Increase in Fees and Charges for Egg, Poultry, and Rabbit Grading, 59028-59031 [E6-16528]
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59028
Proposed Rules
Federal Register
Vol. 71, No. 194
Friday, October 6, 2006
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.
DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Parts 56 and 70
[Docket No. PY–06–002]
RIN 0581–AC64
Increase in Fees and Charges for Egg,
Poultry, and Rabbit Grading
Agricultural Marketing Service,
USDA.
ACTION: Proposed rule.
pwalker on PRODPC60 with PROPOSALS
AGENCY:
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, and to
establish a separate billing rate for the
audit services. The fees and charges
need to be 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. 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 November 6, 2006.
ADDRESSES: Send written comments, in
duplicate, to David Bowden, Jr., Chief,
USDA, AMS, PY, Standardization
Branch, STOP 0256, Room 3932–S, 1400
Independence Avenue, SW.,
Washington, DC 20250–0256.
Comments, in duplicate, may also be
faxed to (202) 720–5631.
Comments may be submitted
electronically to:
AMSPYDockets@usda.gov or https://
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.s.t., Monday through Friday, except
legal holidays. Comments received will
also be available on the AMS Web site
https://www.ams.usda.gov/rulemaking or
may be inspected at the above address.
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18:35 Oct 05, 2006
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All comments should reference
docket number PY–06–002 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, et seq.), 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
September 25, 2005, will not generate
sufficient revenue to cover program
costs while maintaining an adequate
trust fund reserve balance in FY 2007.
Revenue in FY 2005 was $30.1 million
while expenses were $33.8 million.
After factoring in investment income,
the result was a loss of $3.4 million.
This loss reduced the trust fund reserve
balance to $12.4 million. FY 2006
revenue is currently projected at $33.8
million and expenses in FY 2006 are
projected at $34.8 million, which will
reduce the trust fund reserve balance to
$12.0 million. However, prior-year
adjustments and projected investment
income will increase the projected endof-year trust fund reserve balance to
$13.3 million. Without a fee increase,
FY 2007 revenue is projected to be $33.8
million. Expenses are projected to be
$36.6 million. After factoring in
investment income, this loss would
leave a reserve of $11.1 million, which
is below the required minimum level.1
1 The required minimum level for the trust fund
reserve is equal to four months of the revenue
projected from collecting inspection fees during
that fiscal year. With FY 2007 revenue projected to
be $33.8 million, four months of the revenue in
FY2007 equals $11.3 million. Therefore a reserve of
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With a fee increase, FY 2007 revenue is
projected at $35.1 million.
Over $1 million in cost cutting
measures will be taken by the Agency in
FY 2006 and FY 2007 to maintain
acceptable trust fund reserve levels.
These cost reductions will include
reorganization of field offices and not
filling targeted vacancies. The fee
increase in conjunction with cost
reductions will result in trust fund
reserve balances that would be
maintained at the required minimum
level.
The review also included an in-depth
analysis of expenses specifically related
to auditing services. The audit program,
initiated in 1999, was developed to
provide industry, as well as domestic
and foreign governmental entities, with
verification of quality management
systems, label claims, and other
industry-developed standards. The
number of audits has grown from five in
FY 1999 to 524 in FY 2005. They are
presently conducted by 30 full-time
auditors. Audit fees are based on the
approved hourly nonresident fee rate
established for egg, poultry, and rabbit
grading and certification services
provided by the Agency pursuant to 7
CFR parts 56 and 70. The review
revealed that this rate did not
sufficiently cover the cost of providing
audit services, primarily due to the use
of higher-salaried employees to perform
audits. Consequently, a separate billing
rate for performing audits is proposed.
The nonresident fee rate for audits
was developed using the salary and
fringe benefit information for
Agricultural Commodity Graders
stationed in the field, the employees
typically assigned to perform fee
grading service. Most of these
employees are full-time at the GS–8/9
pay grade classifications. However, due
to the complexity of planning,
performing, and interpreting the results
of assessments, audits are typically
performed by employees at the GS–11/
12 pay grade.
Upon considering all audit
operational expenses, the Agency
determined that the actual cost of audit
services, excluding travel costs, to be
$82.16 per hour. Included in the
analysis were employee salaries and
benefits, overhead; total revenue hours
available, and other anticipated costs
$11.1 million would fall short of the required
minimum level.
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Federal Register / Vol. 71, No. 194 / Friday, October 6, 2006 / Proposed Rules
such as federally mandated pay raises
through FY 2007, rent, communications,
utilities, contractual services, supplies,
and equipment. Also, this action adds to
the regulations a definition of auditing
services and description of such
services as appropriate.
The Agency considered alternatives to
creating a separate user-fee for audit
services, but found that none were
sufficient. Maintaining the same userfee for audit services that is currently
used for conventional egg, poultry, and
rabbit grading and certification services
would not sufficiently cover the cost of
providing audit services. Another
option was to terminate all audit
services, which would adversely affect
producers, businesses, and consumers
who desire audit services and those
entities with already-established
programs.
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, 2006, and it materially
affected program costs. Projected cost
estimates for that increase were based
on a salary increase of 2.2 percent;
however, the increase was actually 3.89
to 5.35 percent, depending on locality.
The average increase in salary over the
past five years has been 3.71 percent
and was used for the projected salary
increase for January 2007. Also, from
October 2005 through September 2007,
salaries and fringe benefits of federallylicensed State employees will increase
by about 6.0 percent.
The following table compares current
and proposed fees and charges and
shows the new audit fees. To offset
projected cost increases, the hourly
resident and nonresident rate would be
increased by approximately 7.0 percent
and the fee rate would also be increased
by approximately 7.0 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 minimum monthly administrative
volume charge for resident shell egg,
poultry, and rabbit grading would be
changed to $275. The billing rates for
auditing services would be $82.16 for
regular hours and $102.84 for weekend
and holiday hours.
Service
Current
Proposed
Resident Service (egg, poultry, and rabbit grading)
Inauguration of service ....................................................................................................................................................
Hourly charges:
Regular hours ...........................................................................................................................................................
Administrative charges—Poultry grading:
Per pound of poultry .................................................................................................................................................
Minimum per month ..................................................................................................................................................
Maximum per month .................................................................................................................................................
Administrative charges—Shell egg grading:
Per 30-dozen case of shell eggs .............................................................................................................................
Minimum per month ..................................................................................................................................................
Maximum per month .................................................................................................................................................
Administrative charges—Rabbit grading:
Based on 25% of grader’s salary, minimum per month ..........................................................................................
310
310
36.36
39.04
.00039
260
2,875
.00043
275
3,075
.051
260
2,875
.053
275
3,075
260
275
36.36
39.04
260
275
65.00
75.12
69.68
80.12
65.00
75.12
82.16
102.84
Nonresident Service (egg and poultry grading)
Hourly charges:
Regular hours ...........................................................................................................................................................
Administrative charges:
Based on 25% of grader’s salary, minimum per month ..........................................................................................
Nonresident Fee and Appeal Service (egg, poultry, and rabbit grading)
Hourly charges:
Regular hours ...........................................................................................................................................................
Weekend and holiday hours .....................................................................................................................................
Audit Fee (Verification of Standards and Quality Systems)
pwalker on PRODPC60 with PROPOSALS
Hourly charges:
Regular hours ...........................................................................................................................................................
Weekend and holiday hours .....................................................................................................................................
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 et seq.), the AMS has
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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 378 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.
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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
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Federal Register / Vol. 71, No. 194 / Friday, October 6, 2006 / Proposed Rules
September 25, 2005, will not generate
sufficient revenue to cover program
costs while maintaining an adequate
reserve balance in FY 2007. Costs in FY
2007 are projected at $36.6 million.
Without a fee increase, FY 2007 revenue
is projected at $33.8 million and the
trust fund reserve balance would be
below minimum required levels. With a
fee increase, FY 2007 revenues are
projected at $35.1 million. Strategic
cost-cutting measures will be taken by
the program to ensure sufficient trust
fund levels. Cost reductions will
include reorganization of field offices
and not filling targeted vacancies.
This action would raise the fees
charged to users of grading and auditing
services. Also, this action adds to the
regulations a definition of auditing
services and description of such
services as appropriate. The AMS
estimates that, overall, this rule would
yield an additional $1.3 million during
FY 2007. The hourly rate for resident
and nonresident service would also
increase by approximately 7.0 percent
and the fee rate would also increase by
approximately 7.0 percent. The impact
of these rate changes in a poultry plant
would not be substantial and would
range from about $0.00013 to $0.0011
per pound of poultry handled. In a shell
egg plant, the range would be $0.00022
to $0.00224 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.
pwalker on PRODPC60 with PROPOSALS
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: § 56.52(a)(4)—
No. 0581–0128; and § 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 2007, any fee changes
adopted as a result of this rulemaking
action.
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Jkt 211001
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.
2. Section 56.1 is amended by adding
‘‘Auditing Services’’ to read as follows:
§ 56.1
*
*
*
*
Auditing services means the act of
providing independent verification of
written quality assurance and value
added standards for production,
processing and distribution of shell
eggs. Auditing services are performed by
graders authorized by the Secretary to
perform such audits and the service
provided will be in accordance with the
provisions of this part for grading
services, as appropriate.
*
*
*
*
*
3. In § 56.28, the section heading is
revised and paragraph (d) is added to
read as follows:
Types of service.
*
*
*
*
*
(d) Auditing service. This type of
service is performed when an applicant
requests independent verification of
written quality assurance and value
added standards for production,
processing, and distribution of shell
eggs. Charges or fees are based on time,
travel, and expenses needed to perform
the work.
4. Section 56.46 is amended by:
A. Removing in paragraph (b),
‘‘$65.00’’ and adding ‘‘$69.68’’ in its
place.
B. Removing in paragraph (c),
‘‘$75.12’’ and adding ‘‘$80.12’’ in its
place.
C. Adding new paragraphs (d) and (e)
to read as follows:
§ 56.46
On a fee basis.
*
*
*
*
*
(d) Fees for audit services will be
based on the time and expenses
required to perform the audit. The
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PART 70—VOLUNTARY GRADING OF
POULTRY PRODUCTS AND RABBIT
PRODUCTS
6. The authority citation for part 70
continues to read as follows:
Authority: 7 U.S.C. 1621–1627.
Meaning of words and terms.
*
§ 56.28
hourly charge shall be $82.16 and shall
include the time actually required to
perform the audit, waiting time, travel
time, travel expenses and any clerical
costs involved in issuing an audit
report.
(e) Audit services rendered on
Saturdays, Sundays, or legal holidays
shall be charged for at the rate of
$102.84 per hour. Information on legal
holidays is available from the
Supervisor.
5. Section 56.52 is amended by
removing in paragraph (a)(4), ‘‘$0.051’’
and adding ‘‘$0.053’’ in its place,
removing ‘‘$260’’ and adding ‘‘$275’’ in
its place, and removing ‘‘$2,875’’ and
adding ‘‘$3,075’’ in its place.
Frm 00003
Fmt 4702
Sfmt 4702
7. Section 70.1 is amended by adding
‘‘Auditing Services’’ to read as follows:
§ 70.1
Definitions.
*
*
*
*
*
Auditing services means the act of
providing independent verification of
written quality assurance and value
added standards for production,
processing and distribution of poultry
and rabbits. Auditing services are
performed by graders authorized by the
Secretary to perform such audits and the
service provided will be in accordance
with the provisions of this part for
grading services, as appropriate.
*
*
*
*
*
8. In § 70.4 the section heading is
revised, and paragraph (c) is added to
read as follows:
§ 70.4
Services available.
*
*
*
*
*
(c) Auditing service. This type of
service is performed when an applicant
requests independent verification of
written quality assurance and value
added standards for production,
processing, and distribution of poultry
and rabbits. Charges or fees are based on
time, travel, and expenses needed to
perform the work.
9. Section 70.71 is amended by:
A. Removing in paragraph (b)
‘‘$65.00’’ and adding ‘‘$69.68’’ in its
place.
B. Removing in paragraph (c)
‘‘$75.12’’ and adding ‘‘$80.12’’ in its
place.
C. Adding new paragraphs (d) and (e)
to read as follows:
§ 70.71
*
E:\FR\FM\06OCP1.SGM
On a fee basis.
*
*
06OCP1
*
*
Federal Register / Vol. 71, No. 194 / Friday, October 6, 2006 / Proposed Rules
(d) Fees for audit services will be
based on the time and expenses
required to perform the audit. The
hourly charge shall be $82.16 and shall
include the time actually required to
perform the audit, waiting time, travel
time, travel expenses and any clerical
costs involved in issuing a certificate.
(e) Audit services rendered on
Saturdays, Sundays, or legal holidays
shall be charged for at the rate of
$102.84 per hour. Information on legal
holidays is available from the
Supervisor.
10. Section 70.77 is amended by
removing in paragraph (a)(4) ‘‘$0.00039’’
and adding ‘‘$0.00043’’ in its place,
removing ‘‘$260’’ and adding ‘‘$275’’ in
its place, and removing ‘‘$2,875’’ and
adding ‘‘$3,075’’ in its place.
Dated: September 29, 2006.
Kenneth C. Clayton,
Acting Administrator, Agricultural Marketing
Service.
[FR Doc. E6–16528 Filed 10–5–06; 8:45 am]
BILLING CODE 3410–02–P
DEPARTMENT OF TRANSPORTATION
Federal Aviation Administration
14 CFR Part 71
[Docket No. FAA–2006–25436; Airspace
Docket No. 06–AGL–05]
Proposed Modification of Class E
Airspace; Hayward, WI
Federal Aviation
Administration (FAA), DOT.
ACTION: Notice of proposed rulemaking.
pwalker on PRODPC60 with PROPOSALS
AGENCY:
SUMMARY: This document proposes to
modify Class E airspace at Hayward, WI.
Standard Instrument Approach
Procedures have been developed for
Sawyer County Airport, Hayward, WI.
Controlled airspace extending upward
from 700 feet or more above the surface
of the earth is needed to contain aircraft
executing these approaches. This action
would increase the area of the existing
controlled airspace for Hayward, WI.
DATES: Comments must be received on
or before November 24, 2006.
ADDRESSES: Send comments on the
proposal to the Docket Management
System, U.S. Department of
Transportation, Room Plaza 401, 400
Seventh Street, SW., Washington, DC
20590–0001. You must identify the
docket Number FAA–2006–/Airspace
Docket No. 06–AGL–05, at the
beginning of your comments. You may
also submit comments on the Internet at
https://dms.dot.gov. You may review the
public docket containing the proposal,
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18:35 Oct 05, 2006
Jkt 211001
any comments received, and any final
disposition in person in the Dockets
Office between 9 a.m. and 5 p.m.,
Monday through Friday, except Federal
holidays. The Docket Office (telephone
1–800–647–5527) is on the plaza level
of the Department of Transportation
NASSIF Building at the above address.
An informal docket may also be
examined during normal business hours
at FAA Terminal Operations, Central
Service Office, 2300 East Devon
Avenue, Des Plaines, Illinois 60018.
FOR FURTHER INFORMATION CONTACT:
Steve Davis, FAA Terminal Operations,
Central Service Office, System Support
Branch, Federal Aviation
Administration, 2300 East Devon
Avenue, Des Plaines, Illinois 60018,
telephone (847) 294–7131.
SUPPLEMENTARY INFORMATION:
Comments Invited
Interested parties are invited to
participate in this proposed rulemaking
by submitting such written data, views,
or arguments as they may desire.
Comments that provide the factual basis
supporting the views and suggestions
presented are particularly helpful in
developing reasoned regulatory
decisions on the proposal. Comments
are specifically invited on the overall
regulatory, aeronautical, economic,
environmental, and energy-related
aspects of the proposal.
Communications should identify both
docket numbers and be submitted in
triplicate to the address listed above.
Commenters wishing the FAA to
acknowledge receipt of their comments
on this document must submit with
those comments a self-addressed,
stamped postcard on which the
following statement is made:
‘‘Comments to Docket No. FAA–2006–
25436/Airspace Docket No. 06–AGL–
05.’’ The postcard will be date/time
stamped and returned to the
commenter. All communications
received on or before the specified
closing date for comments will be
considered before taking action on the
proposed rule. The proposal contained
in this action may be changed in light
of comments received. All comments
submitted will be available for
examination in the Rules Docket, FAA,
Great Lakes Region, Office of the
Regional Counsel, 2300 East Devon
Avenue, Des Plaines, Illinois, both
before and after the closing date for
comments. A report summarizing each
substantive public contact with FAA
personnel concerned with this
rulemaking will be filed in the docket.
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59031
Availability of NPRM’s
An electronic copy of this document
may be downloaded through the
Internet at https://dms.dot.gov. Recently
published rulemaking documents can
also be accessed through the FAA’s Web
page at https://www.faa.gov or the
Superintendent of Document’s Web
page at https://www.access.gpo.gov/nara.
Additionally, any person may obtain
a copy of this notice by submitting a
request to the Federal Aviation
Administration, Office of Air Traffic
Airspace Management, ATA–400, 800
Independence Avenue, SW.,
Washington, DC 20591, or by calling
(202) 267–8783. Communications must
identify both docket numbers for this
notice. Persons interested in being
placed on a mailing list for future
NPRM’s should contact the FAA’s
Office of Rulemaking, (202) 267–9677,
to request a copy of Advisory Circular
No. 11–2A, Notice of Proposed
Rulemaking Distribution System, which
describes the application procedure.
The Proposal
The FAA is considering an
amendment to 14 CFR part 71 to modify
Class E airspace at Hayward, WI, for
Sawyer County Airport. Controlled
airspace extending upward from 700
feet above the surface of the earth is
needed to contain aircraft executing
instrument approach procedures. Class
E airspace areas extending upward from
700 feet above the surface of the earth
are published in paragraph 6005 of FAA
Order 7400.9N dated September 1, 2005,
and effective September 16, 2005, which
is incorporated by reference in 14 CFR
71.1. The Class E designations listed in
this document would be removed
subsequently in the Order.
The FAA has determined that this
proposed regulation only involves an
established body of technical
regulations for which frequent and
routine amendments are necessary to
keep them operationally current.
Therefore this, proposed regulation—(1)
is not a ‘‘significant regulatory action’’
under Executive Order 12866; (2) is not
a ‘‘significant rule’’ under DOT
Regulatory Policies and Procedures (44
FR 11034; February 26, 1979); and (3)
does not warrant preparation of a
Regulatory Evaluation as the anticipated
impact is so minimal. Since this is a
routine matter that will only affect air
traffic procedures and air navigation, it
is certified that this proposed rule will
not have a significant economic impact
on a substantial number of small entities
under the criteria of the Regulatory
Flexibility Act.
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]]>Agencies
[Federal Register Volume 71, Number 194 (Friday, October 6, 2006)]
[Proposed Rules]
[Pages 59028-59031]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-16528]
========================================================================
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. 71, No. 194 / Friday, October 6, 2006 /
Proposed Rules
[[Page 59028]]
DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Parts 56 and 70
[Docket No. PY-06-002]
RIN 0581-AC64
Increase in Fees and Charges for Egg, Poultry, and Rabbit Grading
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Proposed rule.
-----------------------------------------------------------------------
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, and to establish a separate
billing rate for the audit services. The fees and charges need to be
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. 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 November 6, 2006.
ADDRESSES: Send written comments, in duplicate, to David Bowden, Jr.,
Chief, USDA, AMS, PY, Standardization Branch, STOP 0256, Room 3932-S,
1400 Independence Avenue, SW., Washington, DC 20250-0256. Comments, in
duplicate, may also be faxed to (202) 720-5631.
Comments may be submitted electronically to: AMSPYDockets@usda.gov
or https://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.s.t., Monday through
Friday, except legal holidays. Comments received will also be available
on the AMS Web site https://www.ams.usda.gov/rulemaking or may be
inspected at the above address.
All comments should reference docket number PY-06-002 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, et seq.), 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 September 25, 2005, will not generate sufficient revenue to
cover program costs while maintaining an adequate trust fund reserve
balance in FY 2007. Revenue in FY 2005 was $30.1 million while expenses
were $33.8 million. After factoring in investment income, the result
was a loss of $3.4 million. This loss reduced the trust fund reserve
balance to $12.4 million. FY 2006 revenue is currently projected at
$33.8 million and expenses in FY 2006 are projected at $34.8 million,
which will reduce the trust fund reserve balance to $12.0 million.
However, prior-year adjustments and projected investment income will
increase the projected end-of-year trust fund reserve balance to $13.3
million. Without a fee increase, FY 2007 revenue is projected to be
$33.8 million. Expenses are projected to be $36.6 million. After
factoring in investment income, this loss would leave a reserve of
$11.1 million, which is below the required minimum level.\1\ With a fee
increase, FY 2007 revenue is projected at $35.1 million.
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\1\ The required minimum level for the trust fund reserve is
equal to four months of the revenue projected from collecting
inspection fees during that fiscal year. With FY 2007 revenue
projected to be $33.8 million, four months of the revenue in FY2007
equals $11.3 million. Therefore a reserve of $11.1 million would
fall short of the required minimum level.
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Over $1 million in cost cutting measures will be taken by the
Agency in FY 2006 and FY 2007 to maintain acceptable trust fund reserve
levels. These cost reductions will include reorganization of field
offices and not filling targeted vacancies. The fee increase in
conjunction with cost reductions will result in trust fund reserve
balances that would be maintained at the required minimum level.
The review also included an in-depth analysis of expenses
specifically related to auditing services. The audit program, initiated
in 1999, was developed to provide industry, as well as domestic and
foreign governmental entities, with verification of quality management
systems, label claims, and other industry-developed standards. The
number of audits has grown from five in FY 1999 to 524 in FY 2005. They
are presently conducted by 30 full-time auditors. Audit fees are based
on the approved hourly nonresident fee rate established for egg,
poultry, and rabbit grading and certification services provided by the
Agency pursuant to 7 CFR parts 56 and 70. The review revealed that this
rate did not sufficiently cover the cost of providing audit services,
primarily due to the use of higher-salaried employees to perform
audits. Consequently, a separate billing rate for performing audits is
proposed.
The nonresident fee rate for audits was developed using the salary
and fringe benefit information for Agricultural Commodity Graders
stationed in the field, the employees typically assigned to perform fee
grading service. Most of these employees are full-time at the GS-8/9
pay grade classifications. However, due to the complexity of planning,
performing, and interpreting the results of assessments, audits are
typically performed by employees at the GS-11/12 pay grade.
Upon considering all audit operational expenses, the Agency
determined that the actual cost of audit services, excluding travel
costs, to be $82.16 per hour. Included in the analysis were employee
salaries and benefits, overhead; total revenue hours available, and
other anticipated costs
[[Page 59029]]
such as federally mandated pay raises through FY 2007, rent,
communications, utilities, contractual services, supplies, and
equipment. Also, this action adds to the regulations a definition of
auditing services and description of such services as appropriate.
The Agency considered alternatives to creating a separate user-fee
for audit services, but found that none were sufficient. Maintaining
the same user-fee for audit services that is currently used for
conventional egg, poultry, and rabbit grading and certification
services would not sufficiently cover the cost of providing audit
services. Another option was to terminate all audit services, which
would adversely affect producers, businesses, and consumers who desire
audit services and those entities with already-established programs.
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, 2006, and
it materially affected program costs. Projected cost estimates for that
increase were based on a salary increase of 2.2 percent; however, the
increase was actually 3.89 to 5.35 percent, depending on locality. The
average increase in salary over the past five years has been 3.71
percent and was used for the projected salary increase for January
2007. Also, from October 2005 through September 2007, salaries and
fringe benefits of federally-licensed State employees will increase by
about 6.0 percent.
The following table compares current and proposed fees and charges
and shows the new audit fees. To offset projected cost increases, the
hourly resident and nonresident rate would be increased by
approximately 7.0 percent and the fee rate would also be increased by
approximately 7.0 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 minimum monthly administrative volume charge for
resident shell egg, poultry, and rabbit grading would be changed to
$275. The billing rates for auditing services would be $82.16 for
regular hours and $102.84 for weekend and holiday hours.
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Service Current Proposed
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Resident Service (egg, poultry, and rabbit grading)
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Inauguration of service....................... 310 310
Hourly charges:
Regular hours............................. 36.36 39.04
Administrative charges--Poultry grading:
Per pound of poultry...................... .00039 .00043
Minimum per month......................... 260 275
Maximum per month......................... 2,875 3,075
Administrative charges--Shell egg grading:
Per 30-dozen case of shell eggs........... .051 .053
Minimum per month......................... 260 275
Maximum per month......................... 2,875 3,075
Administrative charges--Rabbit grading:
Based on 25% of grader's salary, minimum 260 275
per month................................
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Nonresident Service (egg and poultry grading)
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Hourly charges:
Regular hours............................. 36.36 39.04
Administrative charges:
Based on 25% of grader's salary, minimum 260 275
per month................................
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Nonresident Fee and Appeal Service (egg, poultry, and rabbit grading)
------------------------------------------------------------------------
Hourly charges:
Regular hours............................. 65.00 69.68
Weekend and holiday hours................. 75.12 80.12
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Audit Fee (Verification of Standards and Quality Systems)
------------------------------------------------------------------------
Hourly charges:
Regular hours............................. 65.00 82.16
Weekend and holiday hours................. 75.12 102.84
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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 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 378 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
[[Page 59030]]
September 25, 2005, will not generate sufficient revenue to cover
program costs while maintaining an adequate reserve balance in FY 2007.
Costs in FY 2007 are projected at $36.6 million. Without a fee
increase, FY 2007 revenue is projected at $33.8 million and the trust
fund reserve balance would be below minimum required levels. With a fee
increase, FY 2007 revenues are projected at $35.1 million. Strategic
cost-cutting measures will be taken by the program to ensure sufficient
trust fund levels. Cost reductions will include reorganization of field
offices and not filling targeted vacancies.
This action would raise the fees charged to users of grading and
auditing services. Also, this action adds to the regulations a
definition of auditing services and description of such services as
appropriate. The AMS estimates that, overall, this rule would yield an
additional $1.3 million during FY 2007. The hourly rate for resident
and nonresident service would also increase by approximately 7.0
percent and the fee rate would also increase by approximately 7.0
percent. The impact of these rate changes in a poultry plant would not
be substantial and would range from about $0.00013 to $0.0011 per pound
of poultry handled. In a shell egg plant, the range would be $0.00022
to $0.00224 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.
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 2007, 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.
2. Section 56.1 is amended by adding ``Auditing Services'' to read
as follows:
Sec. 56.1 Meaning of words and terms.
* * * * *
Auditing services means the act of providing independent
verification of written quality assurance and value added standards for
production, processing and distribution of shell eggs. Auditing
services are performed by graders authorized by the Secretary to
perform such audits and the service provided will be in accordance with
the provisions of this part for grading services, as appropriate.
* * * * *
3. In Sec. 56.28, the section heading is revised and paragraph (d)
is added to read as follows:
Sec. 56.28 Types of service.
* * * * *
(d) Auditing service. This type of service is performed when an
applicant requests independent verification of written quality
assurance and value added standards for production, processing, and
distribution of shell eggs. Charges or fees are based on time, travel,
and expenses needed to perform the work.
4. Section 56.46 is amended by:
A. Removing in paragraph (b), ``$65.00'' and adding ``$69.68'' in
its place.
B. Removing in paragraph (c), ``$75.12'' and adding ``$80.12'' in
its place.
C. Adding new paragraphs (d) and (e) to read as follows:
Sec. 56.46 On a fee basis.
* * * * *
(d) Fees for audit services will be based on the time and expenses
required to perform the audit. The hourly charge shall be $82.16 and
shall include the time actually required to perform the audit, waiting
time, travel time, travel expenses and any clerical costs involved in
issuing an audit report.
(e) Audit services rendered on Saturdays, Sundays, or legal
holidays shall be charged for at the rate of $102.84 per hour.
Information on legal holidays is available from the Supervisor.
5. Section 56.52 is amended by removing in paragraph (a)(4),
``$0.051'' and adding ``$0.053'' in its place, removing ``$260'' and
adding ``$275'' in its place, and removing ``$2,875'' and adding
``$3,075'' in its place.
PART 70--VOLUNTARY GRADING OF POULTRY PRODUCTS AND RABBIT PRODUCTS
6. The authority citation for part 70 continues to read as follows:
Authority: 7 U.S.C. 1621-1627.
7. Section 70.1 is amended by adding ``Auditing Services'' to read
as follows:
Sec. 70.1 Definitions.
* * * * *
Auditing services means the act of providing independent
verification of written quality assurance and value added standards for
production, processing and distribution of poultry and rabbits.
Auditing services are performed by graders authorized by the Secretary
to perform such audits and the service provided will be in accordance
with the provisions of this part for grading services, as appropriate.
* * * * *
8. In Sec. 70.4 the section heading is revised, and paragraph (c)
is added to read as follows:
Sec. 70.4 Services available.
* * * * *
(c) Auditing service. This type of service is performed when an
applicant requests independent verification of written quality
assurance and value added standards for production, processing, and
distribution of poultry and rabbits. Charges or fees are based on time,
travel, and expenses needed to perform the work.
9. Section 70.71 is amended by:
A. Removing in paragraph (b) ``$65.00'' and adding ``$69.68'' in
its place.
B. Removing in paragraph (c) ``$75.12'' and adding ``$80.12'' in
its place.
C. Adding new paragraphs (d) and (e) to read as follows:
Sec. 70.71 On a fee basis.
* * * * *
[[Page 59031]]
(d) Fees for audit services will be based on the time and expenses
required to perform the audit. The hourly charge shall be $82.16 and
shall include the time actually required to perform the audit, waiting
time, travel time, travel expenses and any clerical costs involved in
issuing a certificate.
(e) Audit services rendered on Saturdays, Sundays, or legal
holidays shall be charged for at the rate of $102.84 per hour.
Information on legal holidays is available from the Supervisor.
10. Section 70.77 is amended by removing in paragraph (a)(4)
``$0.00039'' and adding ``$0.00043'' in its place, removing ``$260''
and adding ``$275'' in its place, and removing ``$2,875'' and adding
``$3,075'' in its place.
Dated: September 29, 2006.
Kenneth C. Clayton,
Acting Administrator, Agricultural Marketing Service.
[FR Doc. E6-16528 Filed 10-5-06; 8:45 am]
BILLING CODE 3410-02-P
