[Federal Register Volume 69, Number 38 (Thursday, February 26, 2004)]
[Rules and Regulations]
[Pages 8797-8798]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-4222]




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  Federal Register / Vol. 69, No. 38 / Thursday, February 26, 2004 / 
Rules and Regulations  

[[Page 8797]]



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: Final rule.

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

SUMMARY: The Agricultural Marketing Service (AMS) is revising the 
hourly fees charged for Federal dairy grading and inspection services 
performed by the Dairy Grading Branch. Dairy grading and inspection 
services are voluntary and are financed through user-fees assessed to 
participants in the program. The hourly fees will be adjusted by this 
action to reflect the increased costs of providing service and to 
ensure that the Dairy Grading Branch operates on a financially self-
supporting basis.

EFFECTIVE DATE: April 4, 2004.

FOR FURTHER INFORMATION CONTACT: Duane R. Spomer, Associate Deputy 
Administrator for Standards and Grading, USDA, AMS, Dairy Programs, 
telephone (202) 720-3171 or e-mail [email protected].

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 equitably 
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% of 
the non-travel related operating budget. The majority of 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% 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 that will minimize the extent of 
future fee increases. 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 considerations, AMS will increase the hourly fees 
associated with Federal dairy grading and inspection services. The 
hourly fee for resident services provided between the hours of 6:00 
a.m. and 6:00 p.m. will increase from $51.00 to $57.00 per hour. The 
hourly fee for nonresident services between the hours of 6 a.m. and 6 
p.m. will increase from $56.00 to $62.00 per hour. The hourly fee for 
resident services provided between 6 p.m. and 6 a.m. will be $61.60 and 
for nonresident services the fee will be $68.20. 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 will increase from $84.00 per hour to $93.00 per 
hour.

Executive Order 12866

    This action 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 action on small entities. It has determined 
that its provisions would not have a significant economic effect on a 
substantial number of small entities.
    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 by the Dairy 
Grading Branch have certificates issued concerning the product's 
quality and condition. Many

[[Page 8798]]

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 approximately 10.7% for nonresident service and 11.8% 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. This action reflects certain fee increases needed to 
recover the cost of inspection and grading services rendered in 
accordance with the Agricultural Marketing Act.
    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. 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, which is below the Agency policy requirement.
    This action raises the hourly fees charged to users of Federal 
dairy inspection and grading services. AMS estimates this action will 
provide the Dairy Grading Branch an additional $522 thousand annually. 
This will 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.

Comments and Responses

    AMS published a proposed rule in the Federal Register on October 3, 
2003 (68 FR 57882) to increase the fees for Federal dairy grading and 
inspection services and requested comments by November 3, 2003. The 
Agency did not receive comments on this proposal.

List of Subjects in 7 CFR Part 58

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

0
For the reason 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

0
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]

0
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]

0
3. In Sec.  58.45, ``$51.00'' is removed and ``$57.00'' is added in its 
place.

    Dated: February 20, 2004.
A.J. Yates,
Administrator, Agricultural Marketing Service.
[FR Doc. 04-4222 Filed 2-25-04; 8:45 am]
BILLING CODE 3410-02-P