[Federal Register Volume 68, Number 192 (Friday, October 3, 2003)]
[Proposed Rules]
[Pages 57382-57383]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-25112]


 ========================================================================
 Proposed Rules
                                                 Federal Register
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 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.
 
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 

  Federal Register / Vol. 68, No. 192 / Friday, October 3, 2003 / 
Proposed Rules  

[[Page 57382]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 58

[Docket Number DA-03-03]
RIN 0581-AC32


Increase in Fees for Federal Dairy Grading and Inspection 
Services

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

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SUMMARY: The Agricultural Marketing Service (AMS) proposes to increase 
the hourly fees charged under the Federal dairy grading and inspection 
program. Dairy grading and inspection services are voluntary and are 
financed through user-fees assessed to participants in the program. The 
hourly fees would be adjusted by 10.7 to 11.8 percent to reflect the 
increased costs of providing service and to ensure that the program 
operates on a financially self-supporting basis.

DATES: Comments must be received on or before November 3, 2003.

ADDRESSES: Interested persons are invited to submit written comments to 
Duane R. Spomer, Associate Deputy Administrator for Standards and 
Grading, USDA, AMS, Dairy Programs, STOP 0230, 1400 Independence 
Avenue, SW., Washington, DC 20250-0230. Comments may also be submitted 
electronically to [email protected] or faxed to (202) 720-2643.
    All comments should reference docket number DA-03-03 and note the 
date and page number of this issue of the Federal Register.
    Comments received may be inspected at the above address between 8 
a.m. and 4:30 p.m., e.s.t., Monday through Friday, except legal 
holidays.

FOR FUTHER INFORMATION CONTACT: Duane R. Spomer, Dairy Programs, (202) 
720-3171.

SUPPLEMENTARY INFORMATION:

Background

    The Secretary of Agriculture is authorized by the Agricultural 
Marketing Act of 1946 (AMA), as amended (7 U.S.C. 1621, et seq.), to 
provide voluntary Federal dairy grading and inspection services to 
facilitate the orderly marketing of dairy products and to enable 
consumers to obtain the quality of dairy products they desire. The AMA 
also provides for the collection of reasonable fees from users of the 
Federal dairy grading and inspection services that cover the cost of 
providing these services. The hourly fees are established by 
distributing the program's projected operating costs over the estimated 
hours of service--revenue hours--provided to users of the service on a 
yearly basis. Program operating costs include employee salaries and 
benefits--which account for nearly 80 percent of the non-travel related 
operating costs--training, and administrative costs. Periodically, the 
fees must be adjusted to ensure that the program remains financially 
self-supporting.
    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, effective January 4, 1998, would not generate 
sufficient revenues to recover operating costs for current and near-
term periods while maintaining an adequate reserve balance. Costs in FY 
2004 are projected at $5.95 million. Without a fee increase, FY 2004 
revenues are projected at $5.71, and the trust fund balance would be 
$2.09 million. With a fee increase, FY 2004 revenues are projected at 
$6.14 million, and the trust fund balance would be $2.52 million.
    Employee salaries and benefits account for approximately 80.0 
percent of the non-travel related operating budget. Travel costs are 
billed directly to the users of services provided by the Dairy Grading 
Branch on a cost-recovery basis. Since the January 4, 1998, fee 
increase, Federal salaries and location adjustments have increased 
annually. The average salary has increased approximately 17.4 percent 
during this 6-year period. As a result of these increases, annual 
salary and benefit costs to the program are approximately $556 thousand 
more today than in 1998. Inflation has also increased the operational 
and administrative costs associated with this program, and a fee 
increase is necessary to sustain the program. If the short fall is 
allowed to continue, it will place the Dairy Grading Branch in an 
unstable financial position that will adversely affect its ability to 
provide dairy grading and inspection services.
    This proposal will also generate funds to automate current business 
practices of the Dairy Grading Branch. Automated business practices 
will also enhance customer services through improvements in office 
efficiency and timeliness of providing grading and inspection services 
and information to users of dairy grading and inspection services.
    In view of these increased costs, AMS proposes to increase the 
hourly fees associated with Federal dairy grading and inspection 
services. Currently the fees are $51.00 per hour for continuous 
resident services and $56.00 per hour for non-resident services. The 
proposed increases would result in a fee of $57.00 per hour for 
continuous resident services and $62.00 per hour for nonresident 
services between the hours of 6 a.m. and 6 p.m. The fee for nonresident 
service between the hours of 6 p.m. and 6 a.m. would be $68.20 per 
hour. The proposed fees represent increases of $6.00 (11.8 percent) per 
hour for continuous resident and $6.00 (10.7 percent) per hour for 
nonresident services. For services performed in excess of 8 hours per 
day and for services performed on Saturday, Sunday, and legal holidays, 
1\1/2\ times the base fee would apply and as a result, the fee would 
increase from $84.00 per hour to $93.00 per hour.

Executive Order 12866

    This proposed rule has been determined to be ``not significant'' 
for purposes of Executive Order 12866 and, therefore, has not been 
reviewed by the Office of Management and Budget (OMB).

Regulatory Flexibility Act

    Pursuant to the requirements set forth in the Regulatory 
Flexibility Act (5 U.S.C. 601, et seq.), the AMS has considered the 
economic impact of this proposed action on small entities. It has 
determined that its provisions would not have a significant economic 
effect on a substantial number of small entities.

[[Page 57383]]

    AMS provides voluntary Federal dairy product grading and inspection 
services to about 350 users of services provided by the Dairy Grading 
Branch. Manufacturing operations participating in the voluntary plant 
inspection program have their facility inspected against established 
construction and sanitation requirements. Dairy products manufactured 
in facilities complying with the USDA requirements are eligible to be 
inspected and graded against official quality standards and 
specifications established by AMS and certain contract provisions 
between buyer and seller. Products inspected or graded under the 
program have certificates issued attesting to the product's quality and 
condition. Many of these users are small entities under the criteria 
established by the Small Business Administration (13 CFR 121.201). This 
rule will raise the fee charged to businesses for voluntary inspection 
and grading services for dairy and related products and the evaluation 
of food processing equipment. Even though the fee will be raised, the 
increase is 10.7 percent for nonresident service and 11.8 percent for 
resident service and will not significantly affect these entities. 
These businesses are under no obligation to use these voluntary user-
fee based services, and any decision on their part to discontinue the 
use of the services would not prevent them from marketing their 
products. The AMS estimates that overall this rule would yield an 
additional $522,000 annually. The proposed 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, as 
amended.
    The AMS regularly reviews its user-fee financed programs to 
determine if fees are adequate and if costs are reasonable. 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, total revenue projections--including travel 
revenue--for Fiscal Year 2004 would be $5.71 million. Total costs--
including travel costs--for the same period of time are projected to 
increase to $5.95 million. The shortfall, if allowed to continue, would 
translate into a trust fund balance of $431 thousand or 0.8 months of 
operating reserve at the end of FY 2007.
    This action would raise the hourly fees charged to users of Federal 
dairy inspection and grading services. AMS estimates this action would 
provide the Dairy Grading Branch an additional $522 thousand annually. 
This would generate revenue to recover program costs, automate business 
practices to minimize the extent of future fee increases, and enhance 
customer services through improvements in office efficiency and 
timeliness of providing grading and inspection information to users of 
these services.

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 Act

    This action would not impose any additional reporting or 
recordkeeping requirements on users of Federal dairy grading and 
inspection services.
    A thirty-day comment period is provided for interested persons to 
comment on this proposed rule. This period is appropriate in order to 
implement, as early as possible in FY 2004, any fee changes adopted as 
a result of this rulemaking action.

List of Subjects in 7 CFR Part 58

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

    For the reason set forth in the preamble, it is proposed that 7 CFR 
part 58 be 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 7 CFR part 58 continues to read as 
follows:

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

Subpart A--[Amended]


Sec.  58.43  [Amended]

    2. In Sec.  58.43, ``$56.00'' is removed and ``$62.00'' is added in 
its place, and $61.60'' is removed and ``$68.20'' is added in its 
place.


Sec.  58.45  [Amended]

    3. In Sec.  58.45, ``$51.00'' is removed and ``$57.00'' is added in 
its place.

    Dated: September 30, 2003.
A.J. Yates,
Administrator, Agricultural Marketing Service.
[FR Doc. 03-25112 Filed 10-2-03; 8:45 am]
BILLING CODE 3410-02-P