05-14514. 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. These fees and charges are being increased to cover the increase in salaries of Federal employees, salary increases of State employees cooperatively utilized in administering the programs, and other increased Agency costs.

Dates:

Effective September 25, 2005.

FOR FURTHER INFORMATION CONTACT:

David Bowden, Jr., Chief, Standardization Branch, [phone].

SUPPLEMENTARY INFORMATION:

Background

The Agricultural Marketing Act (AMA) of 1946 (7 U.S.C. 1621 et seq.) authorizes official voluntary grading and certification of eggs, poultry, and rabbits on a user-fee basis. The AMA provides that reasonable fees be collected from users of program services to cover, as nearly as practicable, the costs of services rendered. The AMS regularly reviews these programs to determine if fees are adequate and if costs are reasonable.

A recent review determined that the existing fee schedule, effective January 1, 2004, would not generate sufficient revenues to cover program costs while maintaining an adequate reserve balance in FY 2006. Costs in FY 2006 are projected at $31.9 million. Without a fee increase, FY 2006 revenues are projected at $30.5 million and trust fund balances would be $14.5 million. With a fee increase, FY 2006 revenues are projected at $31.9 million and trust fund balances would remain at $15.9 million.

Employee salaries and benefits account for approximately 82 percent of the total operating budget. A general and locality salary increase for Federal employees, effective in January 2004, materially affected program costs. Projected cost estimates for that increase were based on a salary increase of 2.0 percent, however, the increase was actually 3.89 to 5.35 percent, depending on locality. The last increase of 3.25 to 4.3 percent, depending on locality, became effective in January 2005 and another increase, estimated at 1.5 percent, is expected in January 2006. Also, from October 2004 through September 2006, salaries and fringe benefits of federally-licensed State employees will have increased by about 6.0 percent. This paragraph, which also appeared in the proposed rule, has been updated to reflect more current information.

The impact of these cost increases was determined for resident, nonresident, and fee services. To offset projected cost increases, the hourly resident and nonresident rate will be increased by approximately 5.8 percent and the fee rate will be increased by approximately 8.3 percent. The hourly rate for resident and nonresident service covers graders' salaries and benefits. The hourly rate for fee service covers graders' salaries and benefits, plus the cost of travel and supervision.

As shown in the table below, the minimum monthly administrative volume charge for resident poultry, shell egg, and rabbit grading will not change.

The following table compares current fees and charges with proposed fees and charges for egg, poultry, and rabbit grading as found in 7 CFR parts 56 and 70:

Service	Current	Proposed
Resident Service (egg, poultry, and rabbit grading)
Inauguration of service	310	310
Hourly charges:
Regular hours	34.36	36.36
Administrative charges—Poultry grading:
Per pound of poultry	.00037	.00039
Minimum per month	260	260
Maximum per month	2,755	2,875
Administrative charges—Shell egg grading:
Per 30-dozen case of shell eggs	.048	.051
Minimum per month	260	260
Maximum per month	2,755	2,875
Administrative charges—Rabbit grading:
Based on 25% of grader's salary, minimum per month	260	260
Nonresident Service (egg and poultry grading)
Hourly charges:
Regular hours	34.36	36.36
Administrative charges:
Based on 25% of grader's salary, minimum per month	260	260
Fee and Appeal Service (egg, poultry, and rabbit grading)
Hourly charges:
Regular hours	60.00	65.00
Weekend and holiday hours	69.32	75.12

Comments

Based on the analysis of costs to provide these services, a proposed rule to increase the fees for these services was published in the Federal Register (70 FR 9883) on March 1, 2005. Comments on the proposed rule were solicited from interested parties until March 31. One comment was received from an egg industry association.

The association acknowledged the Agency's need to increase fees. However, the association requested that the increase be postponed for a period of six months. The commenter stated that an immediate increase would be an added hardship on an already economically depressed industry but, in a few months, industry self-help programs should be up and running. As stated in the proposal, the Agency intended that the fee increase be implemented as early as possible in FY 2006. The closest available billing cycle begins on September 25, 2005. Accordingly, this rule will be effective on that date.

Executive Order 12866

This action has been determined to be not significant for purposes of Executive Order 12866 and, therefore, has not been reviewed by the Office of Management and Budget (OMB).

Regulatory Flexibility

Pursuant to the requirements set forth in the Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq.), the AMS has considered the economic impact of this action on small entities. It is determined that this rule will not have a significant economic impact on a substantial number of small entities.

There are about 376 users of Poultry Programs' grading services. These official plants can pack eggs, poultry, and rabbits in packages bearing the USDA grade shield when AMS graders are present to certify that the products meet the grade requirements as labeled. Many of these users are small entities under the criteria established by the Small Business Administration (13 CFR 121.201). These entities are under no obligation to use grading services as authorized under the Agricultural Marketing Act of 1946.

The AMS regularly reviews its user fee financed programs to determine if fees are adequate and if costs are reasonable. A recent review determined that the existing fee schedule, effective January 1, 2004, will not generate sufficient revenues to cover program costs while maintaining an adequate reserve balance in FY 2006. Costs in FY 2006 are projected at $31.9 million. Without a fee increase, FY 2006 revenues are projected at $30.5 million and trust fund balances would be $14.5 million. With a fee increase, FY 2006 revenues are projected at $31.9 million and trust fund balances would remain at $15.9 million.

This action will raise the fees charged to users of grading services. The AMS estimates that overall, this rule will yield an additional $1,400,000 during FY 2006. The hourly rate for resident and nonresident service will increase by approximately 5.8 percent and the fee rate will increase by approximately 8.3 percent. The impact of these rate changes in a poultry plant will range from about 0.0075 to 0.10 cents per pound of poultry handled. In a shell egg plant, the range will be less than 0.037 to 0.466 cents per dozen eggs handled.

Civil Justice Reform

This action has been reviewed under Executive Order 12988, Civil Justice Reform. This action is not intended to have retroactive effect. This rule will not preempt any State or local laws, 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, September 25, 2005, will coincide with the first billing period in FY 2006.

List of Subjects

7 CFR Part 56

• Eggs and egg products
• Food grades and standards
• Food labeling
• Reporting and recordkeeping requirements

7 CFR Part 70

• Food grades and standards
• Food labeling
• Poultry and poultry products
• Rabbits and rabbit products
• Reporting and recordkeeping requirements

For reasons set forth in the preamble, title 7, Code of Federal Regulations, parts 56 and 70 are amended as follows:

PART 56—GRADING OF SHELL EGGS

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

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

2. Section 56.46 is revised to read as follows:

§ 56.46

On a fee basis.

(a) Unless otherwise provided in this part, the fees to be charged and collected for any service performed, in accordance with this part, on a fee basis shall be based on the applicable rates specified in this section.

(b) Fees for grading services will be based on the time required to perform the services. The hourly charge shall be $65.00 and shall include the time actually required to perform the grading, waiting time, travel time, and any clerical costs involved in issuing a certificate.

(c) Grading services rendered on Saturdays, Sundays, or legal holidays shall be charged for at the rate of $75.12 per hour. Information on legal holidays is available from the Supervisor.

3. In § 56.52, paragraph (a)(4) is revised to read as follows:

§ 56.52

Continuous grading performed on resident basis.

* * * * *

(a) * * *

(4) An administrative service charge based upon the aggregate number of 30-dozen cases of all shell eggs handled in the plant per billing period multiplied by $0.051, except that the minimum charge per billing period shall be $260 and the maximum charge shall be $2,875. The minimum charge also applies where an approved application is in effect and no product is handled.

PART 70—VOLUNTARY GRADING OF POULTRY PRODUCTS AND RABBIT PRODUCTS

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

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

5. Section 70.71 is revised to read as follows:

§ 70.71

On a fee basis.

(a) Unless otherwise provided in this part, the fees to be charged and collected for any service performed, in accordance with this part, on a fee basis shall be based on the applicable rates specified in this section.

(b) Fees for grading services will be based on the time required to perform such services for class, quality, quantity (weight test), or condition, whether ready-to-cook poultry, ready-to-cook rabbits, or specified poultry food products are involved. The hourly charge shall be $65.00 and shall include the time actually required to perform the work, waiting time, travel time, and any clerical costs involved in issuing a certificate.

(c) Grading services rendered on Saturdays, Sundays, or legal holidays shall be charged for at the rate of $75.12 per hour. Information on legal holidays is available from the Supervisor.

6. In § 70.77, paragraph (a)(4) is revised to read as follows:

§ 70.77

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

* * * * *

(a) * * *

(4) For poultry grading: An administrative service charge based upon the aggregate weight of the total volume of all live and ready-to-cook poultry handled in the plant per billing period computed in accordance with the following: Total pounds per billing period multiplied by $0.00039, except that the minimum charge per billing period shall be $260 and the maximum charge shall be $2,875. The minimum charge also applies where an approved application is in effect and no product is handled.

* * * * *

Dated: July 19, 2005.

Kenneth C. Clayton,

Acting Administrator, Agricultural Marketing Service.