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contains regulatory documents having general

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Rules and Regulations Federal Register

66257

Vol. 62, No. 243

Thursday, December 18, 1997

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: Revision of User Fees

AGENCY: Agricultural Marketing Service,

USDA.

ACTION: Final rule.

SUMMARY: The Agricultural Marketing

Service (AMS) is increasing the fees

charged for services provided under the

dairy inspection and grading program.

This rule will yield an estimated

$343,000 during 1998. The program is a

voluntary, user fee program conducted

under the authority of the Agricultural

Marketing Act of 1946, as amended.

This action increases the hourly rate to

$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 fees represent an

increase of four dollars per hour.

The fees are being increased to cover

the costs of recent 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

nonpay operating costs.

EFFECTIVE DATE: January 4, 1998.

FOR FURTHER INFORMATION CONTACT:

Lynn G. Boerger, USDA/AMS/Dairy

Programs, Dairy Grading Branch, Room

2750—South Building, P.O. Box 96456,

Washington, D.C. 20090–6456, (202)

720–9381.

SUPPLEMENTARY INFORMATION: This 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 final 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),

5 U.S.C. 601 et seq., the 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

fees will be raised, the increase is

approximately 8 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 should not prevent them from

marketing their products. The AMS

estimates that overall this rule will yield

an additional $343,000 during 1998.

The rule reflects certain fee increases

needed to recover the cost of inspection

and grading services rendered in

accordance with the Agricultural

Marketing Act of 1946.

The 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 program 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 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 four months.

Since the costs of the grading program

are covered entirely by user fees, it is

essential that fees be increased when

necessary to cover the cost of

maintaining a financially selfsupporting program. The last fee

increase under this program became

effective on January 5, 1997. On the

same effective date, the salaries of
66258 Federal Register / Vol. 62, No. 243 / Thursday, December 18, 1997 / Rules and Regulations

Federal employees increased by 3

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 3 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.

On October 16, 1997, the AMS

published in the Federal Register (62

FR 53760), a proposed rule for public

comment. Only one comment was

received. A U.S. Senator forwarded a

constituent comment from a dairy

product manufacturer to the Department

for its review. That commenter opposed

the proposed fee increase as harmful to

the dairy industry.

The commenter was of the view that

the proposed fee increase coupled with

the most recent increase made effective

on January 5, 1997 (61 FR 68997), is far

out of line with the general economic

conditions in the United States. The

commenter went on to conclude that

manufacturers who must have USDA

inspection to sell their products

domestically or internationally would

bear the brunt of the fee increase. The

commenter discussed passing the fee

increase on to customers but stated that

it would be unable to pass though the

increases to its customers. The

commenter further stated that it would

not accept price increases from its

suppliers unless it was an absolute last

resort. As stated previously, 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

service to cover, as nearly as practicable,

the cost of maintaining the program.

The fees, as proposed in this

rulemaking, are consistent with the

provisions of the 1946 Act. The Agency

conducts continuing fee analyses and

has instituted annual fee increases,

when necessary, to recover salary and

other routine costs. The programs’

financial situation described herein

requires implementation of the fee

increase. Even so, every effort has been

and will continue to be made to operate

the program as efficiently as possible

and to seek cost-cutting measures that

are consistent with the Agency’s

mission under this program.

With regard to the commenters

passing increases forward or backward,

such actions are subject to agreement

between buyers and sellers as is any

provision between the parties to require

inspection. This program is a voluntary

program under the 1946 Act. Even

though the fees will be revised, the

increase is approximately 8 percent and

will not significantly affect the industry.

Accordingly, consistent with the

provisions of the Agricultural Marketing

Act of 1946, the fees as proposed are

made final in this rule.

Pursuant to 5 U.S.C. 553, it is hereby

found that good cause exists for not

delaying the effective date of this action

until 30 days after publication of this

final rule in the Federal Register. A

revenue shortfall warrants putting the

higher rates into effect as quickly as

possible. The increase in fees is

essential for effective management and

operation of the program and to satisfy

the intent of the Agricultural Marketing

Act of 1946. A proposed rule setting

forth proposed fee increases was

published in the Federal Register on

October 16, 1997 (62 FR 53760).

Accordingly, the program fees are

being increased as set forth below.

Program Changes Adopted in the Final

Rule

This rule document makes the

following changes in the regulations

implementing the dairy inspection and

grading program:

1. Increases 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. Increases 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.

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, 7 CFR part 58 is 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, § 58.43 is revised to

read as follows:

§ 58.43 Fees for inspection, grading, and

sampling.

Except as otherwise provided in

§§ 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 between

6:00 a.m. and 6:00 p.m. and $61.60 for

service performed between 6:00 p.m.

and 6:00 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:

§ 58.45 Fees for continuous resident

services.

Irrespective of the fees and charges

provided in §§ 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 11⁄2 times the rate

stated in this section.

Dated: December 12, 1997.

Enrique E. Figueroa,

Acting Administrator, Agricultural Marketing

Service.

[FR Doc. 97–33005 Filed 12–17–97; 8:45 am]

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