[Federal Register Volume 72, Number 214 (Tuesday, November 6, 2007)]
[Proposed Rules]
[Pages 62591-62593]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 07-5571]


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

  Federal Register / Vol. 72, No. 214 / Tuesday, November 6, 2007 / 
Proposed Rules  

[[Page 62591]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Parts 56 and 70

[Docket No. AMS-PY-07-0065]
RIN 0581-AC73


Multiyear Increase in Fees and Charges for Egg, Poultry, and 
Rabbit Grading and Audit Services

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

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SUMMARY: The Agricultural Marketing Service (AMS) proposes to increase 
the fees and charges for Federal voluntary egg, poultry, and rabbit 
grading, certification, and audit services for the next two fiscal 
years, FY 2008 and FY 2009. The fees and charges need to be increased 
by 2.76% to 7.74% 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. The 
AMS is required to collect fees from users of these services to cover 
the costs of services rendered.

DATES: Comments must be received on or before December 6, 2007.

ADDRESSES: Send written comments, in duplicate, to David Bowden, Jr., 
Chief, USDA, AMS, PY, Standards, Promotion and Technology Branch, STOP 
0256, Room 3932-S, 1400 Independence Avenue, SW., Washington, DC 20250-
0256. Comments, in duplicate, also may be faxed to (202) 720-2930.
    Comments also may be submitted electronically to: http://www.regulations.gov.
    Comments received will be available for public inspection at the 
above location between 8 a.m. and 4:30 p.m., e.t., Monday through 
Friday, except legal holidays, or can be reviewed on http://www.regulations.gov.
    All comments should reference docket number AMS-PY-07-0065 and note 
the date and page number of this issue of the Federal Register.

FOR FURTHER INFORMATION CONTACT: Charles L. Johnson, Chief, Grading 
Branch, (202) 720-3271.

SUPPLEMENTARY INFORMATION: 

Background and Proposed Changes

    The Agricultural Marketing Act of 1946 (AMA), as amended (7 U.S.C. 
1621-1627), gives AMS the authority to provide services so that 
agricultural products may be marketed to their best advantage, that 
global marketing and trade may be facilitated, and that consumers may 
be able to ascertain characteristics involved in the production and 
processing of products and obtain the quality of product they desire. 
The AMA also provides for the collection of fees from users of these 
services that are reasonable and cover the cost of providing services. 
Voluntary grading and certification of eggs, poultry, and rabbits and 
verification and conformance audits, fall within this authorization.
    A recent review determined that the existing fee schedule, 
effective April 1, 2007, will not generate sufficient revenue to cover 
program costs while maintaining an adequate trust fund reserve balance 
in FY 2008 and FY 2009. Revenue, investment income and other 
adjustments in FY 2006 were $36 million while expenses were $35 
million, resulting in a trust fund reserve balance increase from $12.3 
million to $13.3 million.\1\
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    \1\ With the increase, the reserve would be $14 million. However 
a six month reserve is needed for all program contingencies, 
including shutdown.
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    FY 2007 revenue, investment income and other adjustments are 
currently projected at $35.9 million and expenses in FY 2007 are 
projected at $35.8 million. This will result in a trust fund reserve 
balance of $13.4 million.
    Without a fee increase, FY 2008 revenue is projected to be $35 
million. Expenses are projected to be $37.4 million, which would leave 
a reserve of $11 million. With a fee increase, FY 2008 revenue is 
projected at $37.5 million. The fee increase will result in a trust 
fund reserve balance of $13.5 million.
    Without a fee increase, FY 2009 revenue is projected at $34.9 
million. Expenses are projected at $38.2 million, which would leave a 
reserve of $7.7 million. With a fee increase, FY 2009 revenue is 
projected at $38.8 million. The fee increase will result in a trust 
fund reserve balance of $14 million.
    Employee salaries and benefits account for approximately 85 percent 
of the total operating budget. The last general and locality salary 
increase for Federal employees became effective on January 1, 2007, and 
it materially affected program costs. Projected cost estimates for that 
increase were based on a salary increase of 1.7 percent; however, the 
increase was actually 1.81 to 3.02 percent, depending on locality. The 
average annual increase in salary over the past five years has been 
3.71 percent and was used for the projected salary increase for January 
2008 and January 2009. Also, from October 2007 through September 2009, 
salaries and fringe benefits of federally-licensed State employees are 
estimated to increase by about 6.0 percent.
    The hourly rate for resident and non-resident service covers 
graders' salaries and benefits. The current hourly rates of $39.04, 
$69.68, and $80.12 for the resident and fee service cover graders' 
salaries and benefits, plus the cost of travel and supervision. The 
minimum monthly administrative volume charge for resident poultry, 
shell egg, and rabbit grading remains at $275, because the fee analysis 
determined that raising the minimum monthly administrative charge would 
not generate additional reserve. For FY 2008 the non-resident fee rates 
would be $74.08 for regular hours and $86.68 for weekend and holiday 
hours, an increase of approximately 7 percent from the previous year. 
Beginning in January 2009, the non-resident fee rates would be $77.28 
for regular hours and $93.24 for weekend and holiday hours, an increase 
of approximately 6 percent from the previous year.
    Current rates for auditing services are $82.16 and $102.84. In FY 
2008 they would be $87.56 for regular hours and $112.00 for weekend and 
holiday hours, an increase of approximately 8 percent from the previous 
year. Beginning in January 2009, the audit rates would be $89.20 for 
regular hours and $116.08 for weekend and holiday hours, an increase of 
approximately 3 percent.
    Elimination of the inauguration charge of $310, when an application 
for service has been received, is also proposed. By restructuring the 
inauguration charge, expenses incurred

[[Page 62592]]

for plant surveys and billed to applicants will reflect a more accurate 
accounting for the services rendered. Since a plant survey still would 
be required, the fee for the survey would be borne by the applicant at 
rates set forth for shell eggs in Sec.  56.46 (a)-(c) and for poultry 
and rabbits in Sec.  70.71 (a)-(c), plus any travel and additional 
expenses.
    The following table compares current and proposed fees. The fee 
rate would be increased by approximately 7.0 percent. The hourly rate 
for resident and nonresident service covers graders' salaries and 
benefits.

----------------------------------------------------------------------------------------------------------------
                             Service                                  Current      Proposed 2008   Proposed 2009
----------------------------------------------------------------------------------------------------------------
                               Resident Service (egg, poultry, and rabbit grading)
----------------------------------------------------------------------------------------------------------------
Inauguration of service.........................................             310               0               0
Hourly charges:
    Regular hours...............................................           39.04           40.88           42.68
Administrative charges--Poultry grading:
    Per pound of poultry........................................          .00043          .00045          .00047
    Minimum per month...........................................             275             275             275
    Maximum per month...........................................           3,075           3,150           3,225
Administrative charges--Shell egg grading:
    Per 30-dozen case of shell eggs.............................            .053            .055            .058
    Minimum per month...........................................             275             275             275
    Maximum per month...........................................           3,075           3,150           3,225
Administrative charges--Rabbit grading:
    Based on 25% of grader's salary, minimum per month..........             275             275             275
----------------------------------------------------------------------------------------------------------------
                             Non-resident Service (egg, poultry, and rabbit grading)
----------------------------------------------------------------------------------------------------------------
Hourly charges:
    Regular hours...............................................           39.04           40.88           42.68
Administrative charges:
    Based on 25% of grader's salary, minimum per month..........             275             275             275
----------------------------------------------------------------------------------------------------------------
                      Nonresident Fee and Appeal Service (egg, poultry, and rabbit grading)
----------------------------------------------------------------------------------------------------------------
Hourly charges:
    Regular hours...............................................           69.68           74.08           77.28
    Weekend and holiday hours...................................           80.12           86.68           93.24
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                                 Audit Fee (Plant Systems, Animal Welfare, QSVP)
----------------------------------------------------------------------------------------------------------------
Hourly charges:
    Regular hours...............................................           82.16           87.56           89.20
    Weekend and holiday hours...................................          102.84          112.00          116.08
----------------------------------------------------------------------------------------------------------------

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 (RFA) (5 U.S.C. 601-674), 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 390 users of Poultry Programs' 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 program 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 April 1, 
2007, will not generate sufficient revenue to cover program costs while 
maintaining an adequate reserve balance in FY 2008 and FY 2009.
    Expenses in FY 2008 are projected at $37.4 million. Without a fee 
increase, FY 2008 revenue is projected at $35 million. With a fee 
increase, FY 2008 revenues are projected at $37.5 million.
    Expenses in FY 2009 are projected at $38.2 million. Without a fee 
increase, FY 2009 revenues are projected at $34.9 million. With a fee 
increase, FY 2009 revenues are projected at $38.8 million.
    This action would raise the fees charged to users of grading and 
auditing services. The AMS estimates that, overall, this rule would 
yield an about $2.4 million during FY 2008 and $3.9 million for FY 
2009. The hourly rate for resident and nonresident service would 
increase by approximately 4.71 percent in FY 2008 and 4.4 percent in FY 
2009. The fee rate would increase by approximately 7 percent in FY 2008 
and approximately 6 percent in FY 2009. The audit fee would increase by 
approximately 8 percent in FY 2008 and approximately 3 percent in FY 
2009. The impact of these rate changes in a poultry plant would range 
from about $0.000078 to $0.000952 per pound of poultry handled in FY 
2008 and $0.000085 to $0.001068 in FY 2009. In a shell egg plant, the 
range would be $0.000273 to $0.003499 per dozen eggs handled in FY 2008 
and $0.000410 to $0.004870 per dozen eggs handled in FY 2009.

[[Page 62593]]

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.
    A 30-day comment period is provided for interested persons to 
comment on this proposed rule. Given the current financial status of 
this program, this comment period is deemed appropriate in order to 
implement, as early as possible in FY 2008, any fee changes adopted as 
a result of this rulemaking action.

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, it is proposed that Title 7, 
Code of Federal Regulations, parts 56 and 70 be 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.


Sec.  56.46  [Amended]

    2. Section 56.46 is amended by:
    A. Removing in paragraph (b), ``$69.68'' and adding ``$74.08, 
beginning January 27, 2008, and $77.28 on or after January 25, 2009,'' 
in its place.
    B. Removing in paragraph (c), ``$80.12 per hour'' and adding 
``$86.68 per hour, beginning January 27, 2008 and $93.24 per hour on or 
after January 25, 2009,'' in its place.
    C. Removing in paragraph (d), ``$82.16'' and adding ``$87.56 
beginning January 27, 2008, and $89.20 on or after January 25, 2009,'' 
in its place.
    D. Removing in paragraph (e), ``$102.84 per hour'' and adding 
``$112.00 per hour beginning January 27, 2008 and $116.08 per hour on 
or after January 25, 2009,'' in its place.
    3. Section 56.52 is amended by:
    A. Removing the first sentence of paragraph (a)(1), and adding 
three sentences to read as set forth below; and
    B. Removing in paragraph (a)(4), ``$0.053'' and adding ``$0.055 
beginning January 27, 2008, and $0.058 on or after January 25, 2009,'' 
in its place, and removing ``$3,075'' and adding ``$3,150 beginning 
January 27, 2008, and $3,225 on or after January 25, 2009,'' in its 
place.


Sec.  56.52  Charges for continuous grading performed on a resident 
basis.

* * * * *
    (1) When a signed application for service has been received, the 
State supervisor or the supervisor's assistant shall complete a plant 
survey pursuant to Sec.  56.30. The costs for completing the plant 
survey shall be borne by the applicant on a fee basis at rates set 
forth in Sec.  56.46 (a) through (c), plus any travel and additional 
expenses. No charges will be assessed when the application is required 
because of a change in name or ownership. * * *
* * * * *

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

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

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


Sec.  70.71  [Amended]

    5. Section 70.71 is amended by:
    A. Removing in paragraph (b) ``$69.68'' and adding ``$74.08 
beginning January 27, 2008, and $77.28 on or after January 25, 2009,'' 
in its place.
    B. Removing in paragraph (c) ``$80.12 per hour'' and adding 
``$86.68 per hour beginning January 27, 2008, and $93.24 per hour on or 
after January 25, 2009,'' in its place.
    C. Removing in paragraph (d), ``$82.16'' and adding ``$87.56 
beginning January 27, 2008, and $89.20 on or after January 25, 2009,'' 
in its place.
    D. Removing in paragraph (e), ``$102.84 per hour'' and adding 
``$112.00 per hour beginning January 27, 2008, and $116.08 per hour on 
or after January 25, 2009,'' in its place.
    6. Section 70.77 is amended by:
    A. Removing the first sentence of paragraph (a)(1), and adding 
three sentences to read as set forth below; and
    B. Removing in paragraph (a)(4), ``$0.00043'' and adding ``$0.00045 
beginning January 27, 2008 and $0.00047 on or after January 25, 2009,'' 
in its place, and removing ``$3,075'' and adding ``$3,150 beginning 
January 27, 2008, and $3,225 on or after January 25, 2009,'' in its 
place.


Sec.  70.77  Charges for continuous poultry or rabbit grading performed 
on a resident basis.

* * * * *
    (1) When a signed application for service has been received, the 
State supervisor or the supervisor's assistant shall complete a plant 
survey pursuant to Sec.  70.34. The costs for completing the plant 
survey shall be borne by the applicant on a fee basis at rates set 
forth in Sec.  70.71(a) through (c), plus any travel and additional 
expenses. No charges will be assessed when the application is required 
because of a change in name or ownership. * * *
* * * * *

    Dated: October 18, 2007
Lloyd C. Day,
Administrator, Agricultural Marketing Service.
[FR Doc. 07-5571 Filed 11-2-07; 11:54 am]
BILLING CODE 3410-02-P