[Federal Register Volume 79, Number 219 (Thursday, November 13, 2014)]
[Rules and Regulations]
[Pages 67313-67326]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-26655]



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Rules and Regulations
                                                Federal Register
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Federal Register / Vol. 79, No. 219 / Thursday, November 13, 2014 / 
Rules and Regulations

[[Page 67313]]



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: Final rule.

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SUMMMARY: The Agricultural Marketing Service (AMS) is amending its 
regulations to provide for a set of standardized formulas by which fees 
are calculated. The fees are calculated using formulas to account for 
all costs incurred by AMS in providing these services. Each year, fees 
will 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 action provides greater transparency to the 
customers we serve as to how the fees are derived.
    The standardized formulas will 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 will 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 are also affected by this rule.
    Provisions of this rule do not supersede rates established by 
Memoranda of Understanding, Marketing Orders, or by cooperative 
agreements already in place. Furthermore, the cotton program will 
continue to consult with its industry before rates are established.

DATES: Effective Date: This rule is effective December 15, 2014.

FOR FURTHER INFORMATION CONTACT: For further information contact, Sonia 
N. Jimenez, 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 action sets 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; Sec. Sec.  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; Sec. Sec.  28.115-28.126; Fees and Costs
    Subpart D--Cotton Classification and Market News Service for 
Producers;
    Sec. Sec.  28.909; Costs
    Sec. Sec.  28.910; Classification of samples and issuance of 
classification data
    Sec. Sec.  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; Sec. Sec.  58.38-
58.46; Fees and Charges

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;
    Sec. Sec.  51.37-51.44; Schedule of Fees and Charges at Destination 
Markets
    Sec. Sec.  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; 
Sec. Sec.  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; Sec. Sec.  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; Sec. Sec.  54.1028; 
Charges for Service
7 CFR Part 62--Livestock, Meat and Other Agricultural Commodities

[[Page 67314]]

(Quality Systems Verification Programs)
    Subpart A--Quality Systems Verification Definitions Sec. Sec.  
62.300; Fees and Other Costs for Service
7 CFR Part 75--Regulations for Inspection and Certification of Quality 
of Agricultural and Vegetable Seeds Sec. Sec.  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; Sec. Sec.  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; Sec. Sec.  
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; Sec. Sec.  91.37-91.45

Tobacco Fees

Tobacco Inspection Act (7 U.S.C. 511-511s)
7 CFR Part 29--Tobacco Inspection
    Subpart B--Regulations; Sec. Sec.  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; Sec. Sec.  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 fee-for-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). Prior to this action, each AMS program individually 
proposed a fee change when a revenue shortfall was anticipated for a 
specific program or activity. As a result, these changes did not appear 
in a single unified fee schedule. Lack of certainty as to when annual 
fees would 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 experienced delays in 
recovering the full cost of the services they provided.
    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 
amending its regulations to provide for a set of standardized formulas 
by which fees are calculated. This process will use formulas 
established to determine fees for AMS's grading, inspection, 
certification, auditing, and laboratory services that 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.
    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 rule 
specifies 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 formulas, AMS will determine the fees necessary to sustain program 
services. This increases predictability and provides 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.
    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 will continue to be 
addressed in various industry-sponsored forums.
    Provisions of this rule will 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 action is 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 will avoid financial crises that may 
occur when reserve funds are rapidly depleted due to unanticipated 
business events, and will allow the Agency to more quickly adjust the 
cost of the services it provides. The information will 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

[[Page 67315]]

government's initiative to streamline processes and the Department's 
goal of formalizing processes to integrate openness, transparency, 
participation and collaboration.

Final Rule

    With this action, AMS is amending 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 allows 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 will 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 will 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 will 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 will 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 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.

Formulas for Regular, Overtime, and Holiday Rates

    With this rulemaking, AMS amends 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 will be specified in 7 CFR parts 27, 28, 29, 51, 52, 54, 56, 
58, 62, 70, 75, and 91.
    AMS will 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 
will 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 will be based on 
the prior fiscal year's (or applicable accounting period or historical 
data) actual costs and hours. AMS will round the final rates up to make 
the amounts divisible by the quarter hour (15 minutes). Fifteen minutes 
will 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.
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    \1\ The current minimum charge for some services covered by 
these rates is 30 minutes.
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    Currently, some fees are charged on a per unit basis and others are 
charged on a per hour basis. AMS will 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 establishing 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 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 + $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,

[[Page 67316]]

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 this 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.

Formulas for the Benefits, Operating, and Allowance for Bad Debt Rates

    AMS will derive the components of the 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 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 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.

Comments

    AMS received two comments on the proposed rule.
    One commenter asked whether the industry will be notified as to the 
amounts of each factor within the calculation, including the factors 
within the benefits rate and the operating rate; whether the Department 
will publish a final hourly rate for regular, overtime, and holiday 
rates; and when will the new fee schedule become effective and put into 
practice.
    The categories of costs included in each fee were stated in the 
proposed rule and are part of this final rule. The specific amounts 
within each factor will not be published in the annual notice. However, 
this information is available upon request from the specific AMS 
program. The final hourly rate for regular, overtime, and holiday rates 
will be part of the annual notice.
    Each year, fees will 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. The yearly notice will 
identify the start date for each fee. AMS plans to have these rates in 
place in FY 15.
    Another commenter recommended that application of this uniform fee 
regulation maintain the calculation and reporting of the cotton 
classing fee on a per sample basis and that the procedure used by the 
AMS Cotton Division maintain the flexibility with the formula to 
account for an adequate reserve and projection of classing volume.
    As stated in the proposed rule and earlier in this rule, the yearly 
notice will include a per-hour rate and, in some instances, the 
equivalent per-unit cost which is the same as per sample basis. The 
per-unit (or per sample) 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.
    An adequate reserve and work load (volume) are part of the 
standardized formulas as they have been in the past.
    No changes were made to the proposed rule based on comments 
received.

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 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 rule under these Orders.

[[Page 67317]]

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 will not have 
substantial and direct effect on Tribal governments and will not have 
significant Tribal implications.

Executive Order 12988

    This rule has been reviewed under Executive Order 12988, Civil 
Justice Reform. This 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.<SUP>2 3</SUP> 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.
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    \2\ Currently, there is no mandatory inspection and grading of 
tobacco under the Tobacco Inspection Act (7 U.S.C. 511-511s).
    \3\ 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.
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    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 are 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 
are 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 are 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 are considered a small business under the SBA criteria.
    AMS considered the economic impact of this action on these small 
entities. The formulas will have a minimal impact on entities that 
request these services. The difference in fee rates are negligible 
since the costs used in the formulas to calculate the current and 
future fees will remain the same. For example, it is expected that the 
Dairy user fee will change from $76 per hour to $78 per hour under the 
proposed formulas. AMS has not updated several of its programs' user 
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 will be 
the result of using current economic data and cost estimates to 
calculate the fee rates. AMS will take into consideration, when 
appropriate, economic and industry conditions before adjusting fees. 
The process will maintain up-to-date fees.
    By including the formulas used to calculate annual user fee rates 
in the regulations, the Agency streamlines 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 will cover inflation and 
national and locality pay raises but will 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 rule will 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 will avoid financial 
crises that occur when reserve funds are rapidly depleted due to 
unanticipated business events, and will allow the Agency to more 
quickly adjust the cost of the services it provides. The information 
will 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 will 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 E-
Government 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

[[Page 67318]]

important. Consequently, in an effort to ensure that all interested 
parties, including minorities, women, and persons with disabilities are 
aware of this rule, 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 rule.

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, 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 
amended as follows:

PART 27--COTTON CLASSIFICATION UNDER COTTON FUTURES LEGISLATION

0
1. The authority citation for 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).


0
2. Revise Sec.  27.80 by adding paragraphs (a), (b), and (c) and 
removing paragraph (d) to read as follows:


Sec.  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.
    (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.

0
3. Revise Sec.  27.81 to read as follows:


Sec.  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 
Sec.  27.73, the person making the request shall pay a fee determined 
as described in Sec.  27.80.

PART 28--COTTON CLASSING, TESTING, AND STANDARDS

Subpart A--Regulations Under the United States Cotton Standards Act

0
4. The authority citation for part 28, subpart A, continues to read as 
follows:

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


0
5. Revise Sec.  28.116 to read as follows:


Sec.  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

[[Page 67319]]

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.

0
6. Revise Sec.  28.117 to read as follows:


Sec.  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 
Sec.  28.116. If the memorandum is provided by electronic means, the 
fee shall be determined using the same provisions.

0
7. Revise Sec.  28.122 to read as follows:


Sec.  28.122  Fee for practical classing examination.

    The fee for the practical classing examination for cotton shall be 
determined as described in Sec.  28.116. 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 be determined as described in 
Sec.  28.116.

Subpart D--Cotton Classification and Market News Service for 
Producers

0
8. The authority citation for part 28, subpart D, continues to read as 
follows:

    Authority: 7 U.S.C. 51-65; 7 U.S.C. 471-476.


0
9. Amend Sec.  28.909 by revising paragraph (b) to read as follows:


Sec.  28.909  Costs.

* * * * *
    (b) The cost of High Volume Instrument (HVI) cotton classification 
service to producers will be based on formulas set forth in Sec.  
28.116. The proceeds of the sale of cotton samples shall be used to 
defray the costs of providing the service under this subpart.
* * * * *

0
10. Revise Sec.  28.910 to read as follows:


Sec.  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 Sec.  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 Sec.  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 Sec.  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 Sec.  28.116, with a minimum per-sheet fee 
determined under the same provisions.

0
11. Amend Sec.  28.911 by revising paragraph (a) and the last sentence 
in paragraph (b) to read as follows:


Sec.  28.911  Review classification.

    (a) A producer may request one review classification for each bale 
of eligible cotton. The fee for review

[[Page 67320]]

classification shall be determined based on the formulas in Sec.  
28.116.
    (b) * * * Producers who request return of their samples after 
classing will pay a fee determined based on the formulas in Sec.  
28.116.

PART 29--TOBACCO INSPECTION

0
12. The authority citation for part 29 is revised to read as follows:

    Authority: 7 U.S.C. 511-511s.


0
13. Amend Sec.  29.123 by:
0
a. Revising the first sentence of paragraph (a);
0
b. Revising paragraph (b);
0
c. Redesignating paragraphs (c), (d), and (e) as paragraphs (d), (e), 
and (f), respectively;
0
d. Adding new paragraph (c); and
0
e. Revising newly redesignated paragraph (d).
    The revisions and addition read as follows:


Sec.  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 Sec.  
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 Sec.  29.123(b) and (c).
* * * * *

0
14. Amend Sec.  29.500 by revising the first sentence of paragraph (a) 
and revising paragraphs (b) and (c) to read as follows:


Sec.  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 Sec.  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 described in Sec.  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 Sec.  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)

0
15. The authority citation for part 51 continues to read as follows:

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


0
16. Revise Sec.  51.38 to read as follows:


Sec.  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,

[[Page 67321]]

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

0
17. The authority citation for part 52 continues to read as follows:

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


Sec.  52.2  [Amended]

0
18. Amend Sec.  52.2 by removing the definition of ``In-plant 
sampler''.

0
19. Revise Sec.  52.42 to read as follows:


Sec.  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.

0
20. Revise Sec.  52.50 to read as follows:


Sec.  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 Sec.  52.42. 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.

0
21. Amend Sec.  52.51 by revising paragraphs (a), (b), (c), and (d) to 
read as follows:


Sec.  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 
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 Sec.  52.42.
    (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 Sec.  52.42. 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 Sec.  52.42(a)(2).
    (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 Sec.  52.42.
* * * * *

PART 54--MEATS, PREPARED MEATS, AND MEAT PRODUCTS (GRADING, 
CERTIFICATION, AND STANDARDS)

0
22. The authority citation for part 54 continues to read as follows:

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


Sec.  54.6  [Amended]

0
23. Amend Sec.  54.6 in paragraph (c)(2), in the first sentence, by 
removing the phrase ``as provided in Sec.  54.27(b)'' and adding ``as 
provided in Sec.  54.27'' in its place.

0
24. Revise Sec.  54.27 to read as follows:


Sec.  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

[[Page 67322]]

with the following provisions unless otherwise provided in the 
cooperative agreement under which the services are furnished, or as 
provided in Sec.  54.6. 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 Sec.  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 Sec.  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 
Department. The fee for copies of certificates will be determined using 
the formulas in this section.

PART 56--VOLUNTARY GRADING OF SHELL EGGS

0
25. The authority citation for part 56 continues to read as follows:

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


0
26. Revise Sec.  56.46 to read as follows:


Sec.  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.

[[Page 67323]]

    (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.

0
27. Amend Sec.  56.52 by:
0
a. Revising the introductory text;
0
b. Revising the second sentence of paragraph (a)(1); and
0
c. Revising the first sentence of paragraph (a)(2) introductory text.
    The revisions read as follows:


Sec.  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 Sec.  56.47.
    (a) * * *
    (1) * * * The costs for completing the plant survey shall be borne 
by the applicant on a fee basis as described in Sec.  56.46. * * *
    (2) Charges for the cost of each grader assigned to a plant will be 
calculated as described in Sec.  56.46, 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. * * *
* * * * *

0
28. Amend Sec.  56.54 by revising the introductory text and paragraph 
(a)(1) introductory text to read as follows:


Sec.  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 Sec.  56.47.
    (a) * * *
    (1) A charge for the salary and other costs, calculated as 
described in Sec.  56.46, 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

0
29. The authority citation for part 58 continues to read as follows:

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


0
30. Revise Sec.  58.39 to read as follows:


Sec.  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 Sec.  58.43.

0
31. Revise Sec.  58.43 to read as follows:


Sec.  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 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.

0
32. Revise Sec.  58.45 to read as follows:


Sec.  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 Sec.  58.43.

PART 62--LIVESTOCK, MEAT AND OTHER AGRICULTURAL COMMODITIES 
(QUALITY SYSTEMS VERIFICATION PROGRAMS)

0
33. The authority citation for part 62 is revised to read as follows:

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


0
34. Revise Sec.  62.300 to read as follows:

[[Page 67324]]

Sec.  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

0
35. The authority citation for part 70 continues to read as follows:

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


0
36. Revise Sec.  70.71 to read as follows:


Sec.  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.
    (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.

0
37. Revise Sec.  70.72 to read as follows:


Sec.  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

[[Page 67325]]

rates determined based on the formulas in Sec.  70.71. 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.

0
38. Amend Sec.  70.76 by revising the introductory text and the first 
sentence of paragraph (a)(1) introductory text to read as follows:


Sec.  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 Sec.  70.72.
    (a) * * *
    (1) A charge for the salary and other costs, based on Sec.  70.71, 
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. * * *
* * * * *

0
39. Amend Sec.  70.77 by revising the introductory text and paragraphs 
(a)(1) and (2) to read as follows:


Sec.  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 Sec.  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 Sec.  70.34. The costs for completing the plant 
survey shall be borne by the applicant on a fee basis based on the 
formulas in Sec.  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

0
40. The authority citation for part 75 continues to read as follows:

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


0
41. Revise Sec.  75.41 to read as follows:


Sec.  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.
    (a) 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.
    (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.

0
42. Amend Sec.  75.42 by revising paragraph (b) to read as follows:


Sec.  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 Sec.  75.41.

0
43. Amend Sec.  75.43 by revising paragraphs (a) and (c) to read as 
follows:


Sec.  75.43  Laboratory testing.

* * * * *
    (a) Fees assessed based on the formulas in Sec.  75.41.
* * * * *
    (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

0
44. The authority citation for part 91 continues to read as follows:

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


0
45. Amend Sec.  91.37 by:
0
a. Revising paragraphs (a) and (b);
0
b. Removing paragraph (c); and
0
c. Redesignating paragraphs (d) and (e) as paragraphs (c) and (d), 
respectively.
    The revisions read as follows:


Sec.  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:

[[Page 67326]]

    (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.
* * * * *


0
46. Amend Sec.  91.38 by revising paragraph (a) to read as follows:


Sec.  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 Sec.  91.37.
* * * * *


0
47. Amend Sec.  91.39 by revising paragraph (a) to read as follows:


Sec.  91.39  Premium 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 Sec.  91.37.
* * * * *

    Dated: November 5, 2014.
Erin M. Morris,
Associate Administrator, Agricultural Marketing Service.
[FR Doc. 2014-26655 Filed 11-12-14; 8:45 am]
BILLING CODE 3410-02-P