Increase in Fees and Charges for Egg, Poultry, and Rabbit Grading, 11773-11776 [E7-4657]
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11773
Rules and Regulations
Federal Register
Vol. 72, No. 49
Wednesday, March 14, 2007
This section of the FEDERAL REGISTER
contains regulatory documents having general
applicability and legal effect, most of which
are keyed to and codified in the Code of
Federal Regulations, which is published under
50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by
the Superintendent of Documents. Prices of
new books are listed in the first FEDERAL
REGISTER issue of each week.
DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Parts 56 and 70
[Docket No. AMS 2006–0142; PY–06–002]
RIN 0581–AC64
Increase in Fees and Charges for Egg,
Poultry, and Rabbit Grading
Agricultural Marketing Service,
USDA.
ACTION: Final rule.
AGENCY:
SUMMARY: The Agricultural Marketing
Service (AMS) is increasing the fees and
charges for Federal voluntary egg,
poultry, and rabbit grading,
certification, and audit services, and
establishing a separate billing rate for
the audit services. The 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. The AMS is required to
collect fees from users of these services
to cover the costs of services rendered.
DATES: Effective Date: April 1, 2007.
FOR FURTHER INFORMATION CONTACT:
David Bowden, Jr., Chief, USDA, AMS,
PY, Standards, Promotion and
Technology Branch, (202) 690–3148.
SUPPLEMENTARY INFORMATION:
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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
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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
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
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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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 has been
established.
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
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.
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Federal Register / Vol. 72, No. 49 / Wednesday, March 14, 2007 / Rules and Regulations
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)
Hourly charges:
Regular hours ...................................................................................................................................................
Weekend and holiday hours .............................................................................................................................
Comments
Regulatory Flexibility Act
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
(71 FR 59028) on October 6, 2006.
Comments on the proposed rule were
solicited from interested parties until
November 6. One comment was
received which was outside of the scope
of the rulemaking.
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
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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).
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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
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
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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 will 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 will
yield an additional $1.3 million during
FY 2007. The hourly rate for resident
and nonresident service will also
increase by approximately 7.0 percent
and the fee rate will also increase by
approximately 7.0 percent. The impact
of these rate changes in a poultry plant
will not be substantial and will range
from about $0.00013 to $0.0011 per
pound of poultry handled. In a shell egg
plant, the range will 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: § 56.52(a)(4)—
No. 0581–0128; and § 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, is April 1, 2007.
List of Subjects
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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,
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Rabbits and rabbit products, Reporting
and recordkeeping requirements.
I For reasons set forth in the preamble,
Title 7, Code of Federal Regulations,
parts 56 and 70 is amended as follows:
PART 56—VOLUNTARY GRADING OF
SHELL EGGS
1. The authority citation for part 56
continues to read as follows:
I
Authority: 7 U.S.C. 1621–1627.
2. Section 56.1 is amended by adding
‘‘Auditing Services’’ to read as follows:
I
§ 56.1 Meaning of words 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.
*
*
*
*
*
I 3. In § 56.28,the section heading is
revised and paragraph (d) is added to
read as follows:
shall be charged for at the rate of
$102.84 per hour. Information on legal
holidays is available from the
Supervisor.
I 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:
I
Authority: 7 U.S.C. 1621–1627.
*
§ 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.
I 4. Section 56.46 is amended by:
I A. Removing in paragraph (b),
‘‘$65.00’’ and adding ‘‘$69.68’’ in its
place.
I B. Removing in paragraph (c),
‘‘$75.12’’ and adding ‘‘$80.12’’ in its
place.
I 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
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
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11775
7. Section 70.1 is amended by revising
the section heading and by adding
‘‘Auditing Services’’ to read as follows:
I
§ 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.
*
*
*
*
*
I 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.
I 9. Section 70.71 is amended by:
I A. Removing in paragraph (b)
‘‘$65.00’’ and adding ‘‘$69.68’’ in its
place.
I B. Removing in paragraph (c)
‘‘$75.12’’ and adding ‘‘$80.12’’ in its
place.
I C. Adding new paragraphs (d) and (e)
to read as follows:
§ 70.71
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
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Federal Register / Vol. 72, No. 49 / Wednesday, March 14, 2007 / Rules and Regulations
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.
I 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.
ACTION:
Final rule.
SUMMARY: The Coast Guard is changing
the operating regulation governing the
operation of the Outer Clam Bay
Boardwalk Drawbridge, mile 0.3, near
North Naples in Collier County, Florida.
The rule will require the drawbridge to
open on signal, with at least 30 minutes
advance notice. This rule will allow the
unrestricted movement of pedestrian
traffic while providing for the
reasonable needs of navigation.
DATES: This rule is effective April 13,
2007.
Food Labeling
Comments and material
received from the public, as well as
documents indicated in this preamble as
being available in the docket, are part of
docket (CGD07–06–237) and are
available for inspection or copying at
Commander (dpb), Seventh Coast Guard
District, 909 SE. 1st Avenue, Room 432,
Miami, Florida 33131–3050 between 8
a.m. and 4:30 p.m., Monday through
Friday, except Federal holidays.
FOR FURTHER INFORMATION CONTACT: Mr.
Barry Dragon, Seventh Coast Guard
District, Bridge Branch, telephone
number 305–415–6743.
SUPPLEMENTARY INFORMATION:
CFR Correction
Regulatory Information
In Title 21 of the Code of Federal
Regulations, Parts 100 to 169, revised as
of April 1, 2006, on page 18, in § 101.4,
the introductory text of paragraph (h) is
corrected by revising the phrase ‘‘or at
the Office of the Federal Register, 800 N.
Capitol St. NW., suite 700, Washington,
DC.’’ to read: ‘‘or at the National
Archives and Records Administration
(NARA). For information on the
availability of this material at NARA,
call 202–741–6030, or go to: https://
www.archives.gov/federallregister/
codeloflfederallregulations/
ibrllocations.html.’’
On November 17, 2006, we published
a notice of proposed rulemaking
(NPRM) entitled Drawbridge Operation
Regulations; Outer Clam Bay Boardwalk
Bridge, Mile 0.3, Near North Naples,
Collier County, FL in the Federal
Register (71 FR 66895). We received no
comments on the proposed rule. No
public meeting was requested, and none
was held.
ADDRESSES:
Dated: March 9, 2007.
Lloyd C. Day,
Administrator, Agricultural Marketing
Service.
[FR Doc. E7–4657 Filed 3–13–07; 8:45 am]
BILLING CODE 3410–02–P
DEPARTMENT OF HEALTH AND
HUMAN SERVICES
Food and Drug Administration
21 CFR Part 101
[FR Doc. 07–55502 Filed 3–13–07; 8:45 am]
BILLING CODE 1505–01–D
DEPARTMENT OF HOMELAND
SECURITY
Coast Guard
33 CFR Part 117
[CGD07–06–237]
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RIN 1625–AA09
Drawbridge Operation Regulations;
Outer Clam Bay Boardwalk Bridge,
Mile 0.3, Near North Naples, Collier
County, FL
AGENCY:
Coast Guard, DHS.
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14:23 Mar 13, 2007
Jkt 211001
Background and Purpose
The current regulation of the Outer
Clam Bay Boardwalk Drawbridge, mile
0.3, near North Naples, at Collier
County, published in 33 CFR 117.323
requires the drawspan to open on signal
between 9 a.m. and 5 p.m., if at least
one-hour advance notice is given.
Between 5 p.m. and 9 a.m., the draw is
left in the open position.
On October 19, 2006, the officials of
Collier County requested that the Coast
Guard review the existing regulations
governing the operation of the Outer
Clam Bay Boardwalk Drawbridge
because they contended that the
regulation did not meet the needs of
pedestrians utilizing the boardwalk and
drawspan.
County records indicated that the
owner has had one request for an
opening since 1986 and the vessel did
not show up for the requested opening.
Night time vessel traffic is negligible.
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The boardwalk provides access to a
recreational beachfront area 24 hours a
day. Leaving the drawspan in the open
position prevents beachgoers from
accessing the recreational area between
the hours of 5 p.m. and 9 a.m.
Discussion of Comments and Changes
The Coast Guard received no
responses to the Notice of Proposed
Rulemaking. The rule will provide
access to the recreational beachfront
area 24 hours a day while meeting the
reasonable needs of navigation.
Regulatory Evaluation
This rule is not a ‘‘significant
regulatory action’’ under section 3(f) of
Executive Order 12866, Regulatory
Planning and Review, and does not
require an assessment of potential costs
and benefits under section 6(a)(3) of that
Order. The Office of Management and
Budget has not reviewed it under that
Order.
We expect the economic impact of
this proposed rule to be so minimal that
a full Regulatory Evaluation under the
regulatory policies and procedures of
DHS is unnecessary. This rule modifies
the existing bridge schedule to allow
pedestrian and vehicle traffic
unrestricted access to the recreation area
while providing for the reasonable
needs of navigation.
Small Entities
Under the Regulatory Flexibility Act
(5 U.S.C. 601–612), we have considered
whether this rule would have a
significant economic impact on a
substantial number of small entities.
The term ‘‘small entities’’ comprises
small businesses, not-for-profit
organizations that are independently
owned and operated and are not
dominant in their fields, and
governmental jurisdictions with
populations of less than 50,000.
The Coast Guard certifies under 5
U.S.C. 605(b) that this rule will not have
a significant economic impact on a
substantial number of small entities.
This rule would affect the following
entities, some of which may be small
entities: The owners or operators of
vessels needing to transit the Outer
Clam Bay Boardwalk Drawbridge. The
rule would not have a significant
economic impact on a substantial
number of small entities because the
rule provides for openings to vessel
traffic.
Assistance for Small Entities
Under section 213(a) of the Small
Business Regulatory Enforcement
Fairness Act of 1996 (Pub. L. 104–121),
we offered to assist small entities in
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]]>Agencies
[Federal Register Volume 72, Number 49 (Wednesday, March 14, 2007)]
[Rules and Regulations]
[Pages 11773-11776]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-4657]
========================================================================
Rules and Regulations
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains regulatory documents
having general applicability and legal effect, most of which are keyed
to and codified in the Code of Federal Regulations, which is published
under 50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by the Superintendent of Documents.
Prices of new books are listed in the first FEDERAL REGISTER issue of each
week.
========================================================================
Federal Register / Vol. 72, No. 49 / Wednesday, March 14, 2007 /
Rules and Regulations
[[Page 11773]]
DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Parts 56 and 70
[Docket No. AMS 2006-0142; PY-06-002]
RIN 0581-AC64
Increase in Fees and Charges for Egg, Poultry, and Rabbit Grading
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The Agricultural Marketing Service (AMS) is increasing the
fees and charges for Federal voluntary egg, poultry, and rabbit
grading, certification, and audit services, and establishing a separate
billing rate for the audit services. The 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. The AMS
is required to collect fees from users of these services to cover the
costs of services rendered.
DATES: Effective Date: April 1, 2007.
FOR FURTHER INFORMATION CONTACT: David Bowden, Jr., Chief, USDA, AMS,
PY, Standards, Promotion and Technology Branch, (202) 690-3148.
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.
---------------------------------------------------------------------------
\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.
---------------------------------------------------------------------------
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 has been established.
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 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.
[[Page 11774]]
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.
------------------------------------------------------------------------
Service Current Proposed
------------------------------------------------------------------------
Resident Service (Egg, Poultry, and Rabbit Grading)
------------------------------------------------------------------------
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, 260 275
minimum per month..................
------------------------------------------------------------------------
Nonresident Service (Egg and Poultry Grading)
------------------------------------------------------------------------
Hourly charges:
Regular hours....................... 36.36 39.04
Administrative charges:
Based on 25% of grader's salary, 260 275
minimum per month..................
------------------------------------------------------------------------
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
------------------------------------------------------------------------
Audit Fee (Verification of Standards and Quality Systems)
------------------------------------------------------------------------
Hourly charges:
Regular hours....................... 65.00 82.16
Weekend and holiday hours........... 75.12 102.84
------------------------------------------------------------------------
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 (71 FR 59028) on October 6, 2006. Comments on the
proposed rule were solicited from interested parties until November 6.
One comment was received which was outside of the scope of the
rulemaking.
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 (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 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
[[Page 11775]]
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 will 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 will yield an
additional $1.3 million during FY 2007. The hourly rate for resident
and nonresident service will also increase by approximately 7.0 percent
and the fee rate will also increase by approximately 7.0 percent. The
impact of these rate changes in a poultry plant will not be substantial
and will range from about $0.00013 to $0.0011 per pound of poultry
handled. In a shell egg plant, the range will 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.
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, is April 1, 2007.
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.
0
For reasons set forth in the preamble, Title 7, Code of Federal
Regulations, parts 56 and 70 is amended as follows:
PART 56--VOLUNTARY 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 56.1 is amended by adding ``Auditing Services'' to read as
follows:
Sec. 56.1 Meaning of words 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.
* * * * *
0
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.
0
4. Section 56.46 is amended by:
0
A. Removing in paragraph (b), ``$65.00'' and adding ``$69.68'' in its
place.
0
B. Removing in paragraph (c), ``$75.12'' and adding ``$80.12'' in its
place.
0
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.
0
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
0
6. The authority citation for part 70 continues to read as follows:
Authority: 7 U.S.C. 1621-1627.
0
7. Section 70.1 is amended by revising the section heading and 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.
* * * * *
0
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.
0
9. Section 70.71 is amended by:
0
A. Removing in paragraph (b) ``$65.00'' and adding ``$69.68'' in its
place.
0
B. Removing in paragraph (c) ``$75.12'' and adding ``$80.12'' in its
place.
0
C. Adding new paragraphs (d) and (e) to read as follows:
Sec. 70.71 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
[[Page 11776]]
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.
0
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: March 9, 2007.
Lloyd C. Day,
Administrator, Agricultural Marketing Service.
[FR Doc. E7-4657 Filed 3-13-07; 8:45 am]
BILLING CODE 3410-02-P
