate will increase by approximately 6 percent. The impact of 
these rate changes in a poultry plant will range from less than 0.002 
to 0.02 cents per pound of poultry handled. In a shell egg plant, the 
range will be less than 0.009 to 0.09 cents per dozen eggs handled.

Civil Justice Reform

    This action 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.

Paperwork Reduction

    The information collection requirements that appear in the sections 
to be amended by this action have been previously approved by OMB and 
assigned OMB Control Numbers under the Paperwork Reduction Act (44 
U.S.C. Chapter 35) as follows: Sec. 56.52(a)(4)--No. 0581-0128; and 
Sec. 70.77(a)(4)--No. 0581-0127.
    Pursuant to 5 U.S.C. 553, it is found and determined that good 
cause exists for not postponing the effective date of the action until 
30 days after publication in the Federal Register. The revised fees 
need to be implemented on an expedited basis in order to avoid further 
financial losses in the grading program. The effective date of the fee 
increase will be set to coincide with the billing cycle that begins on 
the first day of the first month after date of publication in the 
Federal Register.

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, Title 7, Code of Federal 
Regulations, parts 56 and 70 are 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. Section 56.46 is revised to read as follows:


Sec. 56.46  On a fee basis.

    (a) Unless otherwise provided in this part, the fees to be charged 
and collected for any service performed, in accordance with this part, 
on a fee basis shall be based on the applicable rates specified in this 
section.
    (b) Fees for grading services will be based on the time required to 
perform the services. The hourly charge shall be $51.32 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 $59.12 per hour. 
Information on legal holidays is available from the Supervisor.

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

    3. The authority citation for part 70 continues to read as follows:

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

    4. Section 70.71 is revised to read as follows:


Sec. 70.71  On a fee basis.

    (a) Unless otherwise provided in this part, the fees to be charged 
and collected for any service performed, in accordance with this part, 
on a fee basis shall be based on the applicable rates specified in this 
section.
    (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 $51.32 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 $59.12 per hour. 
Information on legal holidays is available from the Supervisor.

    Dated: September 21, 2000.
Kathleen A. Merrigan,
Administrator, Agricultural Marketing Service.
[FR Doc. 00-24778 Filed 9-26-00; 8:45 am]
BILLING CODE 3410-02-P