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.

Proposed Rules Federal Register

53633 

Vol. 79, No. 175 

Wednesday, September 10, 2014 

DEPARTMENT OF AGRICULTURE 

Agricultural Marketing Service 

7 CFR Parts 27, 28, 29, 51, 52, 54, 56, 

58, 62, 70, 75, and 91 

[Document Number AMS–LPS–13–0050] 

RIN 0581–AD36 

Process for Establishing Rates 

Charged for AMS Services 

AGENCY: Agricultural Marketing Service, 

USDA. 

ACTION: Proposed rule. 

SUMMARY: The Agricultural Marketing 

Service (AMS) is proposing to amend its 

regulations to provide for a set of 

standardized formulas by which fees are 

calculated. The methodology used to 

calculate and implement the fees 

charged by AMS user-funded programs 

would be specified in the regulations. 

Currently, AMS publishes separate rules 

for each of the service fees it collects. 

The fees are calculated using formulas 

to account for all costs incurred by AMS 

in providing these services. Each year, 

fees would be announced in a notice in 

the Federal Register by June 1 and take 

effect at the start of the fiscal year, crop 

year, or as required by specific laws. 

This would provide greater 

transparency to the customers we serve 

as to how the fees are derived. 

The standardized formulas would be 

used to calculate fees that AMS charges 

for providing voluntary grading, 

inspection, certification, auditing and 

laboratory services for a variety of 

agricultural commodities including 

meat and poultry, fruits and vegetables, 

eggs, dairy products, and cotton and 

tobacco. The fees would also apply to 

those persons requesting such services 

including producers, handlers, 

processors, importers and exporters. 

Fees charged for inspection of fruits, 

vegetables, and specialty crops subject 

to the Agricultural Marketing 

Agreement Act of 1937 also would be 

affected by this rule. 

Provisions of this proposed rule 

would not supersede rates established 

by Memorandum of Understanding, 

Marketing Orders, or by cooperative 

agreements already in place. 

Furthermore, the cotton program would 

continue to consult with its industry 

before rates are established. 

DATES: Comments must be received by 

October 10, 2014. 

ADDRESSES: AMS invites interested 

persons to submit comments on this 

proposed rule. Comments may be 

submitted through the Federal 

eRulemaking portal. This Web site 

provides the ability to type short 

comments directly into the comment 

field on the Web page or attach a file 

containing lengthier comments. Go to 

http://www.regulations.gov and follow 

the online instructions at that site for 

submitting comments. All comments 

submitted by mail or electronic mail 

must include the Agency name and 

docket number AMS–LPS–13–0050. 

Comments received in response to this 

docket will be made available for public 

inspection and posted without change, 

including any personal information, to 

http://www.regulations.gov. 

FOR FURTHER INFORMATION CONTACT: For 

further information concerning policy 

issues contact, Melissa R. Bailey, Ph.D., 

AMS, U.S. Department of Agriculture, 

Room 3069–S, 1400 Independence Ave. 

SW., Washington, DC 20250; telephone 

(202) 720–5115, fax (202) 720–8477. 

SUPPLEMENTARY INFORMATION: 

Background 

The Agricultural Marketing Act of 

1946, as amended, (AMA) (7 U.S.C. 

1621–1627), provides for the collection 

of fees to cover costs of various 

inspection, grading, certification or 

auditing services covering many 

agricultural commodities and products. 

The AMA also provides for the recovery 

of costs incurred in providing laboratory 

services. The Cotton Statistics and 

Estimates Act (7 U.S.C. 471–476) and 

the U.S. Cotton Standards Act (7 U.S.C. 

51–65) provide for classification of 

cotton and development of cotton 

standards materials necessary for cotton 

classification. The Cotton Futures Act (7 

U.S.C. 15b) provides for futures 

certification services and the Tobacco 

Inspection Act (7 U.S.C. 511–511s) 

provides for tobacco inspection and 

grading. These Acts also provide for the 

recovery of costs associated with these 

services. This proposal would set 

formulas to calculate these fees and any 

other fee currently being charged under 

these statutes. The table below shows 

the program regulations and types of 

fees charged for AMS services. 

Cotton Fees 

Cotton Statistics and Estimates Act (7 U.S.C. 471–476). 

U.S. Cotton Standards Act (7 U.S.C. 51–65). 

Cotton Futures Act (7 U.S.C. 15b). 

7 CFR Part 27—Cotton Classification Under Cotton Futures Legislation. 

Subpart A—Regulations; §§ 27.80–27.90; Costs of Classifications and Micronaire. 

7 CFR Part 28—Cotton Classing, Testing, and Standards. 

Subpart A—Regulations Under the United States Cotton Standards Act; §§ 28.115–28.126; Fees and Costs. 

Subpart D—Cotton Classification and Market News Service for Producers: 

§§ 28.909; Costs. 

§§ 28.910; Classification of samples and issuance of classification data. 

§§ 28.911; Review classification. 

Dairy Fees 

The Agricultural Marketing Act of 1946, as amended, (AMA) (7 U.S.C. 1621–1627). 

7 CFR Part 58—Grading and Inspection, General Specifications for Approved Plants and Standards for Grades of Dairy Products. 

Subpart A—Regulations Governing the Inspection and Grading Services of Manufactured or Processed Dairy Products; §§ 58.38–58.46;

Fees and Charges. 


tkelley on DSK3SPTVN1PROD with PROPOSALS
53634 Federal Register / Vol. 79, No. 175 / Wednesday, September 10, 2014 / Proposed Rules 

Fruit and Vegetable Fees 

The Agricultural Marketing Act of 1946, as amended, (AMA) (7 U.S.C. 1621–1627). 

7 CFR Part 51—Fresh Fruits, Vegetables and Other Products (Inspection, Certification, and Standards). 

Subpart A—Regulations: 

§§ 51.37–51.44; Schedule of Fees and Charges at Destination Markets. 

§§ 51.45; Schedule of Fees and Charges at Shipping Point Areas. 

7 CFR Part 52—Processed Fruits and Vegetables, Processed Products Thereof, and Other Processed Food Products. 

Subpart—Regulations Governing Inspection and Certification; §§ 52.41–52.51; Fees and Charges. 

Meat and Livestock Fees 

The Agricultural Marketing Act of 1946, as amended, (AMA) (7 U.S.C. 1621–1627). 

7 CFR Part 54—Meats, Prepared Meats, and Meat Products (Grading, Certification, and Standards). 

Subpart A—Regulations; §§ 54.27–54.28; Charges for Service. 

7 CFR Part 54—Meats, Prepared Meats, and Meat Products (Grading, Certification, and Standards). 

Subpart C—Regulations Governing the Certification of Sanitary Design and Fabrication of Equipment Used in the Slaughter, Processing 

and Packaging of Livestock and Poultry Products; §§ 54.1028; Charges for Service. 

7 CFR Part 62—Livestock, Meat and Other Agricultural Commodities (Quality Systems Verification Programs). 

Subpart A—Quality Systems Verification Definitions §§ 62.300; Fees and Other Costs for Service. 

7 CFR Part 75—Regulations for Inspection and Certification of Quality of Agricultural and Vegetable Seeds; §§ 75.41; General. 

Poultry Fees 

The Agricultural Marketing Act of 1946, as amended, (AMA) (7 U.S.C. 1621–1627). 

7 CFR Part 56—Voluntary Grading of Shell Eggs. 

Subpart A—Grading of Shell Eggs; §§ 56.45–56.54; Fees and Charges. 

7 CFR Part 70—Voluntary Grading of Poultry and Rabbit Products. 

Subpart A—Grading of Poultry and Rabbit Products; §§ 70.70–70.78; Fees and Charges. 

Science and Technology Fees 

The Agricultural Marketing Act of 1946, as amended, (AMA) (7 U.S.C. 1621–1627). 

7 CFR Part 91—Services and General Information (Science and Technology). 

Subpart I—Fees and Charges; §§ 91.37–91.45. 

Tobacco Fees 

Tobacco Inspection Act (7 U.S.C. 511–511s). 

7 CFR Part 29—Tobacco Inspection. 

Subpart B—Regulations; §§ 29.123–29.129; Fees and Charges. 

Subpart F—Policy Statement and Regulations Governing the Identification and Certification of Non-quota Tobacco Produced and Marketed 

in Quota Area; §§ 29.9251; Fees and Charges. 

Grading, inspection and verification 

programs facilitate the movement of 

agricultural products through marketing 

channels—from growers to wholesalers, 

retailers and consumers—in a quick, 

efficient, and equitable manner. These 

services include the grading, inspection 

or certification of quality factors in 

accordance with established U.S. Grade 

Standards; audits or accreditation 

according to International Organization 

for Standardization (ISO) standards and/ 

or Hazard Analysis and Critical Control 

Point (HACCP) principles; and other 

marketing claims. The quality grades 

serve as a basis to reflect the value of 

agricultural commodities to both 

producers and consumers. AMS’ 

grading and quality verification and 

certification, audit and accreditation, 

plant process and equipment 

verification, and laboratory approval 

services are voluntary tools paid for by 

the users on a fee-for-service basis. The 

agriculture industry can use these tools 

to promote and communicate the 

quality of agricultural commodities to 

consumers. Laboratory services are 

provided for analytic testing, including 

but not limited to chemical, 

microbiological, biomolecular, and 

physical analyses. 

Approximately 70 percent of AMS’ 

operational budget is derived from fees 

assessed for services provided to 

agricultural industries. Changes in feefor-service rates may result from 

fluctuating customer needs, increases in 

employee salary and benefit expenses, 

inflationary impact on non-labor 

operating expenses and fixed costs, and/ 

or uncollected revenue (bad debt). 

Currently, each AMS program 

individually proposes a fee change 

when a revenue shortfall is anticipated 

for a specific program or activity. As a 

result, these changes do not appear in a 

single unified fee schedule. Lack of 

certainty as to when annual fees will be 

announced may affect fiscal planning 

for the users of the services, especially 

if fees are changed in the middle of a 

contract or harvest season. In addition, 

because of the separate and repetitive 

use of the agency rulemaking process, 

programs can experience delays in 

recovering the full cost of the services 

they provide. 

As a result, a number of AMS 

programs amended their regulations to 

provide for multi-year annual fee 

changes that were established by a 

single rulemaking action. While this 

enabled the Agency to collect revenue 

based on a revised fee each year, 

estimates used to set the projected 

annual rates did not always result in the 

Agency collecting revenues sufficient to 

cover its costs. Instead, in some 

instances, the Agency recovered partial 

costs. 

In order to provide both transparency 

and predictability to the industries 

served and to allow the Agency to 

effectively plan for staffing, investments 

in infrastructure, and other resources, 

AMS is proposing to amend its 

regulations to provide for a set of 

standardized formulas by which fees are 

calculated. This process would use 

formulas established to determine fees 

for AMS’s grading, inspection, 

certification, auditing, and laboratory 

services that would cover expected costs 

while maintaining a reasonable reserve. 

AMS Programs are required to sustain a 

certain minimum level of reserve funds 

in order to maintain fiscal responsibility 

should the program area undergo 

closure. Each Program reserve level is 

affected by factors such as number of 

employees, salaries, benefits, contracted 

obligations, and other items. 

This rulemaking is similar to one 

conducted by the USDA Food Safety 

and Inspection Service (FSIS) and 

published in the Federal Register on 

April 12, 2011 (76 FR 20220). FSIS 

established formulas for calculating 

basetime, overtime, holiday, and 

laboratory services user fee rates in its 

final rule. 


tkelley on DSK3SPTVN1PROD with PROPOSALS
Federal Register / Vol. 79, No. 175 / Wednesday, September 10, 2014 / Proposed Rules 53635 

Currently, AMS performs financial 

analyses on an annual basis to 

determine whether the current fees are 

adequate to recover the costs incurred 

for providing these services. Historical 

or prior year cost and workload data, 

along with applicable projections are 

used to generate estimates of future 

obligations and revenues. This proposal 

would specify that the rates be based on 

the actual cost and workload data of the 

previous fiscal year(s) or accounting 

period(s) (e.g. crop year) used by 

respective programs. On the basis of 

these analyses and using the proposed 

formulas, AMS would determine the 

fees necessary to sustain program 

services. This would increase 

predictability and provide information 

for planning purposes for the industries 

utilizing AMS user fee services. 

The components (costs) that AMS will 

use to calculate the rates for services are 

the same costs used in calculating past 

rates. 

COMPARISON OF CURRENT VERSUS PROPOSED SERVICE CHARGES (COSTS) 

Current charges Proposed charges 

Direct pay ................................................................................................. Direct pay. 

Cost of living ............................................................................................. Cost of living. 

Benefits ..................................................................................................... Benefits. 

Indirect costs (AMS support—‘‘overhead’’, bad debt) .............................. Operating costs (training, equipment, reserve fund, AMS support— 

‘‘overhead’’, and other related expenses). 

See indirect costs ..................................................................................... Bad debt. 

Reserve .................................................................................................... See operating costs.

Training, equipment and other related expenses .................................... See operating costs. 

Travel (if applicable) ................................................................................. Travel (if applicable). 

Overtime, holiday, Saturday, Sunday, and night differential as per OPM 

guidelines.

Overtime, holiday, Saturday, Sunday, and night differential as per OPM 

guidelines. 

As required by the Cotton Statistics 

and Estimates Act (7 U.S.C. 471–476), 

consultations regarding the 

establishment of the fee for cotton 

classification with U.S. cotton industry 

representatives will continue. 

Representatives of all segments of the 

cotton industry, including producers, 

ginners, bale storage facility operators, 

merchants, cooperatives, and textile 

manufacturers would continue to be 

addressed in various industrysponsored forums. 

Provisions of this proposed rule 

would not supersede rates established 

by Memoranda of Understanding, 

Marketing Orders, cooperative 

agreements or other similar instruments. 

Under MOU, cooperative agreements, 

and similar instruments, fees are 

established based on specific 

agreements specified with an individual 

entity such as a State or university. 

The outcome of this proposal would 

be a transparent system for establishing 

fee rates for all AMS user fee programs, 

whereby financial and resource needs 

for continued operation are reviewed on 

a pre-determined cycle, using 

established formulas. This would avoid 

financial crises that may occur when 

reserve funds are rapidly depleted due 

to unanticipated business events, and 

would allow the Agency to more 

quickly adjust the cost of the services it 

provides. The information would also 

greatly benefit AMS customers by 

allowing them to better plan for the cost 

of AMS services. 

Currently, AMS publishes a rule for 

each of the service fees it collects. This 

rulemaking action supports the 

government’s initiative to streamline 

processes (Streamlining Government 

Report GAO 11–908, September 2011) 

and reduces the number of regulations 

that are published by issuing one 

regulation containing the formulas and 

one notice a year to announce all user 

fees. This action also supports the 

Department’s goal of formalizing 

processes to integrate openness, 

transparency, participation and 

collaboration (USDA Open Government 

Plan, April 7, 2010) into AMS’s every 

day operations. 

With this action, AMS is proposing to 

amend its regulations in 7 CFR parts 27, 

28, 29, 51, 52, 54, 56, 58, 62, 70, 75, and 

91 by making public the formulas it uses 

to calculate user-fee rates. Making the 

standardized formulas a part of the 

regulations would allow AMS to 

announce annual fees in a yearly 

Federal Register notice, starting with 

the effective date of this rule and for 

subsequent years, by June 1 each year or 

as required by specific laws. The fee 

rates would be effective at the beginning 

of the following fiscal year, crop year, or 

as required by specific laws and 

identified in the yearly notice. The 

yearly notice will include all rates 

charged by AMS including some that 

are not currently part of regulations. The 

yearly notice would include a per-hour 

rate and, in some instances, the 

equivalent per-unit cost. The per-unit 

cost will be provided to facilitate 

understanding of the costs associated 

with the services to the industries that 

historically use a unit-cost basis for 

payment. In those cases where per-unit 

cost is necessary, the formulas would 

have an additional step to convert per 

hour costs to per unit costs. This 

process is currently followed for cotton 

and some fruit and vegetable user fee 

services. 

Travel costs are also part of the costs 

that are charged for user fee services. 

Currently, in some instances, travel 

costs are already included in the fee 

charged for service. In other instances, 

travel costs are added to the fee. In both 

instances, travel costs are charged to the 

recipient of the service. The annual 

notice would maintain the same 

procedure currently used for recovering 

travel costs. 

AMS is also making several 

administrative changes and corrections 

to language in the regulations that is 

obsolete, such as changing ‘‘diskette’’ to 

‘‘electronic means’’. 

Definitions 

In order to provide additional clarity, 

AMS defines the following terms used 

throughout this document as follows: 

Bad Debt—Accounts receivable that 

will likely remain uncollectable and 

will be written off. 

Benefits—various non-wage 

compensation provided to employees in 

addition to their normal wages or 

salaries. Examples of items included in 

this category are health and 

unemployment insurance, retirement, 

workers compensation, Thrift Savings 

Plan contributions, and other similar 

compensation. 

Cost of Living Adjustment—the cost of 

maintaining a certain standard of living 

based on the economic assumptions in 

the Office of Management and Budget 

(OMB), ‘‘Update to Civilian Position 

Full Fringe Benefit Cost Factor, Federal 


tkelley on DSK3SPTVN1PROD with PROPOSALS
53636 Federal Register / Vol. 79, No. 175 / Wednesday, September 10, 2014 / Proposed Rules 

1The current minimum charge for some services 

covered by these rates is 30 minutes. 

Pay Raise Assumptions, and Inflation 

Factors used in OMB Circular A–76, 

Performance of Commercial Activities’’. 

Direct Hours—the regular hours 

worked by employees of the Agency. 

This does not include overtime or 

holiday hours. 

Direct Pay—monetary compensation 

paid to employees of AMS for work 

performed. Pay is based on the U.S. 

Office of Personnel Management pay 

rate tables. It may include night and 

Sunday differential costs. 

Holiday—the official days of the 

calendar year established by law (5 

U.S.C. 6103) or identified by Executive 

Order as Federal holidays. 

Hour—measure by which grading, 

certification, inspection, classification, 

laboratory or other services cost is based 

and expenses are charged. 

Indirect Cost—this cost includes 

program and AMS activities that 

support the services provided to the 

industry. Another common term for this 

cost category is ‘‘overhead’’. 

Operating Reserve—funds above 

expected obligations required to 

effectively manage uncertainties in 

demand and cash flow timing. 

Operating Cost—costs attributed to 

performing grading, inspection, 

certification, or laboratory services 

duties (i.e. training, equipment, and 

other such costs), plus operating 

reserve, plus indirect costs. 

Overtime—hours worked in excess of 

the approved schedule. Work performed 

after the first 8 hours per day or 40 

hours per week is considered overtime. 

Regular Rate—the cost per hour for 

work provided in accordance with an 

applicant contract. Under Federal labor 

laws, this rate applies to the first 8 

hours per day, or first 40 hours worked 

per week by AMS employees. 

Unit—any measurement that there is 

one of. For example, one bale of cotton 

or one truck load of vegetables. 

Proposed Formulas for Regular, 

Overtime, and Holiday Rates 

With this rulemaking, AMS proposes 

to amend its regulations to provide a set 

of standardized formulas by which fees 

are calculated. The methodology used to 

calculate and implement the fees 

charged by AMS user-funded programs 

would be specified in 7 CFR parts 27, 

28, 29, 51, 52, 54, 56, 58, 62, 70, 75, and 

91. 

AMS would use these formulas to 

calculate annual fee rates starting with 

the effective date of this rule and for 

subsequent years. AMS will publish the 

specific formulas used to calculate 

service fees. AMS intends to announce 

the actual annual fee rates in a Federal 

Register notice by June 1 each year or 

as required by specific laws. These fees 

would be effective at the beginning of 

the following fiscal year, crop year, or 

as required by specific laws. 

Salary, hours, and most rates used in 

the formulas would be based on the 

prior fiscal year’s (or applicable 

accounting period or historical data) 

actual costs and hours. AMS would 

round the final rates up to make the 

amounts divisible by the quarter hour 

(15 minutes). Fifteen minutes would be 

the minimum charge for services 

covered by these rates.1 Travel costs 

may be part of a fee or may be added 

to the calculated fee. 

Currently, some fees are charged on a 

per unit basis and others are charged on 

a per hour basis. AMS would continue 

to provide costs based on a per hour and 

per unit basis to maintain consistency. 

For cotton and some fruit and vegetable 

programs, per unit costs are determined 

after converting the hourly costs to 

units. 

AMS is proposing the following 

formulas: 

Regular Rate—The total AMS grading, 

inspection, certification, classification, 

audit, or laboratory service program 

personnel direct pay divided by direct 

hours for the previous year, which is 

then multiplied by the next year’s 

percentage of cost of living increase, 

plus the benefits rate, plus the operating 

rate, plus the allowance for bad debt 

rate. If applicable, travel expenses may 

also be added to the cost of providing 

the service. 

An example of the calculation would 

look like this: [FY 2013 Direct Pay 

divided by Total Direct Hours 

($2,663,407/82,985) = $32.10, plus 

($32.10 * 1.7% (2014 cost of living 

increase)) = $32.64 + $10.04 (benefits 

rate) + $28.90 (operating rate) + $.01 

(bad debt allowance rate) = $71.59 

(rounded to $71.60); rounding is done to 

reflect billable quarter hour increments 

of 15 minutes. If applicable, travel 

expenses may also be added. 

Overtime Rate—The total AMS 

grading, inspection, certification, 

classification, audit, or laboratory 

service program personnel direct pay 

divided by direct hours, which is then 

multiplied by the next year’s percentage 

of cost of living increase and then 

multiplied by 1.5, plus the benefits rate, 

plus the operating rate, plus an 

allowance for bad debt. If applicable, 

travel expenses may also be added to 

the cost of providing the service. 

An example of the calculation will 

look like this: [FY 2013 Direct Pay 

divided by Total Direct Hours 

($2,663,407/82,985) = $32.10, plus 

($32.10 * 1.7% (2014 cost of living 

increase)) = $32.64, multiplied by 1.5 

($32.64 * 1.5 (overtime rate)) = $48.96 

+ $10.04 (benefits rate) + 28.90 

(operating rate) + $.01 (bad debt 

allowance rate) = $87.91 (rounded to 

$87.92); rounding is done to reflect 

billable quarter hour of 15 minutes. If 

applicable, travel expenses may also be 

added. 

Holiday Rate—The total AMS 

grading, inspection, certification, 

classification, audit, or laboratory 

service program personnel direct pay 

divided by direct hours, which is then 

multiplied by the next year’s percentage 

of cost of living increase and then 

multiplied by 2, plus benefits rate, plus 

the operating rate, plus an allowance for 

bad debt. If applicable, travel expenses 

may also be added to the cost of 

providing the service. 

An example of the calculation will 

look like this: [FY 2013 Direct Pay 

divided by Total Direct Hours 

($2,663,407/82,985) = $32.10, plus 

($32.10 * 1.7% (2014 cost of living 

increase)) = $32.64, multiplied by 2 

($32.64 * 2 (double time or Holiday 

rate)) = $65.28 + $10.04 (benefits rate) 

+ $28.90 (operating rate) + $.01 (bad 

debt allowance rate) = $104.23 (rounded 

to $104.24); rounding is done to reflect 

billable quarter hour increments of 15 

minutes. If applicable, travel expenses 

may also be added. 

Formula calculations are based on 

prior fiscal year’s actual costs or 

historical costs, workload data, 

projection of expenses impacting 

program costs, cost of living increase 

and inflation. Cost of living increases 

and inflation factors are based on the 

economic assumptions from 2013–2023 

which have been updated in the Office 

of Management and Budget’s (OMB) FY 

2014 Mid-Session Review. Rather than 

codify a reference to this OMB budget 

document in the proposed rule, each 

year AMS intends to use the most recent 

economic factors released by OMB for 

budget development purposes to 

determine cost impacts for these user 

fee activities. 

Proposed Formulas for the Benefits, 

Operating, and Allowance for Bad Debt 

Rates 

As proposed, AMS intends to derive 

the components of proposed formulas 

above, using previous fiscal year’s 

actual costs/historical costs, as follows: 

Benefits Rate—The total AMS 

grading, inspection, classification, 

certification, audit, or laboratory service 

program direct benefits costs divided by 

the total hours worked (regular, 

overtime, and holiday), which is then 


tkelley on DSK3SPTVN1PROD with PROPOSALS
Federal Register / Vol. 79, No. 175 / Wednesday, September 10, 2014 / Proposed Rules 53637 

2Currently, there is no mandatory inspection and 

grading of tobacco under the Tobacco Inspection 

Act (7 U.S.C. 511–511s). 

3Fees charged for inspection of fruits, vegetables, 

and specialty crops subject to the Agricultural 

Marketing Agreement Act of 1937 also would be 

affected by this rule. 

multiplied by the next calendar year’s 

percentage cost of living increase. 

An example of the calculation will 

look like this: [2013 Direct Benefits cost/ 

(Total hours + Total Overtime hours + 

Total Holiday hours) ($819,207/82,985)] 

= $9.87, plus ($9.87 * 1.7% (2014 Cost 

of Living)) = $10.04. 

Operating Rate—The total AMS 

grading, inspection, classification, 

certification, audit, or laboratory service 

program operating costs divided by total 

hours worked (regular, overtime, and 

holiday), which is then multiplied by 

the percentage of inflation. 

An example of the calculation will 

look like this: [2013 Total Operating 

Costs/(Total hours + Total Overtime 

hours + Total Holiday hours) 

($2,351,857/82,985)] = $28.34, plus 

($28.34 * 2% (2014 Inflation)) = $28.90. 

Allowance for Bad Debt Rate—Total 

AMS grading, inspection, classification, 

certification, audit, or laboratory service 

program allowance for bad debt divided 

by total hours worked (regular, 

overtime, and holiday). 

An example of the calculation will 

look like this: [2013 Total Bad Debt 

cost/(Total hours + Total Overtime 

hours + Total Holiday hours) ($1,000/

82,985) = $ 0.01. 

As noted above, the proposed 

formulas reflect that the cost of 

providing services include both direct 

and indirect costs. Direct costs include 

the cost of salaries, employee benefits, 

and if applicable, travel and some 

operating costs. Indirect or overhead 

costs include the cost of program and 

Agency activities supporting the 

services provided to the industry. 

Indirect cost expenditures are allocated 

across the Agency for each direct hour 

of grading, inspection, classification, 

certification, auditing, or laboratory 

service provided. For purposes of these 

formulas, indirect costs have been 

included as part of operating costs. 

Executive Order 12866 and Executive 

Order 13563 

Executive Orders 12866 and 13563 

direct agencies to assess all costs and 

benefits of available regulatory 

alternatives and, if regulation is 

necessary, to select regulatory 

approaches that maximize net benefits 

(including potential economic, 

environmental, public health and safety 

effects, distributive impacts, and 

equity). Executive Order 13563 

emphasizes the importance of 

quantifying both costs and benefits, of 

reducing costs, of harmonizing rules, 

and of promoting flexibility. This 

proposed rule is not a significant 

regulatory action under section 3(f) of 

Executive Order 12866, Regulatory 

Planning and Review, as supplemented 

by Executive Order 13563. The Office of 

Management and Budget has not 

reviewed this proposal under these 

Orders. 

Executive Order 13175 

This rule has been reviewed in 

accordance with the requirements of 

Executive Order 13175, Consultation 

and Coordination with Indian Tribal 

Governments. The review reveals that 

this regulation would not have 

substantial and direct effect on Tribal 

governments and would not have 

significant Tribal implications. 

Executive Order 12988 

This proposed rule has been reviewed 

under Executive Order 12988, Civil 

Justice Reform. This proposed rule: (1) 

Has no retroactive effect; and (2) does 

not require administrative proceedings 

before parties may file suit in court 

challenging this rule. 

Regulatory Flexibility Act 

The Regulatory Flexibility Act (RFA) 

(5 U.S.C. 601–612) requires agencies to 

consider the economic impact of each 

rule on small entities and evaluate 

alternatives that would accomplish the 

objectives of the rule without unduly 

burdening small entities or erecting 

barriers that would restrict their ability 

to compete in the market. The purpose 

is to fit regulatory actions to the scale of 

businesses subject to the action. Section 

605 of the RFA allows an agency to 

certify a rule, in lieu of preparing an 

analysis, if the rulemaking is not 

expected to have a significant economic 

impact on a substantial number of small 

entities. 

Most small agricultural service firms 

have been defined by the Small 

Business Administration (SBA) (13 CFR 

121.201) as those having annual receipts 

of less than $7,000,000. For certain 

types of businesses (e.g., dairy, egg, and 

meat processing; handlers of produce), 

the SBA considers a small entity as 

those that employ less than 500 

employees. 

The grading, inspection, certification 

and auditing services provided under 

these regulations are voluntary.2 3 The 

benefits of using grading, inspection, 

certification, auditing, and laboratory 

services outpace the costs of obtaining 

these services. These services are used 

by meat and poultry establishments, 

fruit and vegetable handlers and 

processors, egg processing plants, dairy 

processors, users of cotton and tobacco 

program services, importers and 

exporters of the above commodities, and 

other interested persons to determine 

quality and prices of their products. 

AMS estimates that approximately 

849 entities use voluntary meat grading 

and certification services. This estimate 

includes 413 egg, poultry, and rabbit 

packing plants that use the USDA grade 

shield. Of these 413 plants, 

approximately fifteen percent would be 

considered a small business under the 

SBA criteria. The remaining 436 entities 

includes livestock slaughterers, brokers, 

meat and other processors, distributors, 

organic certification companies, trade 

associations, State and Federal entities, 

and livestock producers and feeders. Of 

these 436 entities, approximately 70 

percent would be considered a small 

business under the SBA criteria. 

AMS estimates that 60 cotton 

merchants use AMS services for cotton 

futures classification, 20,000 cotton 

producers and 637 cotton gins use AMS 

services for normal cotton classification, 

and 125 tobacco customers use AMS 

services. Of these entities, 

approximately 80 percent would be 

considered a small business under the 

SBA criteria. 

AMS estimates that, over the last two 

fiscal years, we provided user fee 

services to an average of 2,308 fruit and 

vegetable companies for fresh products. 

AMS estimates that, over the last two 

fiscal years, we provided user fee 

services to an average of 1,087 fruit and 

vegetable companies for processed 

products. We estimate that 

approximately 98 percent of these 3,395 

companies would be considered a small 

business under the SBA criteria. The 

number of entities referenced above 

includes those subject to the provisions 

of the Agricultural Marketing 

Agreement Act of 1937. 

AMS estimates that 360 dairy plants 

use AMS’ dairy grading and inspection 

services. We believe that approximately 

96 percent of these plants would be 

considered a small business under the 

SBA criteria. 

AMS considered the economic impact 

of this action on these small entities. 

The proposed formulas would have a 

minimal impact on entities that request 

these services. The difference in fee 

rates would be negligible since the costs 

used in the formulas to calculate the 

current and future fees would remain 

the same. For example, it is expected 

that the Dairy user fee would change 

from $76 per hour to $78 per hour under 

the proposed formulas. AMS has not 

updated several of its programs’ user 


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fees for a number of years. For those fees 

that have not been updated recently, 

there may be a change in fees. These 

possible changes would be the result of 

using current economic data and cost 

estimates to calculate the fee rates. AMS 

would take into consideration, when 

appropriate, economic and industry 

conditions before adjusting fees. The 

process would maintain up-to-date fees. 

By including the formulas used to 

calculate annual user fee rates in the 

regulations, the Agency would 

streamline the rulemaking process to 

help ensure that fees are effective at the 

beginning of each fiscal year or other 

period as required by law. Fees would 

cover inflation and national and locality 

pay raises but would not support any 

new budgetary initiative. Any cost 

changes are similar to other changes that 

the industry would experience because 

of inflation and wage increases. 

The outcome of this proposal would 

be a transparent system for establishing 

fee rates for all AMS user fee programs, 

whereby financial and resource needs 

for continued operation are reviewed on 

a pre-determined cycle, using 

established formulas. This would avoid 

financial crises that occur when reserve 

funds are rapidly depleted due to 

unanticipated business events, and 

would allow the Agency to more 

quickly adjust the cost of the services it 

provides. The information would also 

greatly benefit AMS customers by 

allowing them to better plan for the cost 

of AMS services. 

The total volume of commodities 

graded, inspected and certified under 

the associated regulations in 2012 was 

approximately 91 billion pounds. An 

overall increase in cost per pound of 

product associated with the new fees is 

estimated at $.0002. Even in competitive 

industries such as fruit and vegetables, 

meat, poultry, dairy and eggs, this 

amount of increase in costs would have 

an insignificant impact on profits and 

processes. Accordingly, AMS certifies 

that this rule will not have a significant 

economic impact on a substantial 

number of small entities. 

Paperwork Reduction Act 

This rule does not contain any new 

information collection or recordkeeping 

requirements that are subject to the 

Office of Management and Budget 

(OMB) approval under the Paperwork 

Reduction Act, 44 U.S.C. Chapter 35. 

E-Government Act 

AMS and USDA are committed to 

achieving the purposes of the EGovernment Act (44 U.S.C. 3601, et 

seq.) by, among other things, promoting 

the use of the Internet and other 

information technologies and providing 

increased opportunities for citizen 

access to Government information and 

services, and for other purposes. 

Public awareness of all segments of 

rulemaking and policy development is 

important. Consequently, in an effort to 

ensure that all interested parties, 

including minorities, women, and 

persons with disabilities are aware of 

this notice, AMS will announce it 

online and make copies of this Federal 

Register publication available through 

the AMS Web page located at http:// 

www.ams.usda.gov/AMSv1.0/. In 

addition, AMS offers a subscription 

service which provides automatic and 

customized access to selected 

agricultural commodity news and 

information. Further, each program will 

make a concerted effort to inform their 

respective industries while performing 

inspections and providing services. 

Finally, USDA has not identified any 

relevant Federal rules that duplicate, 

overlap, or conflict with this proposed 

rule. 

A 30-day comment period is provided 

to allow interested persons to respond 

to this proposal. Thirty days is deemed 

appropriate because this action needs to 

be in place no later than March 2015 to 

allow sufficient time for fees to be 

published and the industry to be 

notified. Further, this action does not 

change the services for which fees are 

charged. All written comments received 

in response to this rule by the date 

specified will be considered prior to 

finalizing this action. 

List of Subjects 

7 CFR Part 27 

Commodity futures, Cotton. 

7 CFR Part 28 

Administrative practice and 

procedure, Cotton, Reporting and 

recordkeeping requirements, 

Warehouses. 

7 CFR Part 29 

Administrative practice and 

procedure, Advisory committees, 

Government publications, Imports, 

Pesticide and pests, Reporting and 

recordkeeping requirements, Tobacco. 

7 CFR Part 51 

Agricultural commodities, Food 

grades and standards, Fruits, Nuts, 

Reporting and recordkeeping 

requirements, Vegetables. 

7 CFR Part 52 

Food grades and standards, Food 

labeling, Frozen foods, Fruits, Reporting 

and recordkeeping requirements, 

Vegetables 

7 CFR Part 54 

Food grades and standards, Food 

labeling, Meat and meat products, 

Poultry and poultry products. 

7 CFR Part 56 

Eggs and egg products, Food grades 

and standards, Food labeling, Reporting 

and recordkeeping requirements. 

7 CFR Part 58 

Dairy products, Food grades and 

standards, Food labeling, Reporting and 

recordkeeping requirements. 

7 CFR Part 62 

Food grades and standards, Food 

labeling, and Meat and meat products. 

7 CFR Part 70 

Food grades and standards, Food 

labeling, Poultry and poultry products, 

Rabbits and rabbit products, Reporting 

and recordkeeping requirements. 

7 CFR Part 75 

Administrative practice and 

procedure, Agricultural commodities, 

Reporting and recordkeeping 

requirements, Seeds, Vegetables. 

7 CFR Part 91 

Administrative practice and 

procedure, Agricultural commodities, 

Laboratories, Reporting and 

recordkeeping requirements. 

For the reasons set forth in the 

preamble, 7 CFR chapter I is proposed 

to be amended as follows: 

PART 27—COTTON CLASSIFICATION 

UNDER COTTON FUTURES 

LEGISLATION 

■ 1. The authority citation for 7 CFR 

part 27 continues to read as follows: 

Authority: 7 U.S.C. 15b, 7 U.S.C. 473a–b, 

7 U.S.C. 1622(g). 

■ 2. Revise § 27.80 by adding 

paragraphs (a) and (b) and removing 

paragraphs (c) and (d). 

The additions read as follows: 

§ 27.80 Fees; review classification, futures 

classification and supervision. 

* * * * * 

(a) For each calendar year, AMS will 

calculate the rate for services, per hour 

per program employee using the 

following formulas: 

(1) Regular rate. The total AMS 

grading or classification program 

personnel direct pay divided by direct 

hours, which is then multiplied by the 

next year’s percentage of cost of living 

increase, plus the benefits rate, plus the 

operating rate, plus the allowance for 

bad debt rate. If applicable, travel 

expenses may also be added to the cost 

of providing the service. 


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(2) Overtime rate. The total AMS 

grading or classification program 

personnel direct pay divided by direct 

hours, which is then multiplied by the 

next year’s percentage of cost of living 

increase and then multiplied by 1.5 plus 

the benefits rate, plus the operating rate, 

plus an allowance for bad debt. If 

applicable, travel expenses may also be 

added to the cost of providing the 

service. 

(3) Holiday rate. The total AMS 

grading or classification program 

personnel direct pay divided by direct 

hours which is then multiplied by the 

next year’s percentage of cost of living 

increase and then multiplied by 2, plus 

benefits rate, plus the operating rate, 

plus an allowance for bad debt. If 

applicable, travel expenses may also be 

added to the cost of providing the 

service. 

(b) For each calendar year, based on 

historical costs, AMS will calculate the 

benefits, operating, and allowance for 

bad debt components of the regular, 

overtime and holiday rates as follows: 

(1) Benefits rate. The total AMS 

grading or classification program direct 

benefits costs divided by the total hours 

(regular, overtime, and holiday) worked, 

which is then multiplied by the next 

calendar year’s percentage cost of living 

increase. Some examples of direct 

benefits are health insurance, 

retirement, life insurance, and Thrift 

Savings Plan (TSP) retirement basic and 

matching contributions. 

(2) Operating rate. The total AMS 

grading or classification program 

operating costs divided by total hours 

(regular, overtime, and holiday) worked, 

which is then multiplied by the 

percentage of inflation. 

(3) Allowance for bad debt rate. Total 

AMS grading or classification program 

allowance for bad debt divided by total 

hours (regular, overtime, and holiday) 

worked. 

(c) Basis. The calendar year cost of 

living expenses and percentage of 

inflation factors used in the formulas in 

this section are based on the most 

current Office of Management and 

Budget’s Presidential Economic 

Assumptions. 

■ 3. Revise § 27.81 to read as follows: 

§ 27.81 Fees; certificates 

For each new certificate issued in 

substitution for a prior certificate at the 

request of the holder thereof, for the 

purpose of business convenience, or 

when made necessary by the transfer of 

cotton under the supervision of any 

exchange inspection agency as provided 

in § 27.73, the person making the 

request shall pay a fee determined as 

described in § 27.80 of this part. 

PART 28—COTTON CLASSING, 

TESTING, AND STANDARDS 

■ 4. The authority citation for 7 CFR 

part 28, Subpart A, continues to read as 

follows: 

Authority: 7 U.S.C. 55 and 61. 

■ 5. Revise § 28.116 to read as follows: 

§ 28.116 Amounts of fees for 

classification; exemption. 

(a) For the classification of any cotton 

or samples, the person requesting the 

services shall pay a fee, based on the 

description that follows, subject to the 

additional fee provided by paragraph (c) 

of this section. 

(1) For each calendar year, AMS will 

calculate the rate for services per hour 

per program employee using the 

following formulas: 

(i) Regular rate. The total AMS 

grading or classification program 

personnel direct pay divided by direct 

hours, which is then multiplied by the 

next year’s percentage of cost of living 

increase, plus the benefits rate, plus the 

operating rate, plus the allowance for 

bad debt rate. If applicable, travel 

expenses may also be added to the cost 

of providing the service. 

(ii) Overtime rate. The total AMS 

grading or classification program 

personnel direct pay divided by direct 

hours, which is then multiplied by the 

next year’s percentage of cost of living 

increase and then multiplied by 1.5 plus 

the benefits rate, plus the operating rate, 

plus an allowance for bad debt. If 

applicable, travel expenses may also be 

added to the cost of providing the 

service. 

(iii) Holiday rate. The total AMS 

grading or classification program 

personnel direct pay divided by direct 

hours which is then multiplied by the 

next year’s percentage of cost of living 

increase and then multiplied by 2, plus 

benefits rate, plus the operating rate, 

plus an allowance for bad debt. If 

applicable, travel expenses may also be 

added to the cost of providing the 

service. 

(2) For each calendar year, based on 

historical costs, AMS will calculate the 

benefits, operating, and allowance for 

bad debt components of the regular, 

overtime and holiday rates as follows: 

(i) Benefits rate. The total AMS 

grading or classification program direct 

benefits costs divided by the total hours 

(regular, overtime, and holiday) worked, 

which is then multiplied by the next 

calendar year’s percentage cost of living 

increase. Some examples of direct 

benefits are health insurance, 

retirement, life insurance, and Thrift 

Savings Plan (TSP) retirement basic and 

matching contributions. 

(ii) Operating rate. The total AMS 

grading or classification program 

operating costs divided by total hours 

(regular, overtime, and holiday) worked, 

which is then multiplied by the 

percentage of inflation. 

(iii) Allowance for bad debt rate. Total 

AMS grading or classification program 

allowance for bad debt divided by total 

hours (regular, overtime, and holiday) 

worked. 

(3) The calendar year cost of living 

expenses and percentage of inflation 

factors used in the formulas in this 

section are based on the most current 

Office of Management and Budget’s 

Presidential Economic Assumptions. 

(b) When a comparison is requested of 

any samples with a type or with other 

samples, the fees prescribed in 

paragraph (a) of this section shall apply 

to every sample involved, including 

each of the samples of which the type 

is composed. 

(c) An additional fee based on current 

shipping rates shall be assessed for 

returning samples unless the request for 

service is so worded that the samples 

become government property 

immediately after classification. 

(d) For any review of classification or 

comparison of any cotton, the fees 

prescribed in paragraph (a) of this 

section shall apply. The additional fee 

prescribed in paragraph (c) of this 

section is not applicable to review of 

classification if made on the same 

sample as the original class or 

comparison. 

■ 6. Revise § 28.117 to read as follows: 

§ 28.117 Fee for new memorandum or 

certificate. 

For each new memorandum or 

certificate issued in substitution for a 

prior memorandum or certificate at the 

request of the holder, thereof, on 

account of the breaking or splitting of 

the lot of cotton covered thereby or 

otherwise for his business convenience, 

the person requesting such substitution 

shall pay a fee determined as described 

in § 28.116 of this part. If the 

memorandum is provided by electronic 

means, the fee shall be determined 

using the same provisions. 

■ 7. Revise § 28.122 to read as follows: 

§ 28.122 Fee for practical classing 

examination. 

The fee for the practical classing 

examination for cotton shall be 

determined as described in § 28.116 of 

this part. Any applicant who passes the 

examination may be issued a certificate 

indicating this accomplishment. Any 

person who fails to pass the 

examination may be reexamined. The 

fee for this practical reexamination will 


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be determined as described in section 

28.116. 

■ 8. The authority citation for 7 CFR 

part 28, Subpart D, continues to read as 

follows: 

Authority: 7 U.S.C. 51–65; 7 U.S.C. 471– 

476. 

■ 9. Amend § 28.909 by revising 

paragraph (b) to read as follows: 

§ 28.909 Costs. 

* * * * * 

(b) The cost of High Volume 

Instrument (HVI) cotton classification 

service to producers will be based on 

formulas set forth in § 28.116 of this 

part. The proceeds of the sale of cotton 

samples shall be used to defray the costs 

of providing the service under this 

subpart. 

* * * * * 

■ 10. Revise § 28.910 to read as follows: 

§ 28.910 Classification of samples and 

issuances of classification data. 

(a)(1) The samples submitted as 

provided in the subpart shall be 

classified by employees of the Division 

and classification memoranda showing 

the official quality determination of 

each sample according to the official 

cotton standards of the United States 

shall be issued by any one of the 

following methods at no additional 

charge: 

(i) Electronic means, or 

(ii) Telecommunications, with all long 

distance telephone line charges paid by 

the receiver of data. 

(2) When an additional copy of the 

classification memorandum is issued by 

any method listed in paragraph (a)(1) of 

this section, there will be a charge 

determined as described in § 28.116. If 

provided as an additional method of 

data transfer, the minimum fee for each 

method issued shall also be determined 

as described in § 28.116. 

(b) Owners of cotton, other than 

producers, may receive classification 

data showing the official quality 

determination of each sample by means 

of telecommunications from a central 

database to be maintained by the 

Division. The fee for this service shall 

be determined as described in § 28.116, 

with all communication charges paid by 

the receiver of data. 

(c) Upon request of an owner of cotton 

for which classification memoranda 

have been issued under the subpart, a 

new memorandum shall be issued for 

the business convenience of such owner 

without the reclassification of the 

cotton. Such rewritten memorandum 

shall bear the date of its issuance and 

the date or inclusive dates of the 

original classification. The per-hour fee 

for a new memorandum shall be 

determined according to § 28.116, with 

a minimum per-sheet fee determined 

under the same provisions. 

■ 11. Amend § 28.911 by revising 

paragraph (a) and the last sentence in 

paragraph (b) to read as follows: 

§ 28.911 Review classification. 

(a) A producer may request one 

review classification for each bale of 

eligible cotton. The fee for review 

classification shall be determined based 

on the formulas in § 28.116. 

(b) * * * Producers who request 

return of their samples after classing 

will pay a fee determined based on the 

formulas in § 28.116. 

PART 29—TOBACCO INSPECTION 

■ 12. The authority citation for part 29 

is revised to read as follows: 

Authority: 7 U.S.C. 511–511s. 

■ 13. Amend § 29.123 by: 

■ a. Revising the first sentence of 

paragraph (a); 

■ b. Revising paragraph (b); 

■ c. Redesignating paragraphs (c), (d), 

and (e) as paragraphs (d), (e), and (f) 

respectively; 

■ d. Adding new paragraph (c); and 

■ e. Revising newly redesignated 

paragraph (d). 

The revisions and addition read as 

follows: 

§ 29.123 Fees and charges. 

* * * * * 

(a) Mandatory inspection. For each 

year, AMS will calculate the rate for 

services, per hour per program 

employee as described in § 29.123(b) 

and (c). * * * 

(b) Domestic permissive inspection 

and certification—(1) Regular rate. The 

total AMS grading, inspection, or 

sampling program personnel direct pay 

divided by direct hours, which is then 

multiplied by the next year’s percentage 

of cost of living increase, plus the 

benefits rate, plus the operating rate, 

plus the allowance for bad debt rate. If 

applicable, travel expenses may also be 

added to the cost of providing the 

service. 

(2) Overtime rate. The total AMS 

grading, inspection, or sampling 

program personnel direct pay divided 

by direct hours, which is then 

multiplied by the next year’s percentage 

of cost of living increase and then 

multiplied by 1.5 plus the benefits rate, 

plus the operating rate, plus an 

allowance for bad debt. If applicable, 

travel expenses may also be added to 

the cost of providing the service. 

(3) Holiday rate. The total AMS 

grading, inspection, or sampling 

program personnel direct pay divided 

by direct hours which is then multiplied 

by the next year’s percentage of cost of 

living increase and then multiplied by 

2, plus benefits rate, plus the operating 

rate, plus an allowance for bad debt. If 

applicable, travel expenses may also be 

added to the cost of providing the 

service. 

(4) Applicability. The fees in 

paragraphs (b)(1) through (3) of this 

section shall be applicable for hogshead, 

bale cases, or sample inspections. 

(c)(1) For each calendar year, based on 

previous fiscal year/historical actual 

costs, AMS will calculate the benefits, 

operating, and allowance for bad debt 

components of the regular, overtime and 

holiday rates as follows: 

(i) Benefits rate. The total AMS 

grading, inspection, or sampling 

program direct benefits costs divided by 

the total hours (regular, overtime, and 

holiday) worked, which is then 

multiplied by the next calendar year’s 

percentage cost of living increase. Some 

examples of direct benefits are health 

insurance, retirement, life insurance, 

and Thrift Savings Plan (TSP) 

retirement basic and matching 

contributions. 

(ii) Operating rate. The total AMS 

grading, inspection, or sampling 

program operating costs divided by total 

hours (regular, overtime, and holiday) 

worked, which is then multiplied by the 

percentage of inflation. 

(iii) Allowance for bad debt rate. Total 

AMS grading, inspection, or sampling 

program allowance for bad debt divided 

by total hours (regular, overtime, and 

holiday) worked. 

(2) The calendar year cost of living 

expenses and percentage of inflation 

factors used in the formulas in this 

section are based on the most recent 

Office of Management and Budget’s 

Presidential Economic Assumptions. 

(d) Export permissive inspection and 

certification. The inspection and 

certification fee for export tobacco will 

be determined as described in 

§ 29.123(b) and (c). 

* * * * * 

■ 14. Amend § 29.500 by revising the 

first sentence of paragraph (a) and 

revising paragraphs (b) and (c) to read 

as follows: 

§ 29.500 Fees and charges for inspection 

and acceptance of imported tobacco. 

(a) The fee for inspection of imported 

tobacco will be determined as described 

in § 29.123 and shall be paid by the 

importer. * * * 

(b) The fee for sampling, accepting, 

and certification of imported flue-cured 

and burley tobacco for prohibited 

pesticide residues will be determined as 


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described in § 29.123 and shall be paid 

by the importer. 

(c) The fee for accepting imported 

flue-cured and burley tobacco not 

accompanied by a certification that it is 

free of prohibited pesticide residues will 

be determined as described in § 29.123. 

Fees for services rendered shall be 

remitted by check or draft in accordance 

with a statement issued by the Director, 

and shall be made payable to 

‘‘Agricultural Marketing Service.’’ 

PART 51—FRESH FRUITS, 

VEGETABLES AND OTHER 

PRODUCTS (INSPECTION, 

CERTIFICATION, AND STANDARDS) 

■ 15. The authority citation for part 51 

continues to read as follows: 

Authority: 7 U.S.C. 1621–1627. 

■ 16. Revise § 51.38 to read as follows: 

§ 51.38 Basis for fees and rates. 

(a) For each calendar year, AMS will 

calculate the rate for services, per hour 

per program employee using the 

following formulas: 

(1) Regular rate. The total AMS 

inspection program personnel direct pay 

divided by direct hours, which is then 

multiplied by the next year’s percentage 

of cost of living increase, plus the 

benefits rate, plus the operating rate, 

plus the allowance for bad debt rate. If 

applicable, travel expenses may also be 

added to the cost of providing the 

service. 

(2) Overtime rate. The total AMS 

inspection program personnel direct pay 

divided by direct hours, which is then 

multiplied by the next year’s percentage 

of cost of living increase and then 

multiplied by 1.5 plus the benefits rate, 

plus the operating rate, plus an 

allowance for bad debt. If applicable, 

travel expenses may also be added to 

the cost of providing the service. 

(3) Holiday rate. The total AMS 

inspection program personnel direct pay 

divided by direct hours which is then 

multiplied by the next year’s percentage 

of cost of living increase and then 

multiplied by 2, plus benefits rate, plus 

the operating rate, plus an allowance for 

bad debt. If applicable, travel expenses 

may also be added to the cost of 

providing the service. 

(b)(1) For each calendar year, based 

on previous fiscal year/historical actual 

costs, AMS will calculate the benefits, 

operating, and allowance for bad debt 

components of the regular, overtime and 

holiday rates as follows: 

(i) Benefits rate. The total AMS 

inspection program direct benefits costs 

divided by the total hours (regular, 

overtime, and holiday) worked, which is 

then multiplied by the next calendar 

year’s percentage cost of living increase. 

Some examples of direct benefits are 

health insurance, retirement, life 

insurance, and Thrift Savings Plan 

(TSP) retirement basic and matching 

contributions. 

(ii) Operating rate. The total AMS 

inspection program operating costs 

divided by total hours (regular, 

overtime, and holiday) worked, which is 

then multiplied by the percentage of 

inflation. 

(iii) Allowance for bad debt rate. Total 

allowance for bad debt divided by total 

hours (regular, overtime, and holiday) 

worked. 

(2) The calendar year cost of living 

expenses and percentage of inflation 

factors used in the formulas in this 

section are based on the most recent 

Office of Management and Budget’s 

Presidential Economic Assumptions. 

(c) When an inspection is delayed 

because product is not available or 

readily accessible, a charge for waiting 

time shall be determined using the 

formulas in this section. 

PART 52—PROCESSED FRUITS AND 

VEGETABLES, PROCESSED 

PRODUCTS THEREOF, AND OTHER 

PROCESSED FOOD PRODUCTS 

■ 17. The authority citation for part 52 

continues to read as follows: 

Authority: 7 U.S.C. 1621–1627. 

§ 52.2 [Amended] 

■ 18. Amend § 52.2 by removing the 

definition of ‘‘In-plant sampler’’. 

■ 19. Revise § 52.42 to read as follows: 

§ 52.42 Schedule of fees. 

(a) For each calendar year, AMS will 

calculate the rate for services, per hour 

per program employee using the 

following formulas: 

(1) Regular rate. The total AMS 

inspection program personnel direct pay 

divided by direct hours, which is then 

multiplied by the next year’s percentage 

of cost of living increase, plus the 

benefits rate, plus the operating rate, 

plus the allowance for bad debt rate. If 

applicable, travel expenses may also be 

added to the cost of providing the 

service. 

(2) Overtime rate. The total AMS 

inspection program personnel direct pay 

divided by direct hours, which is then 

multiplied by the next year’s percentage 

of cost of living increase and then 

multiplied by 1.5 plus the benefits rate, 

plus the operating rate, plus an 

allowance for bad debt. If applicable, 

travel expenses may also be added to 

the cost of providing the service. 

(3) Holiday rate. The total AMS 

inspection program personnel direct pay 

divided by direct hours which is then 

multiplied by the next year’s percentage 

of cost of living increase and then 

multiplied by 2, plus benefits rate, plus 

the operating rate, plus an allowance for 

bad debt. If applicable, travel expenses 

may also be added to the cost of 

providing the service. 

(b) For each calendar year, based on 

previous fiscal year/historical actual 

costs, AMS will calculate the benefits, 

operating, and allowance for bad debt 

components of the regular, overtime and 

holiday rates as follows: 

(1) Benefits rate. The total AMS 

inspection program direct benefits costs 

divided by the total hours (regular, 

overtime, and holiday) worked, which is 

then multiplied by the next calendar 

year’s percentage cost of living increase. 

Some examples of direct benefits are 

health insurance, retirement, life 

insurance, and Thrift Savings Plan 

(TSP) retirement basic and matching 

contributions. 

(2) Operating rate. The total AMS 

inspection program operating costs 

divided by total hours (regular, 

overtime, and holiday) worked, which is 

then multiplied by the percentage of 

inflation. 

(3) Allowance for bad debt rate. Total 

AMS inspection program allowance for 

bad debt divided by total hours (regular, 

overtime, and holiday) worked. 

(c) The calendar year cost of living 

expenses and percentage of inflation 

factors used in the formulas in this 

section are based on the most recent 

Office of Management and Budget’s 

Presidential Economic Assumptions. 

■ 20. Revise § 52.50 to read as follows: 

§ 52.50 Travel and other expenses. 

Charges may be assessed to cover the 

cost of travel time incurred in 

connection with the performance of any 

inspection service, including appeal 

inspections, as described in § 52.42 of 

this part. This includes time spent 

waiting for transportation as well as 

time spent traveling, but not to exceed 

eight hours of travel time for any one 

person for any one day: And provided 

further, that if travel is by common 

carrier, no hourly charge may be made 

for travel time outside the employee’s 

official work hours. 

■ 21. Amend § 52.51 by revising 

paragraphs (a), (b), (c), and (d) to read 

as follows: 

§ 52.51 Charges for inspection services on 

a contract basis. 

(a) The Administrator may enter into 

contracts with applicants to perform 

continuous inspection services or other 

types of inspection services pursuant to 

the regulations in this part and other 


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53642 Federal Register / Vol. 79, No. 175 / Wednesday, September 10, 2014 / Proposed Rules 

requirements as prescribed by the 

Administrator in such contract, and the 

charges for such inspection service 

provided in such contracts shall be 

based on such basis as will reimburse 

the Agricultural Marketing Service of 

the Department for the full cost of 

rendering such inspection service as 

described in § 52.42 of this subpart. 

(b) The Administrator may enter into 

a written memorandum of 

understanding or contract, whichever 

may be appropriate, with any 

administrative agency charged with the 

administration of a marketing agreement 

or a marketing order effective pursuant 

to the Agricultural Marketing 

Agreement Act of 1937, as amended (7 

U.S.C. 601 et seq.) for the making of 

inspections pursuant to said agreement 

or order on such basis as will reimburse 

the Agricultural Marketing Service of 

the Department for the full cost of 

rendering such inspection service based 

on the formulas in § 52.42 of this 

subpart. Likewise, the Administrator 

may enter into a written memorandum 

of understanding or contract, whichever 

may be appropriate, with an 

administrative agency charged with an 

administration of a similar program 

operated pursuant to the laws of any 

State. 

(c) Charges for year-round in-plant 

inspection services on a contract basis 

will be billed to the applicant monthly 

for all hours worked with a minimum of 

40 hours per week for each inspector 

assigned to perform the inspection 

services. Charges for work performed in 

excess of an employee’s regular work 

schedule will be calculated as described 

in § 52.42(a)(2) of this subpart. 

(d) Charges for less than year-round 

in-plant inspection services (four or 

more consecutive 40 hour weeks) on a 

contract basis will be billed to the 

applicant monthly for all hours with a 

minimum of 40 hours for each inspector 

assigned to perform the inspection 

services and will be calculated based on 

the formulas in § 52.42 of this subpart. 

* * * * * 

PART 54—MEATS, PREPARED 

MEATS, AND MEAT PRODUCTS 

(GRADING, CERTIFICATION, AND 

STANDARDS) 

■ 22. The authority citation for 7 CFR 

part 54 continues to read as follows: 

Authority: 7 U.S.C. 1621–1627. 

§ 54.6 [Amended] 

■ 23. Amend § 54.6 in paragraph (c)(2), 

in the first sentence, by removing the 

phrase ‘‘as provided in § 54.27(b)’’ and 

adding ‘‘as provided in § 54.27’’ in its 

place. 

■ 24. Revise § 54.27 to read as follows: 

§ 54.27 Fees and other charges for 

service. 

(a) Fees and other charges equal as 

nearly as may be to the cost of the 

services rendered shall be assessed and 

collected from applicants in accordance 

with the following provisions unless 

otherwise provided in the cooperative 

agreement under which the services are 

furnished, or as provided in § 54.6 of 

this subpart. For each calendar year, 

AMS will calculate the rate for 

inspection, grading, or certification 

services, per hour per program 

employee using the following formulas: 

(1) Regular rate. The total AMS 

grading, inspection, or certification 

program personnel direct pay divided 

by direct hours, which is then 

multiplied by the next year’s percentage 

of cost of living increase, plus the 

benefits rate, plus the operating rate, 

plus the allowance for bad debt rate. If 

applicable, travel expenses may also be 

added to the cost of providing the 

service. 

(2) Overtime rate. The total AMS 

grading, inspection, or certification 

program personnel direct pay divided 

by direct hours, which is then 

multiplied by the next year’s percentage 

of cost of living increase and then 

multiplied by 1.5 plus the benefits rate, 

plus the operating rate, plus an 

allowance for bad debt. If applicable, 

travel expenses may also be added to 

the cost of providing the service. 

(3) Holiday rate. The total AMS 

grading, inspection, or certification 

program personnel direct pay divided 

by direct hours which is then multiplied 

by the next year’s percentage of cost of 

living increase and then multiplied by 

2, plus benefits rate, plus the operating 

rate, plus an allowance for bad debt. If 

applicable, travel expenses may also be 

added to the cost of providing the 

service. 

(b)(1) For each calendar year, based 

on previous fiscal year/historical actual 

costs, AMS will calculate the benefits, 

operating, and allowance for bad debt 

components of the regular, overtime and 

holiday rates as follows: 

(i) Benefits rate. The total AMS 

grading, inspection, or certification 

program direct benefits costs divided by 

the total hours (regular, overtime, and 

holiday) worked, which is then 

multiplied by the next calendar year’s 

percentage cost of living increase. Some 

examples of direct benefits are health 

insurance, retirement, life insurance, 

and Thrift Savings Plan (TSP) 

retirement basic and matching 

contributions. 

(ii) Operating rate. The total AMS 

grading, inspection, or certification 

program operating costs divided by total 

hours (regular, overtime, and holiday) 

worked, which is then multiplied by the 

percentage of inflation. 

(iii) Allowance for bad debt rate. Total 

AMS grading, inspection, or 

certification program allowance for bad 

debt divided by total hours (regular, 

overtime, and holiday) worked. 

(2) The calendar year cost of living 

expenses and percentage of inflation 

factors used in the formulas in this 

section are based on the most recent 

Office of Management and Budget’s 

Presidential Economic Assumptions. 

(c) Fees for service on commitment 

basis. Minimum fees for service 

performed under a commitment 

agreement or an agreement by 

memorandum shall be on the basis of 8 

hours per day, Monday through Friday, 

excluding Federal legal holidays 

occurring Monday through Friday on 

which no grading and certification 

services are performed. Fees will be 

based on the formulas in this section. 

The Agency reserves the right under 

such a commitment agreement or 

agreement by memorandum to use any 

grader assigned to the plant on a 

commitment basis to perform service for 

other applicants, as provided in 

§ 54.6(c), crediting the commitment 

applicant with the number of hours 

charged to the other applicant, provided 

the allowable credit hours plus hours 

actually worked for the applicants do 

not exceed 8 hours on any day, Monday 

through Friday, excluding legal 

holidays. 

(d) Fees for appeal service. Fees for 

appeal service shall be determined on 

the basis of the time, of two official 

graders, required to render the service, 

including the time required for the 

preparation of certificates and travel of 

such graders in connection with the 

performance of the service. Provided, 

That when on appeal it is found that 

there was error in the original 

determination equal to or exceeding ten 

percent of the total number of similar 

units of the products involved, no 

charge will be made for the appeal 

service unless a special agreement 

therefor was made with the applicant in 

advance. 

(e) Fees for extra copies of certificates. 

In addition to copies of certificates 

furnished under § 54.14, any financially 

interested person may obtain not to 

exceed three copies of any such 

certificate within one year from its date 

of issuance upon payment of a fee, and 

not to exceed three copies of any such 

certificate at any time thereafter, while 

a copy of such certificate is on file in the 


tkelley on DSK3SPTVN1PROD with PROPOSALS
Federal Register / Vol. 79, No. 175 / Wednesday, September 10, 2014 / Proposed Rules 53643 

Department. The fee for copies of 

certificates will be determined using the 

formulas in this section. 

PART 56—VOLUNTARY GRADING OF 

SHELL EGGS 

■ 25. The authority citation for part 56 

continues to read as follows: 

Authority: 7 U.S.C. 1621–1627. 

■ 26. Revise § 56.46 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 

formulas specified in this section. For 

each calendar year or crop year, AMS 

will calculate the rate for grading or 

audit services, per hour per program 

employee using the following formulas: 

(1) Regular rate. The total AMS 

grading or audit program personnel 

direct pay divided by direct hours, 

which is then multiplied by the next 

year’s percentage of cost of living 

increase, plus the benefits rate, plus the 

operating rate, plus the allowance for 

bad debt rate. If applicable, travel 

expenses may also be added to the cost 

of providing the service. 

(2) Overtime rate. The total AMS 

grading or audit program personnel 

direct pay divided by direct hours, 

which is then multiplied by the next 

year’s percentage of cost of living 

increase and then multiplied by 1.5 plus 

the benefits rate, plus the operating rate, 

plus an allowance for bad debt. If 

applicable, travel expenses may also be 

added to the cost of providing the 

service. 

(3) Holiday rate. The total AMS 

grading or audit program personnel 

direct pay divided by direct hours 

which is then multiplied by the next 

year’s percentage of cost of living 

increase and then multiplied by 2, plus 

benefits rate, plus the operating rate, 

plus an allowance for bad debt. If 

applicable, travel expenses may also be 

added to the cost of providing the 

service. 

(b)(1) For each calendar year, based 

on previous fiscal year/historical actual 

costs, AMS will calculate the benefits, 

operating, and allowance for bad debt 

components of the regular, overtime and 

holiday rates as follows: 

(i) Benefits rate. The total AMS 

grading or audit program direct benefits 

costs divided by the total hours (regular, 

overtime, and holiday) worked, which is 

then multiplied by the next calendar 

year’s percentage cost of living increase. 

Some examples of direct benefits are 

health insurance, retirement, life 

insurance, and Thrift Savings Plan 

(TSP) retirement basic and matching 

contributions. 

(ii) Operating rate. The total AMS 

grading or audit program operating costs 

divided by total hours (regular, 

overtime, and holiday) worked, which is 

then multiplied by the percentage of 

inflation. 

(iii) Allowance for bad debt rate. Total 

AMS grading or audit program 

allowance for bad debt divided by total 

hours (regular, overtime, and holiday) 

worked. 

(2) The calendar year cost of living 

expenses and percentage of inflation 

factors used in the formulas in this 

section are based on the most recent 

Office of Management and Budget’s 

Presidential Economic Assumptions. 

(c) Fees for grading services will be 

based on the time required to perform 

the services. The hourly charges shall 

include the time actually required to 

perform the grading, waiting time, travel 

time, and any clerical costs involved in 

issuing a certificate. 

(d) Fees for audit services will be 

based on the time and expenses 

required to perform the audit. The 

hourly charge shall include the time 

actually required to perform the audit, 

waiting time, travel time, and any 

clerical costs involved in issuing an 

audit report. 

■ 27. Amend § 56.52 by: 

■ a. Revising the introductory text; 

■ b. Revising the second sentence of 

paragraph (a)(1); and 

■ c. Revising the first sentence of 

paragraph (a)(2) introductory text. 

The revisions read as follows: 

§ 56.52 Charges for continuous grading 

performed on a resident basis. 

Fees to be charged and collected for 

any grading service, other than for an 

appeal grading, on a resident grading 

basis, shall be calculated as described in 

this part. The fees to be charged for any 

appeal grading shall be as provided in 

§ 56.47. 

(a) * * * 

(1) * * * The costs for completing the 

plant survey shall be borne by the 

applicant on a fee basis as described in 

§ 56.46. * * * 

(2) Charges for the cost of each grader 

assigned to a plant will be calculated as 

described in section 56.46 of this part, 

except that no charge will be assessed 

when the assigned grader is temporarily 

reassigned by AMS to perform grading 

service for other than the applicant. 

* * * 

* * * * * 

■ 28. Amend § 56.54 by revising the 

introductory text and paragraph (a)(1) 

introductory text to read as follows: 

§ 56.54 Charges for continuous grading 

performed on a nonresident basis. 

Fees to be charged and collected for 

grading service on a nonresident grading 

basis, shall be calculated as described in 

this part. The fees to be charged for any 

appeal grading shall be calculated as 

provided in § 56.47. 

(a) * * * 

(1) A charge for the salary and other 

costs, calculated as described in § 56.46 

of this part, for each grader while 

assigned to a plant, except that no 

charge will be made when the assigned 

grader is temporarily reassigned by 

AMS to perform grading service for 

other than the applicant. Charges to 

plants are as follows: 

* * * * * 

PART 58—GRADING AND 

INSPECTION, GENERAL 

SPECIFICATIONS FOR APPROVED 

PLANTS AND STANDARDS FOR 

GRADES OF DAIRY PRODUCTS 

■ 29. The authority citation for 7 CFR 

part 58 continues to read as follows: 

Authority: 7 U.S.C. 1621–1627. 

■ 30. Revise § 58.39 to read as follows: 

§ 58.39 Fees for holiday or other 

nonworktime. 

If an applicant requests that 

inspection or grading service be 

performed on a holiday, Saturday, or 

Sunday or in excess of each 8-hour shift 

Monday through Friday, the applicant 

shall be charged for such service at a 

rate determined using the formulas in 

§ 58.43. 

■ 31. Revise § 58.43 to read as follows: 

§ 58.43 Fees for inspection, grading, 

sampling, and certification. 

(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 

formulas specified in this section. For 

each calendar year, AMS will calculate 

the rate for grading, certification, or 

inspection services, per hour per 

program employee using the following 

formulas: 

(1) Regular rate. The total AMS 

grading, certification, or inspection 

program personnel direct pay divided 

by direct hours, which is then 

multiplied by the next year’s percentage 

of cost of living increase, plus the 

benefits rate, plus the operating rate, 

plus the allowance for bad debt rate. If 

applicable, travel expenses may also be 

added to the cost of providing the 

service. 

(2) Overtime rate. The total AMS 

grading, certification, or inspection 


tkelley on DSK3SPTVN1PROD with PROPOSALS
53644 Federal Register / Vol. 79, No. 175 / Wednesday, September 10, 2014 / Proposed Rules 

program personnel direct pay divided 

by direct hours, which is then 

multiplied by the next year’s percentage 

of cost of living increase and then 

multiplied by 1.5 plus the benefits rate, 

plus the operating rate, plus an 

allowance for bad debt. If applicable, 

travel expenses may also be added to 

the cost of providing the service. 

(3) Holiday rate. The total AMS 

grading, certification, or inspection 

program personnel direct pay divided 

by direct hours which is then multiplied 

by the next year’s percentage of cost of 

living increase and then multiplied by 

2, plus benefits rate, plus the operating 

rate, plus an allowance for bad debt. If 

applicable, travel expenses may also be 

added to the cost of providing the 

service. 

(b) For each calendar year, based on 

previous fiscal year/historical actual 

costs, AMS will calculate the benefits, 

operating, and allowance for bad debt 

components of the regular, overtime and 

holiday rates as follows: 

(1) Benefits rate. The total AMS 

grading, certification, or inspection 

program direct benefits costs divided by 

the total hours (regular, overtime, and 

holiday) worked, which is then 

multiplied by the next calendar year’s 

percentage cost of living increase. Some 

examples of direct benefits are health 

insurance, retirement, life insurance, 

and Thrift Savings Plan (TSP) 

retirement basic and matching 

contributions. 

(2) Operating rate. The total AMS 

grading, certification, or inspection 

program operating costs divided by total 

hours (regular, overtime, and holiday) 

worked, which is then multiplied by the 

percentage of inflation. 

(3) Allowance for bad debt rate. Total 

AMS grading, certification, or 

inspection program allowance for bad 

debt divided by total hours (regular, 

overtime, and holiday) worked. 

(c) The calendar year cost of living 

expenses and percentage of inflation 

factors used in the formulas in this 

section are based on the most recent 

Office of Management and Budget’s 

Presidential Economic Assumptions. 

■ 32. Revise § 58.45 to read as follows: 

§ 58.45 Fees for continuous resident 

services. 

Charges for the inspector(s) and 

grader(s) assigned to a continuous 

resident program shall be calculated 

using the formulas in § 58.43 of this 

part. 

PART 62—LIVESTOCK, MEAT AND 

OTHER AGRICULTURAL 

COMMODITIES (QUALITY SYSTEMS 

VERIFICATION PROGRAMS) 

■ 33. The authority citation for part 62 

continues to read as follows: 

Authority: 7 U.S.C. 1621–1627. 

■ 34. Revise § 62.300 to read as follows: 

§ 62.300 Fees and other costs of service. 

(a) For each calendar year, AMS will 

calculate the rate for quality systems 

verification services, per hour per 

program employee using the following 

formulas: 

(1) Regular rate. The total AMS 

quality systems verification program 

(QSVP) personnel direct pay divided by 

direct hours, which is then multiplied 

by the next year’s percentage of cost of 

living increase, plus the benefits rate, 

plus the operating rate, plus the 

allowance for bad debt rate. If 

applicable, travel expenses may also be 

added to the cost of providing the 

service. 

(2) Overtime rate. The total AMS 

QSVP personnel direct pay divided by 

direct hours, which is then multiplied 

by the next year’s percentage of cost of 

living increase and then multiplied by 

1.5 plus the benefits rate, plus the 

operating rate, plus an allowance for 

bad debt. If applicable, travel expenses 

may also be added to the cost of 

providing the service. 

(3) Holiday rate. The total AMS QSVP 

personnel direct pay divided by direct 

hours which is then multiplied by the 

next year’s percentage of cost of living 

increase and then multiplied by 2, plus 

benefits rate, plus the operating rate, 

plus an allowance for bad debt. If 

applicable, travel expenses may also be 

added to the cost of providing the 

service. 

(b)(1) For each calendar year, based 

on previous fiscal year/historical actual 

costs, AMS will calculate the benefits, 

operating, and allowance for bad debt 

components of the regular, overtime and 

holiday rates as follows: 

(i) Benefits rate. The total AMS QSVP 

direct benefits costs divided by the total 

hours (regular, overtime, and holiday) 

worked, which is then multiplied by the 

next calendar year’s percentage cost of 

living increase. Some examples of direct 

benefits are health insurance, 

retirement, life insurance, and Thrift 

Savings Plan (TSP) retirement basic and 

matching contributions. 

(ii) Operating rate. The total AMS 

QSVP operating costs divided by total 

hours (regular, overtime, and holiday) 

worked, which is then multiplied by the 

percentage of inflation. 

(iii) Allowance for bad debt rate. Total 

AMS QSVP allowance for bad debt 

divided by total hours (regular, 

overtime, and holiday) worked. 

(2) The calendar year cost of living 

expenses and percentage of inflation 

factors used in the formulas in this 

section are based on the most recent 

Office of Management and Budget’s 

Presidential Economic Assumptions. 

(c) Transportation costs. Applicants 

are responsible for paying actual travel 

costs incurred to provide QSVP services 

including but not limited to: Mileage 

charges for use of privately owned 

vehicles, rental vehicles and gas, 

parking, tolls, and public transportation 

costs such as airfare, train, and taxi 

service. 

(d) Per diem costs. The applicant is 

responsible for paying per diem costs 

incurred to provide QSVP services away 

from the auditor’s or USDA officials’ 

official duty station(s). Per diem costs 

shall be calculated in accordance with 

existing travel regulations (41 CFR, 

subtitle F—Federal Travel Regulation 

System, chapter 301). 

(e) Other costs. When costs, other 

than those costs specified in paragraphs 

(a), through (c) of this section, are 

involved in providing the QSVP 

services, the applicant shall be 

responsible for these costs. The amount 

of these costs shall be determined 

administratively by the Chief. However, 

the applicant will be notified of these 

costs before the service is rendered. 

PART 70—VOLUNTARY GRADING OF 

POULTRY AND RABBIT PRODUCTS 

■ 35. The authority citation for part 70 

continues to read as follows: 

Authority: 7 U.S.C. 1621–1627. 

■ 36. Revise § 70.71 to read as follows: 

§ 70.71 On a fee basis. 

Unless otherwise provided in this 

part, the fees to be charged and 

collected for any grading or audit 

service performed in accordance with 

this part, on a fee basis shall be based 

on the applicable formulas specified in 

this section. 

(a) For each calendar year, AMS will 

calculate the rate for grading and audit 

services, per hour per program 

employee using the following formulas: 

(1) Regular rate. The total AMS 

grading or audit program personnel 

direct pay divided by direct hours, 

which is then multiplied by the next 

year’s percentage of cost of living 

increase, plus the benefits rate, plus the 

operating rate, plus the allowance for 

bad debt rate. If applicable, travel 

expenses may also be added to the cost 

of providing the service. 


tkelley on DSK3SPTVN1PROD with PROPOSALS
Federal Register / Vol. 79, No. 175 / Wednesday, September 10, 2014 / Proposed Rules 53645 

(2) Overtime rate. The total AMS 

grading or audit program personnel 

direct pay divided by direct hours, 

which is then multiplied by the next 

year’s percentage of cost of living 

increase and then multiplied by 1.5 plus 

the benefits rate, plus the operating rate, 

plus an allowance for bad debt. If 

applicable, travel expenses may also be 

added to the cost of providing the 

service. 

(3) Holiday rate. The total AMS 

grading or audit program personnel 

direct pay divided by direct hours 

which is then multiplied by the next 

year’s percentage of cost of living 

increase and then multiplied by 2, plus 

benefits rate, plus the operating rate, 

plus an allowance for bad debt. If 

applicable, travel expenses may also be 

added to the cost of providing the 

service. 

(b)(1) For each calendar year, based 

on previous fiscal year/historical actual 

costs, AMS will calculate the benefits, 

operating, and allowance for bad debt 

components of the regular, overtime and 

holiday rates as follows: 

(i) Benefits rate. The total AMS 

grading or audit program direct benefits 

costs divided by the total hours (regular, 

overtime, and holiday) worked, which is 

then multiplied by the next calendar 

year’s percentage cost of living increase. 

Some examples of direct benefits are 

health insurance, retirement, life 

insurance, and Thrift Savings Plan 

(TSP) retirement basic and matching 

contributions. 

(ii) Operating rate. The AMS grading 

or audit program total operating costs 

divided by total hours (regular, 

overtime, and holiday) worked, which is 

then multiplied by the percentage of 

inflation. 

(iii) Allowance for bad debt rate. Total 

AMS grading or audit program 

allowance for bad debt divided by total 

hours (regular, overtime, and holiday) 

worked. 

(2) The calendar year cost of living 

expenses and percentage of inflation 

factors used in the formulas in this 

section are based on the most recent 

Office of Management and Budget’s 

Presidential Economic Assumptions. 

(c) Fees for grading services will be 

based on the time required to perform 

the services. The hourly charges shall 

include the time actually required to 

perform the grading, waiting time, travel 

time, and any clerical costs involved in 

issuing a certificate. 

(d) Fees for audit services will be 

based on the time and expenses 

required to perform the audit. The 

hourly charge shall include the time 

actually required to perform the audit, 

waiting time, travel time, and any 

clerical costs involved in issuing an 

audit report. 

■ 37. Revise § 70.72 to read as follows: 

§ 70.72 Fees for appeal grading or review 

of a grader’s decision. 

The costs of an appeal grading, or 

review of a grader’s decision, shall be 

borne by the appellant on a fee basis at 

rates determined based on the formulas 

in § 70.71 of this part. If the appeal 

grading, or review of a grader’s decision 

discloses that a material error was made 

in the original determination, no fee or 

expenses will be charged. 

■ 38. Amend § 70.76 by revising the 

introductory text and the first sentence 

of paragraph (a)(1) introductory text to 

read as follows: 

§ 70.76 Charges for continuous poultry 

grading performed on a nonresident basis. 

Fees to be charged and collected for 

grading service on a nonresident grading 

basis shall be based on the formulas 

provided in this part. The fees to be 

charged for any appeal grading shall be 

as provided in § 70.72. 

(a) * * * 

(1) A charge for the salary and other 

costs, based on § 70.71 of this part, for 

each grader while assigned to a plant, 

except that no charge will be made 

when the assigned grader is temporarily 

reassigned by AMS to perform 

grading service for other than the 

applicant. * * * 

* * * * * 

■ 39. Amend § 70.77 by revising the 

introductory text and paragraphs (a)(1) 

and (2) to read as follows: 

§ 70.77 Charges for continuous poultry or 

rabbit grading performed on a resident 

basis. 

Fees to be charged and collected for 

any grading service on a resident 

grading basis and for an appeal grading 

shall be determined based on the 

formulas in section 70.71. 

(a) * * * 

(1) When a signed application for 

service has been received, the State 

supervisor or the supervisor’s assistant 

shall complete a plant survey pursuant 

to § 70.34. The costs for completing the 

plant survey shall be borne by the 

applicant on a fee basis based on the 

formulas in § 70.71. No charges will be 

assessed when the application is 

required because of a change in name or 

ownership. If service is not installed 

within 6 months from the date the 

application is filed, or if service is 

inactive due to an approved request for 

removal of a grader(s) for a period of 6 

months, the application will be 

considered terminated, but a new 

application may be filed at any time. In 

addition, there will be a charge of $300 

if the application is terminated at the 

request of the applicant for reasons 

other than for a change in location 

within 12 months from the date of the 

inauguration of service. 

(2) A charge for the salary and other 

costs, as specified in this part, for each 

grader while assigned to a plant, except 

that no charge will be made when the 

assigned grader is temporarily 

reassigned by AMS to perform grading 

service for other than the applicant. 

* * * * * 

PART 75—REGULATIONS FOR 

INSPECTION AND CERTIFICATION OF 

QUALITY OF AGRICULTURAL AND 

VEGETABLE SEEDS 

■ 40. The authority citation for part 75 

continues to read as follows: 

Authority: 7 U.S.C. 1622, 1624. 

■ 41. Revise § 75.41 to read as follows: 

§ 75.41 General. 

Fees and charges for inspection or 

certification services performed by 

Federal employees shall cover the cost 

of performing the service. Fees shall be 

for actual time required to render the 

service. For each calendar year, AMS 

will calculate the rate for inspection or 

certification services, per hour per 

program employee using the following 

formulas: 

(1) Regular rate. The total AMS 

inspection or certification program 

personnel direct pay divided by direct 

hours, which is then multiplied by the 

next year’s percentage of cost of living 

increase, plus the benefits rate, plus the 

operating rate, plus the allowance for 

bad debt rate. If applicable, travel 

expenses may also be added to the cost 

of providing the service. 

(2) Overtime rate. The total AMS 

inspection or certification program 

personnel direct pay divided by direct 

hours, which is then multiplied by the 

next year’s percentage of cost of living 

increase and then multiplied by 1.5 plus 

the benefits rate, plus the operating rate, 

plus an allowance for bad debt. If 

applicable, travel expenses may also be 

added to the cost of providing the 

service. 

(3) Holiday rate. The total AMS 

inspection or certification program 

personnel direct pay divided by direct 

hours which is then multiplied by the 

next year’s percentage of cost of living 

increase and then multiplied by 2, plus 

benefits rate, plus the operating rate, 

plus an allowance for bad debt. If 

applicable, travel expenses may also be 

added to the cost of providing the 

service. 


tkelley on DSK3SPTVN1PROD with PROPOSALS
53646 Federal Register / Vol. 79, No. 175 / Wednesday, September 10, 2014 / Proposed Rules 

(b) For each calendar year, based on 

previous fiscal year/historical actual 

costs, AMS will calculate the benefits, 

operating, and allowance for bad debt 

components of the regular, overtime and 

holiday rates as follows: 

(1) Benefits rate. The total AMS 

inspection or certification program 

direct benefits costs divided by the total 

hours (regular, overtime, and holiday) 

worked, which is then multiplied by the 

next calendar year’s percentage cost of 

living increase. Some examples of direct 

benefits are health insurance, 

retirement, life insurance, and Thrift 

Savings Plan (TSP) retirement basic and 

matching contributions. 

(2) Operating rate. The total AMS 

inspection or certification program 

operating costs divided by total hours 

(regular, overtime, and holiday) worked, 

which is then multiplied by the 

percentage of inflation. 

(3) Allowance for bad debt rate. Total 

AMS inspection or certification program 

allowance for bad debt divided by total 

hours (regular, overtime, and holiday) 

worked. 

(c) The calendar year cost of living 

expenses and percentage of inflation 

factors used in the formulas in this 

section are based on the most recent 

Office of Management and Budget’s 

Presidential Economic Assumptions. 

■ 42. Amend § 75.42 by revising 

paragraph (b) to read as follows: 

§ 75.42 Sampling and sealing. 

* * * * * 

(b) When onsite inspection services 

are performed by Federal employees at 

the request of the applicant charges will 

be based on the formulas in § 75.41 of 

this part. 

■ 43. Amend § 75.43 by revising 

paragraphs (a) and (c) to read as follows: 

§ 75.43 Laboratory testing. 

* * * * * 

(a) Fees assessed based on the 

formulas in section 75.41 of this part. 

* * * * * 

(c) The fee for a preliminary report 

issued prior to completion of testing 

shall be assessed in accordance with 

paragraph (a) of this section. 

PART 91—SERVICES AND GENERAL 

INFORMATION (SCIENCE AND 

TECHNOLOGY) 

■ 44. The authority citation for part 91 

continues to read as follows: 

Authority: 7 U.S.C. 1622, 1624. 

■ 45. Amend § 91.37 by: 

■ a. Revising paragraphs (a) and (b); 

■ b. Removing paragraph (c); and 

■ c. Redesignating paragraphs (d) and 

(e) as paragraphs (c) and (d), 

respectively. 

The revisions read as follows: 

§ 91.37 Standard hourly fee rate for 

laboratory testing, analysis, and other 

services. 

(a) For each fiscal year, AMS will 

calculate the rate for laboratory testing, 

analysis, and other services, per hour 

per program employee using the 

following formulas: 

(1) Regular rate. The total AMS 

laboratory service program personnel 

direct pay divided by direct hours, 

which is then multiplied by the next 

year’s percentage of cost of living 

increase, plus the benefits rate, plus the 

operating rate, plus the allowance for 

bad debt rate. If applicable, travel 

expenses may also be added to the cost 

of providing the service. 

(2) Overtime rate. The total AMS 

laboratory service program personnel 

direct pay divided by direct hours, 

which is then multiplied by the next 

year’s percentage of cost of living 

increase and then multiplied by 1.5 plus 

the benefits rate, plus the operating rate, 

plus an allowance for bad debt. If 

applicable, travel expenses may also be 

added to the cost of providing the 

service. 

(3) Holiday rate. The total AMS 

laboratory service program personnel 

direct pay divided by direct hours 

which is then multiplied by the next 

year’s percentage of cost of living 

increase and then multiplied by 2, plus 

benefits rate, plus the operating rate, 

plus an allowance for bad debt. If 

applicable, travel expenses may also be 

added to the cost of providing the 

service. 

(b)(1) For each calendar year, based 

on previous fiscal year/historical actual 

costs, AMS will calculate the benefits, 

operating, and allowance for bad debt 

components of the regular, overtime and 

holiday rates as follows: 

(i) Benefits rate. The total AMS 

laboratory service program direct 

benefits costs divided by the total hours 

(regular, overtime, and holiday) worked, 

which is then multiplied by the next 

calendar year’s percentage cost of living 

increase. Some examples of direct 

benefits are health insurance, 

retirement, life insurance, and Thrift 

Savings Plan (TSP) retirement basic and 

matching contributions. 

(ii) Operating rate. The total AMS 

laboratory service program operating 

costs divided by total hours (regular, 

overtime, and holiday) worked, which is 

then multiplied by the percentage of 

inflation. 

(iii) Allowance for bad debt rate. Total 

AMS laboratory service program 

allowance for bad debt divided by total 

hours (regular, overtime, and holiday) 

worked. 

(2) The calendar year cost of living 

expenses and percentage of inflation 

factors used in the formulas in this 

section are based on the most recent 

Office of Management and Budget’s 

Presidential Economic Assumptions. 

* * * * * 

■ 46. Amend § 91.38 by revising 

paragraph (a) to read as follows: 

§ 91.38 Additional fees for appeal of 

analysis. 

(a) The applicant for appeal sample 

testing will be charged a fee based on 

the formulas in § 91.37 of this part. 

* * * * * 

■ 47. Amend § 91.39 by revising 

paragraph (a) to read as follows: 

§ 91.39 Hourly fee rates for overtime and 

legal holiday service. 

(a) When analytical testing in a 

Science and Technology facility 

requires the services of laboratory 

personnel beyond their regularly 

assigned tour of duty on any day or on 

a day outside the established schedule, 

such services are considered as overtime 

work. When analytical testing in a 

Science and Technology facility 

requires the services of laboratory 

personnel on a Federal holiday or a day 

designated in lieu of such a holiday, 

such services are considered holiday 

work. Laboratory analyses initiated at 

the request of the applicant to be 

rendered on Federal holidays, and on an 

overtime basis will be charged fees 

based on the formulas in § 91.37 of this 

part. 

* * * * * 

Dated: August 29, 2014. 

Rex A. Barnes, 

Associate Administrator, Agricultural 

Marketing Service. 

[FR Doc. 2014–21188 Filed 9–9–14; 8:45 am] 

BILLING CODE 3410–02–P 

SMALL BUSINESS ADMINISTRATION 

13 CFR Part 121 

RIN 3245–AG51 

Small Business Size Standards: 

Industries With Employee Based Size 

Standards Not Part of Manufacturing, 

Wholesale Trade, or Retail Trade 

AGENCY: U.S. Small Business 

Administration. 

ACTION: Proposed rule. 

SUMMARY: The U.S. Small Business 

Administration (SBA) proposes to 

increase employee based small business 


tkelley on DSK3SPTVN1PROD with PROPOSALS