[Federal Register Volume 62, Number 200 (Thursday, October 16, 1997)]
[Proposed Rules]
[Pages 53760-53761]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-27324]


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Proposed Rules
                                                Federal Register
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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.

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Federal Register / Vol. 62, No. 200 / Thursday, October 16, 1997 / 
Proposed Rules

[[Page 53760]]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 58

[DA-97-13]
RIN 0581-AB50


Grading and Inspection, General Specifications for Approved 
Plants and Standards for Grades of Dairy Products; Proposed Increase in 
Fees

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

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SUMMARY: The Agricultural Marketing Service proposes to increase the 
fees charged for services provided under the dairy inspection and 
grading program. The program is a voluntary, user-fee program conducted 
under the authority of the Agricultural Marketing Act of 1946, as 
amended. The proposed increases would result in a fee of $51.00 per 
hour for continuous resident services and $56.00 per hour for 
nonresident services between the hours of 6:00 a.m. and 6:00 p.m. The 
fee for nonresident services between the hours of 6:00 p.m. and 6:00 
a.m. would be $61.60 per hour. These proposed fees represent an 
increase of four dollars per hour. The fees are being increased to 
cover the costs of anticipated salary increases and locality 
adjustments, the costs necessary to maintain adequate levels of service 
during changing production and purchasing patterns within the dairy 
industry, the continued full funding for standardization activities, 
and other operating costs.

DATES: Comments should be mailed by November 17, 1997.

ADDRESSES: Comments should be mailed to: Richard McKee, Office of the 
Director, USDA/AMS/Dairy Division, Room 2968-S, P.O. Box 96456, 
Washington, DC 20090-6456. Comments received will be available for 
public inspection at this location during regular business hours.

FOR FURTHER INFORMATION CONTACT: Lynn G. Boerger, USDA/AMS/Dairy 
Division, Dairy Grading Branch, Room 2750-South Building, P.O. Box 
96456, Washington, DC 20090-6456, (202) 720-9381.

SUPPLEMENTARY INFORMATION: This proposed rule has been determined to be 
not significant for purposes of Executive Order 12866 and has not been 
reviewed by the Office of Management and Budget.
    This proposed rule has been reviewed under Executive Order 12988, 
Civil Justice Reform. This rule is not intended to have preemptive 
effect with respect to any State or local laws, regulations, or 
policies. This rule is not intended to have retroactive effect. There 
are no administrative procedures which must be exhausted prior to any 
judicial challenge to this rule or the application of its provisions.
    Pursuant to the requirements set forth in the Regulatory 
Flexibility Act (RFA), the Agricultural Marketing Service (AMS) has 
considered the economic impact of this action on small entities.
    There are more than 600 users of Dairy Grading Branch's inspection 
and grading services. Many of these users are small entities under the 
criteria established by the Small Business Administration (13 CFR 
121.601). This rule will raise the fee charged to businesses for 
voluntary inspection services and grading services for dairy and 
related products. Even though the fee will be raised, the increase is 
approximately 8.0 percent and will not significantly affect these 
entities. These businesses are under no obligation to use these 
services, and any decision on their part to discontinue the use of the 
services would not prevent them from marketing their products. The 
Agricultural Marketing Service (AMS) estimates that overall this rule 
will yield an additional $343,000 during 1998. The proposed rule 
reflects certain fee increases needed to recover the cost of inspection 
and grading services rendered in accordance with the Agricultural 
Marketing Act (AMA) of 1946.
    AMS regularly reviews its user-fee financed programs to determine 
if the fees are adequate. The existing fee schedule will not generate 
sufficient revenues to cover programs costs while maintaining an 
adequate reserve balance (four months of costs) as called for by Agency 
policy (AMS Directive 408.1). Without a fee increase, revenue 
projections for FY 1998 would remain constant at $4.695 million. Costs 
are projected to increase to $5.628 million. The shortfall, if allowed 
to continue, would translate into an approximate 1.6 month operating 
reserve at the end of FY 1998, which is less than Agency policy 
requires.
    The Agricultural Marketing Service (AMS) has determined that this 
action will not have a significant impact on a substantial number of 
small entities, as defined in the Regulatory Flexibility Act (5 U.S.C. 
601).
    The Agricultural Marketing Act of 1946, as amended, authorizes the 
Secretary of Agriculture to provide Federal dairy grading and 
inspection services that facilitate marketing and help consumers obtain 
the quality of dairy products they desire. The Act provides that 
reasonable fees be collected from the users of the services to cover, 
as nearly as practicable, the cost of maintaining the program.
    FY 1997 revenue was projected to be $4.733 million and costs to be 
$5.240 million. The shortfall during the year reduced the operating 
reserve from 5.6 months at the beginning of the year to 3.8 months at 
the end of August, and is projected to further reduce the operating 
reserve to approximately 1.6 months at the end of FY 1998. With this 
proposed increase, assuming a slightly increased workload, revenue for 
FY 1998 is projected to be $5.540 million with costs totaling $5.628 
million. Of these costs, the general salary increase represents 
$110,000 per year and is scheduled to be effective in January, 1998. 
Employee salaries and benefits are major program costs and account for 
approximately 70 percent of the total operating budget. Program travel 
costs (of which approximately 80 percent are reimbursed by the 
industry), general contract obligations and Agency overhead account for 
another 24 percent of the budget. Changing workloads are analyzed on a 
regular basis in order to maximize grading assignment efficiency and to 
minimize grader and supervisory costs. Future increases would be 
proposed as necessary in following years to cover any annual increases 
in program costs and to maintain the capital reserve at 4 months.
    Since the costs of the grading program are covered entirely by user 
fees, it is

[[Page 53761]]

essential that fees be increased when necessary to cover the cost of 
maintaining a financially self-supporting program. The last fee 
increase under this program became effective on January 5, 1997. On the 
same effective date, Congress increased the salaries of Federal 
employees by 3.0 percent which included locality pay. Also, there have 
been normal increases in other nonpay operating costs that include 
utilities, office space, and reimbursable travel. In addition, recent 
congressional action will result in additional salary increases of 
appoximately 3.0 percent in 1998. Although the program's operating 
reserves were adequate to cover the January 5, 1997, salary increase, 
this will not be the case for 1998 salary increases, and a fee increase 
is needed.
    The grading program fees need to be increased to cover the costs 
associated with maintaining adequate levels of service during shifting 
production patterns within the dairy industry. The industry changes 
include plant consolidations, geographical shifts of dairy production 
areas, and changes in the types of dairy products being manufactured 
and offered for inspection and grading services. To minimize the 
necessary fee increase, the Department has initiated cost-reduction 
efforts which include the reduction of staff and program overhead.

Proposed Changes

    This rule proposes the following changes in the regulations 
implementing the dairy inspection and grading program:
    1. Increase the hourly fee for nonresident services from $52.00 to 
$56.00 for services performed between 6:00 a.m. and 6:00 p.m. The 
nonresident hourly rate is charged to users who request an inspector or 
grader for particular dates and amounts of time to perform specific 
grading and inspection activities. These users of nonresident services 
are charged for the amount of time required to perform the task and 
undertake related travel plus travel costs.
    2. Increase the hourly fee for continuous resident services from 
$47.00 to $51.00. The resident hourly rate is charged to those who are 
using grading and inspection services performed by an inspector or 
grader assigned to a plant on a continuous, year-round resident basis.

Timing of Fee Increase

    It is contemplated that the proposed fee increases would be 
implemented on an expedited basis in order to minimize the period of 
revenue shortfall. Accordingly, it is anticipated that the fee 
increases, if adopted, would become effective upon publication, or very 
soon after publication, of the final rule in the Federal Register. An 
approximate effective date would be January 4, 1998.
    Also, a thirty day comment period is deemed appropriate in view of 
the need to implement any fee increases as early as possible in FY 
1998.
    All written submissions made pursuant to this notice will be made 
available for public inspection in the Dairy Division during regular 
business hours.

List of Subjects in 7 CFR Part 58

    Dairy products, Food grades and standards, Food labeling, Reporting 
and recordkeeping requirements.

    For the reasons set forth in the preamble, it is proposed that 7 
CFR Part 58 be amended as follows:

PART 58--GRADING AND INSPECTION, GENERAL SPECIFICATIONS FOR 
APPROVED PLANTS AND STANDARDS FOR GRADES OF DAIRY PRODUCTS

    1. The authority citation for Part 58 continues to read as follows:

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

Subpart A--[Amended]

    2. In subpart A, Sec. 58.43 is revised to read as follows:


Sec. 58.43  Fees for inspection, grading, and sampling.

    Except as otherwise provided in Secs. 58.38 through 58.46, charges 
shall be made for inspection, grading, and sampling service at the 
hourly rate of $56.00 for service performed 6 a.m., for the time 
required to perform the service calculated to the nearest 15-minute 
period, including the time required for preparation of certificates and 
reports and the travel time of the inspector or grader in connection 
with the performance of the service. A minimum charge of one-half hour 
shall be made for service pursuant to each request or certificate 
issued.
    3. Section 58.45 is revised to read as follows:


Sec. 58.45  Fees for continuous resident services.

    Irrespective of the fees and charges provided in Secs. 58.39 and 
58.43, charges for the inspector(s) and grader(s) assigned to a 
continuous resident program shall be made at the rate of $51.00 per 
hour for services performed during the assigned tour of duty. Charges 
for service performed in excess of the assigned tour of duty shall be 
made at a rate of 1\1/2\ times the rate stated in this section.

    Dated: October 8, 1997.
Lon Hatamiya,
Administrator, Agricultural Marketing Service.
[FR Doc. 97-27324 Filed 10-15-97; 8:45 am]
BILLING CODE 3410-02-P