[Federal Register Volume 70, Number 140 (Friday, July 22, 2005)]
[Rules and Regulations]
[Pages 42254-42256]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-14514]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Parts 56 and 70

[Docket No. PY-05-001]
RIN 0581-AC44


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 being 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: Effective September 25, 2005.

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 of eggs, 
poultry, and rabbits on a user-fee basis. The AMA provides that 
reasonable fees be collected from users of 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.
    A recent review determined that the existing fee schedule, 
effective January 1, 2004, would not generate sufficient revenues to 
cover program costs while maintaining an adequate reserve balance in FY 
2006. Costs in FY 2006 are projected at $31.9 million. Without a fee 
increase, FY 2006 revenues are projected at $30.5 million and trust 
fund balances would be $14.5 million. With a fee increase, FY 2006 
revenues are projected at $31.9 million and trust fund balances would 
remain at $15.9 million.
    Employee salaries and benefits account for approximately 82 percent 
of the total operating budget. A general and locality salary increase 
for Federal employees, effective in January 2004, materially affected 
program costs. Projected cost estimates for that increase were based on 
a salary increase of 2.0 percent, however, the increase was actually 
3.89 to 5.35 percent, depending on locality. The last increase of 3.25 
to 4.3 percent, depending on locality, became effective in January 2005 
and another increase, estimated at 1.5 percent, is expected in January 
2006. Also, from October 2004 through September 2006, salaries and 
fringe benefits of federally-licensed State employees will have 
increased by about 6.0 percent. This paragraph, which also appeared in 
the proposed rule, has been updated to reflect more current 
information.
    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 
5.8 percent and the fee rate will be increased by

[[Page 42255]]

approximately 8.3 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.
    As shown in the table below, the minimum monthly administrative 
volume charge for resident poultry, shell egg, and rabbit grading will 
not change.
    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 Service (egg, poultry, and rabbit grading)
------------------------------------------------------------------------
Inauguration of service.......................          310          310
Hourly charges:
    Regular hours.............................        34.36        36.36
Administrative charges--Poultry grading:
    Per pound of poultry......................       .00037       .00039
    Minimum per month.........................          260          260
    Maximum per month.........................        2,755        2,875
Administrative charges--Shell egg grading:
    Per 30-dozen case of shell eggs...........         .048         .051
    Minimum per month.........................          260          260
    Maximum per month.........................        2,755        2,875
Administrative charges--Rabbit grading:
    Based on 25% of grader's salary, minimum            260          260
     per month................................
-----------------------------------------------
              Nonresident Service (egg and poultry grading)
------------------------------------------------------------------------
Hourly charges:
    Regular hours.............................        34.36        36.36
Administrative charges:
    Based on 25% of grader's salary, minimum            260          260
     per month................................
-----------------------------------------------
        Fee and Appeal Service (egg, poultry, and rabbit grading)
------------------------------------------------------------------------
Hourly charges:
    Regular hours.............................        60.00        65.00
    Weekend and holiday hours.................        69.32        75.12
------------------------------------------------------------------------

Comments

    Based on the analysis of costs to provide these services, a 
proposed rule to increase the fees for these services was published in 
the Federal Register (70 FR 9883) on March 1, 2005. Comments on the 
proposed rule were solicited from interested parties until March 31. 
One comment was received from an egg industry association.
    The association acknowledged the Agency's need to increase fees. 
However, the association requested that the increase be postponed for a 
period of six months. The commenter stated that an immediate increase 
would be an added hardship on an already economically depressed 
industry but, in a few months, industry self-help programs should be up 
and running. As stated in the proposal, the Agency intended that the 
fee increase be implemented as early as possible in FY 2006. The 
closest available billing cycle begins on September 25, 2005. 
Accordingly, this rule will be effective on that date.

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

    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 this rule will not have a significant economic impact on a 
substantial number of small entities.
    There are about 376 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 fees are adequate and if costs are reasonable. A recent 
review determined that the existing fee schedule, effective January 1, 
2004, will not generate sufficient revenues to cover program costs 
while maintaining an adequate reserve balance in FY 2006. Costs in FY 
2006 are projected at $31.9 million. Without a fee increase, FY 2006 
revenues are projected at $30.5 million and trust fund balances would 
be $14.5 million. With a fee increase, FY 2006 revenues are projected 
at $31.9 million and trust fund balances would remain at $15.9 million.
    This action will raise the fees charged to users of grading 
services. The AMS estimates that overall, this rule will yield an 
additional $1,400,000 during FY 2006. The hourly rate for resident and 
nonresident service will increase by approximately 5.8 percent and the 
fee rate will increase by approximately 8.3 percent. The impact of 
these rate changes in a poultry plant will range from about 0.0075 to 
0.10 cents per pound of poultry handled. In a shell egg plant, the 
range will be less than 0.037 to 0.466 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,

[[Page 42256]]

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. 533, it is found and determined that good 
cause exists for not postponing the effective date of this 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, September 25, 2005, will coincide with the first billing 
period in FY 2006.

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

0
1. The authority citation for part 56 continues to read as follows:

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


0
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 $65.00 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 $75.12 per hour. 
Information on legal holidays is available from the Supervisor.

0
3. 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 $0.051, except that the minimum charge per 
billing period shall be $260 and the maximum charge shall be $2,875. 
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

0
4. The authority citation for part 70 continues to read as follows:

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


0
5. 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 $65.00 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 $75.12 per hour. 
Information on legal holidays is available from the Supervisor.

0
6. In Sec.  70.77, paragraph (a)(4) is 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 $0.00039, except that the minimum charge per billing 
period shall be $260 and the maximum charge shall be $2,875. The 
minimum charge also applies where an approved application is in effect 
and no product is handled.
* * * * *

    Dated: July 19, 2005.
Kenneth C. Clayton,
Acting Administrator, Agricultural Marketing Service.
[FR Doc. 05-14514 Filed 7-21-05; 8:45 am]
BILLING CODE 3410-02-P