Federal Register: September 22, 2006 (Volume 71, Number 184)
DOCID: FR Doc 06-7821
DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
CFR Citation: 7 CFR Parts 91 and 92
Docket ID: [Docket Number ST-05-01]
RIN ID: RIN 0581-AC48
NOTICE: PROPOSED RULES
ACTION: Science and Technology Laboratory Service:
DOCUMENT ACTION: Proposed rule with request for comments.
SUBJECT CATEGORY:
Changes in Hourly Fee Rates for Science and Technology Laboratory Services--Fiscal Years 2007-2009
DATES: Comments must be received on or before October 23, 2006.
DOCUMENT SUMMARY:
The Agricultural Marketing Service (AMS) is proposing to change the hourly fee rates for Science and Technology (S&T) Laboratory Services. The agency is proposing to raise these rates to reflect, among other factors, national and locality pay increases for Federal employees and inflation, operating costs, instrumentation and training, and program and agency administrative overhead costs. In the past, AMS has amended its regulations on an as needed basis in order to recover laboratory program costs. With this proposed regulation, AMS is providing for three annual standard hourly fee rate increases for fiscal years 20072009. This would provide the agricultural commodity industries and other stakeholders with more timely and relevant information regarding voluntary user fees for laboratory testing services. The agency is also proposing to remove tables and schedules with listings of individual tests and services. Three annual hourly fee rate adjustments are proposed for appeals, holiday, and overtime services to reflect the anticipated increase in cost of providing these laboratory services each fiscal year. The regulations also are updated to identify current facility addresses. Part 92 is obsolete and therefore has been removed.
SUMMARY:
Fees and charges increase,
SUPPLEMENTAL INFORMATION
Background
Science and Technology (S&T) Programs has been performing voluntary
laboratory services under the Agricultural Marketing Act of 1946, as
amended, for the AMS commodity programs (Fruit and Vegetable, Cotton,
Livestock and Seed, Poultry, Dairy, and Tobacco) and applicable
customers in these industries since its inception on August 17, 1988.
Before that, voluntary laboratory testing was provided for a user fee
by AMS under the various commodity programs. The current standard
hourly rate of $45.00 and the premium hourly rate of $67.50 have been
in effect since publication in the Federal Register on October 27, 2000
(65 FR 64302). The standard fee rate for laboratory services is
proposed to be increased to $60.00 per hour in fiscal year 2007, $63.00
per hour in fiscal year 2008, and $67.00 per hour in fiscal year 2009.
The premium hourly fee rates would also be adjusted for fiscal years
2007 through 2009. An increase in the premium hourly rates over the
three fiscal years for laboratory services performed on holidays,
appeal samples, and overtime basis is also needed since Science and
Technology laboratory personnel may be required to work extended hours
of service at the time and a half pay or the double hourly pay to accommodate clients. This is due to
[[Page 55370]]
stakeholder demand for immediate test results. Generally, the
processing of all laboratory samples is continuous over a 24/7
timeframe due to the recent introduction of automated equipment.
The AMS laboratory testing programs are voluntary, user fee services, conducted under the authority of the Agricultural Marketing Act of 1946 (AMA), as amended (7 U.S.C. 1621, et seq.). The AMA authorizes the Secretary of Agriculture to provide Federal analytical testing services that facilitate marketing and trade. In addition, consumers may be able to determine the quality and wholesomeness characteristics of a commodity or product through laboratory testing. This allows agricultural products to be assigned official AMS grade designations or to meet specifications. The AMA also requires that reasonable fees be collected from the users of the services to cover as nearly as possible the costs of maintaining the programs.
AMS regularly reviews its userfeesupported laboratory service programs to determine if the voluntary fees are adequate to cover expenses. The most recent review determined that the existing fee schedules and tables of individual tests or services, which have been in place since October 27, 2000, will not generate sufficient revenues to recover operating costs.
A more flexible user fee system, using set hourly rates for multiple fiscal years, is proposed by this rulemaking to ensure that AMS properly recovers its full costs for providing laboratory services, and that all stakeholders are charged reasonable fees. By enacting a three year fee increase instead of a single year fee increase, AMS would help ensure that the fee increases are effective at the beginning of each fiscal year (October 1).
In addition, the existing fee schedules and tables in 7 CFR, part 91, Sec. 91.37 would be removed. The analytical tests listed in the tables are not specific to individual commodity testing requirements or stakeholder needs. The current tables do not represent the actual operational costs to perform single tests and newer methodologies. Laboratory services are provided for five types of analytical testing: Microbiological, physical, residue chemistry, proximate analysis for composition, and biomolecular testing. AMS must recover the costs of providing these services. The proposed hourly fee rates would recover these costs.
AMS calculated its actual costs for fiscal years 2001 through 2005
and its projected increases in salaries and inflation in fiscal years
2006 through 2009. The estimates for increases in salaries for fiscal
year 2006 as the base year and the succeeding out years are from the
Office of Management and Budget's (OMB) multiyear ``Economic
Assumptions'' tables. The Federal pay raise for calendar years 2002,
2003, and 2004 were 4.6 percent, 4.1 percent and 4.1 percent,
respectively. This information comes from Table 111, ``Economic
Assumptions'', of the Office of Management and Budget's Fiscal Year
2005 Budget which is available at http://www.whitehouse.gov/omb/budget/fy2005/econ.html. The average fiscal year pay raise for Federal
employees in calendar years 2005 and 2006 was 3.5 percent effective
January 2005 and 3.1 percent effective January 2006. The average
combined national and locality pay raise is estimated to be 2.2 percent
for fiscal years 2007, 2008, and 2009. Inflation for fiscal year 2006
is estimated to be 2.1 percent. Inflation for fiscal year 2007 is
estimated to be 2.2 percent. Inflation for fiscal year 2008 is
estimated to be 2.1 percent. Inflation for fiscal year 2009 is
estimated to be 2.1 percent. These estimates for inflation percent can
be obtained from Table 121, ``Economic Assumptions'', of the OMB's
Fiscal Year 2007 Budget which is available at http://www.whitehouse.gov/omb/budget/fy2007/econ.html .
The Agency will initiate another rulemaking to adjust any fee
established, if estimated increases for pay and inflation do not
adequately cover the Agency's costs of providing the services. The cost
of providing laboratory services includes both direct and overhead
costs. Direct costs include the cost of salaries, employee benefits,
operation cost and infrastructure cost. The Agency is able to estimate
the employee benefits attributable to overtime work and has included these in the fee calculations.
Table 1.Current and Proposed Hourly Fee Rates (Per Hour) by Type of Service
Current FY 2007 FY 2008 FY 2009
Service rate rate \1\ rate \2\ rate \3\
Laboratory.................................................. $ 45.00 $ 60.00 $ 63.00 $ 67.00
Appeal...................................................... 67.50 71.00 74.00 78.00
Overtime.................................................... 67.50 71.00 74.00 78.00
Legal Holiday............................................... 67.50 82.00 85.00 89.00
1 2 3 Hourly values for FY 2007FY 2009 are rounded off to nearest whole dollar.
With this proposed action, the AMS would amend its regulations to
provide for three annual fee increases in one action. Table 1 shows the
summary of the current rates and the proposed hourly fee rates for
fiscal years 2007 through 2009 for the four different types of services
(regular laboratory, appeal, overtime, and legal holiday work) that Science and Technology Programs employees perform.
Table 2.Calculations for the Standard Hourly Rate for Laboratory Program Services for FY 2006
Apportioned
Laboratory services fee rate Base Time:
FY 2006 Pay Adjustment \2\ = [Actual FY 2005 1.48 Salaries ($20.00)] x 0.031 + $0.86 (weighted
changes with payroll for withingrade pay step
increases for General Schedule salaries, promotion
pay costs and new employee position pay costs).....
Benefits \3\........................................ 6.90
Operational Costs \4\............................... 11.60
Infrastructure Costs \5\............................ 8.78 [[Page 55371]]
Program Overhead \6\................................ 3.44
Agency Overhead \7\................................. 3.28
FY 2006 Inflation (2.1 %) = [Costs excluding 0.53 infrastructure and payroll] x .021.................
Total Rate Per HourBase Time.................. 56.01
\1\ Actual cost of FY 2005 salaries ($2,787,474) / (2,080 program hours times 67 program employees) = $20.00 unit cost.
\2\ Actual cost of FY 2006 pay adjustment ($205,911) / (2,080 program hours times 67 program employees) = $1.48 unit cost.
\3\ Actual cost of benefits ($961,668) / (2,080 program hours times 67 program employees) = $6.90 unit cost.
\4\ Actual cost of operational costs ($1,616,645) / (2,080 program hours times 67 program employees) = $11.60 unit cost.
\5\ Actual cost of infrastructure ($1,223,570) / (2,080 program hours times 67 program employees) = $8.78 unit cost.
\6\ Actual cost of Program overhead ($479,000) / (2,080 program hours times 67 program employees) = $3.44 unit cost.
\7\ Actual cost of Agency overhead ($457,000) / (2,080 program hours times 67 program employees) = $3.28 unit cost.
Table 3.Calculations for the Standard Hourly Rate for Laboratory Program Services for FY 2007
Apportioned
Laboratory services fee rate Base Time:
FY 2006 Salaries = Actual FY 2005 Salaries ($20.00) $21.48 + FY 2006 Pay Adjustment ($1.48)...................
FY 2007 Pay Adjustment = FY 2006 Salaries x 0.022... 0.47
Benefits............................................ 6.90
Operational Costs................................... 11.60
Infrastructure Cost................................. 11.75
Program Overhead.................................... 3.44
Agency Overhead..................................... 3.28
FY 2006 Inflation (2.1%) = [Costs excluding 0.53 infrastructure and payroll] x .021.................
FY 2007 Inflation (2.2%) = [Costs excluding 0.57 infrastructure and payroll] x 022..................
Total Rate Per HourBase Time.................. 60.02
Table 4.Calculations for the Standard Hourly Rate for Laboratory Program Services for FY 2008
Apportioned
Laboratory services fee rate Base Time:
FY 2007 Salaries = FY 2006 Salaries ($21.48) + FY $21.95 2007 Pay Adjustment ($0.47)........................
FY 2008 Pay Adjustment = FY 2007 Salaries x 0.022... 0.48
Benefits............................................ 6.90
Operational Costs................................... 11.60
Infrastructure Cost................................. 13.47
Program Overhead.................................... 3.44
Agency Overhead..................................... 3.28
FY 2006 Inflation (2.1%) = [Costs excluding 0.53 infrastructure and payroll] x .021.................
FY 2007 Inflation (2.2%) = [Costs excluding 0.57 infrastructure and payroll] x .022.................
FY 2008 Inflation (2.1%) = [Costs excluding 0.55 infrastructure and payroll] x .021.................
Total Rate Per HourBase Time.................. 62.77
Table 5.Calculations for the Standard Hourly Rate for Laboratory Program Services for FY 2009
Apportioned
Laboratory services fee rate Base Time:
FY 2008 Salaries = FY 2007 Salaries ($21.95) + FY $22.43 2008 Pay Adjustment ($0.48)........................
FY 2009 Pay Adjustment = FY 2008 Salaries x 0.022... 0.49
Benefits............................................ 6.90
Operational Costs................................... 11.60
Infrastructure Cost................................. 16.15
Program Overhead.................................... 3.44
Agency Overhead..................................... 3.28
FY 2006 Inflation (2.1%) = [Costs excluding 0.53 infrastructure and payroll] x .021.................
FY 2007 Inflation (2.2%) = [Costs excluding 0.57 infrastructure and payroll] x .022.................
FY 2008 Inflation (2.1%) = [Costs excluding 0.55 infrastructure and payroll] x .021.................
FY 2009 Inflation (2.1%) = [Costs excluding 0.56 infrastructure and payroll] x .021.................
[[Page 55372]]
Total Rate Per HourBase Time.................. 66.50
In order to project the hourly fee rates for the laboratory program services for fiscal years 2007 through 2009, the current fiscal year 2006 is used as a base. The total base time hourly fee rate calculation (Table 2) for fiscal year 2006 begins with the actual salaries for fiscal year 2005 ($2,787,474) and adds the fiscal year 2006 pay raises (3.1 percent) and add other fiscal year 2006 pay adjustments ($119,500) for withingrade pay step increases for General Schedule (GS) salaries, promotion pay costs, and new employee position pay costs. Table 2 contains footnotes 17 that provide the common mathematical formula used to calculate the apportioned rate for each fee charge category for fiscal year 2006. The formula uses the actual cost or projected cost in dollars for the applicable fiscal year for each individual fee charge category divided by the available program hours and further divided by the number of laboratory service program employees. The formula derives the apportioned fee rate for each fee charge category (salaries with pay adjustment, benefits, operational costs, infrastructure cost, program administrative overhead and agency overhead). The same formula that is used in Table 2 and that is indicated in its footnotes is also applied in the other tables to derive each category unit rate with the different actual costs or variable projected costs to be inserted in the formula equation for the applicable fiscal year.
Table 3 through Table 5 show the calculation of the total standard
hourly fee rates to be rounded off for fiscal years 2007 through 2009.
Table 6.Calculations for the Appeal and Overtime Hourly Rates for Laboratory Program Services for FY 2006
Apportioned
Laboratory services fee rate and a half):
($20.00)] x 1.5....................................
FY 2006 Pay Adjustment = [Actual FY 2005 Salaries 2.22 $119,500 increase for the FY 2006 period changes
with payroll for withingrade pay step increases
for General Schedule salaries, promotion pay costs,
and new employee position pay costs)] x 1.5........
Benefits............................................ 6.90
Operational Costs................................... 11.60
Infrastructure Cost................................. 8.78
Program Overhead.................................... 3.44
Agency Overhead..................................... 3.28
FY 2006 Inflation (2.1%) = [Costs excluding 0.53 infrastructure and payroll] x .021.................
Total Rate Per HourAppeal and Overtime........ 66.75
Table 7.Calculations for the Appeal and Overtime Hourly Rates for Laboratory Program Services for FY 2007
Apportioned
Laboratory services fee rate and a half):
($20.00) + 2006 Pay Adjustment ($1.48)] x 1.5......
0.022..............................................
Benefits............................................ 6.90
Operational Costs................................... 11.60
Infrastructure Cost................................. 11.75
Program Overhead.................................... 3.44
Agency Overhead..................................... 3.28
FY 2006 Inflation (2.1%) = [Costs excluding 0.53 infrastructure and payroll] x .021.................
FY 2007 Inflation (2.2%) = [Costs excluding 0.57 infrastructure and payroll] x .022.................
Total Rate Per HourAppeal and Overtime........ 71.00
Table 8.Calculations for the Appeal and Overtime Hourly Rates for Laboratory Program Services for FY 2008
Apportioned
Laboratory services fee rate and a half):
+ FY 2007 Pay Adjustment ($0.47)] x 1.5............
[[Page 55373]]
0.022..............................................
Benefits............................................ 6.90
Operational Costs................................... 11.60
Infrastructure Cost................................. 13.47
Program Overhead.................................... 3.44
Agency Overhead..................................... 3.28
FY 2006 Inflation (2.1%) = [Costs excluding 0.53 infrastructure and payroll] x .021.................
FY 2007 Inflation (2.2%) = [Costs excluding 0.57 infrastructure and payroll] x .022.................
FY 2008 Inflation (2.1%) = [Costs excluding 0.55 infrastructure and payroll] x .021.................
Total Rate Per HourAppeal and Overtime........ 73.99
Table 9.Calculations for the Appeal and Overtime Hourly Rates for Laboratory Program Services for FY 2009
Apportioned
Laboratory services fee rate and a half):
2008 Pay Adjustment ($0.48)] x 1.5.....................
Benefits............................................ 6.90
Operational Costs................................... 11.60
Infrastructure Cost................................. 16.15
Program Overhead.................................... 3.44
Agency Overhead..................................... 3.28
FY 2006 Inflation (2.1%) = [Costs excluding 0.53 infrastructure and payroll] x .021.................
FY 2007 Inflation (2.2%) = [Costs excluding 0.57 infrastructure and payroll] x .022.................
FY 2008 Inflation (2.1%) = [Costs excluding 0.55 infrastructure and payroll] x .021.................
FY 2009 Inflation (2.1%) = [Costs excluding 0.56 infrastructure and payroll] x .021.................
Total Rate Per HourAppeal and Overtime........ 77.97
Table 6 through Table 9 show the calculation of the total appeal
and total overtime hourly fee rates to be rounded off for fiscal years
2006 through 2009. These tables incorporate the differentials in costs
associated with the necessity of laboratory personnel to work extended
hours of service at the time and a half pay doing either overtime or appeal sample testing.
Table 10.Calculations for the Federal Holiday Hourly Rate for Laboratory Program Services for FY 2006
Apportioned
Laboratory services fee rate ($20.00)] x 2.0....................................
FY 2006 Pay Adjustment = [Actual FY 2005 Salaries 2.96 $119,500 increase for the FY 2006 period changes
with payroll for withingrade pay step increases
for General Schedule salaries, promotion pay costs,
and new employee position pay costs)] x 2.0........
Benefits............................................ 6.96
Operational Costs................................... 11.60
Infrastructure Cost................................. 8.78
Program Overhead.................................... 3.44
Agency Overhead..................................... 3.28
FY 2006 Inflation (2.1%) = [Costs excluding 0.53 infrastructure and payroll] x .021.................
Total Rate Per HourHolidays................... 77.49 [[Page 55374]]
Table 11.Calculations for the Federal Holiday Hourly Rate for Laboratory Program Services for FY 2007
Apportioned
Laboratory services fee rate ($20.00) + 2006 Pay Adjustment ($1.48)] x 2.0......
0.022..............................................
Benefits............................................ 6.90
Operational Costs................................... 11.60
Infrastructure Cost................................. 11.75
Program Overhead.................................... 3.44
Agency Overhead..................................... 3.28
FY 2006 Inflation (2.1%) = [Costs excluding 0.53 infrastructure and payroll] x .021.................
FY 2007 Inflation (2.2%) = [Costs excluding 0.57 infrastructure and payroll] x .022.................
Total Rate Per HourHolidays................... 81.98
Table 12.Calculations for the Federal Holiday Hourly Rate for Laboratory Program Services for FY 2008
Apportioned
Laboratory services fee rate + FY 2007 Pay Adjustment ($0.47)] x 2.0............
0.022..............................................
Benefits............................................ 6.90
Operational Costs................................... 11.60
Infrastructure Cost................................. 13.47
Program Overhead.................................... 3.44
Agency Overhead..................................... 3.28
FY 2006 Inflation (2.1%) = [Costs excluding 0.53 infrastructure and payroll] x .021.................
FY 2007 Inflation (2.2%) = [Costs excluding 0.57 infrastructure and payroll] x .022.................
FY 2008 Inflation (2.1%) = [Costs excluding 0.55 infrastructure and payroll] x .021.................
Total Rate Per HourHolidays................... 85.21
Table 13.Calculations for the Federal Holiday Hourly Rate for Laboratory Program Services for FY 2009
Apportioned
Laboratory services fee rate + FY 2008 Pay Adjustment ($0.48)] x 2.0............
0.022..............................................
Benefits............................................ 6.90
Operational Costs................................... 11.60
Infrastructure Cost................................. 16.15
Program Overhead.................................... 3.44
Agency Overhead..................................... 3.28
FY 2006 Inflation (2.1%) = [Costs excluding 0.53 infrastructure and payroll] x .021.................
FY 2007 Inflation (2.2%) = [Costs excluding 0.57 infrastructure and payroll] x .022.................
FY 2008 Inflation (2.1%) = [Costs excluding 0.55 infrastructure and payroll] x .021.................
FY 2009 Inflation (2.1%) = [Costs excluding 0.56 infrastructure and payroll] x .021.................
Total Rate Per HourHolidays................... 89.43
Table 10 through Table 13 show the calculation of the total legal holiday hourly fee rates to be rounded off for fiscal years 2006 through 2009. These tables incorporate the differentials in costs associated with the necessity of laboratory personnel to work extended hours of service at the double hourly pay rate doing sample testing on a Federal holiday or a designated day for the Federal holiday.
The Agency proposes to recover the actual cost of services for
multiple fiscal years covered by this rule. These fee increases are
essential for the continued sound financial management of the Agency's
budget. In order to enhance the transparency of the hourly fee rates in
the aforementioned Tables 3 through 13 for fiscal year 2007, fiscal
year 2008 and fiscal year 2009, a description is provided of each fee
charge category. Federal salaries with national and locality pay
adjustments and choices in benefits are made available on an annual
basis by the Office of Personnel Management (OPM). Operational costs
include expenses for rents, communications, utilities, medical [[Page 55375]]
examinations, safety equipment, sample preparation equipment, training,
trash and hazardous waste disposal, travel and transportation costs.
Communication expenditures include costs for photocopying, printing, e
mailing, Internet services, telephone, and faxing equipment. There have
been large capital improvement expenditures in the laboratories in
recent years. These expenditures include costs for the Food Emergency
Response Network (FERN) and the capital improvements for the
Environmental Management Systems (EMS) in accordance with the
applicable mandates for Federal laboratories of Executive Order 13148
of April 21, 2000, Greening the Government Through Leadership in
Environmental Management (65 FR 24593). These capital improvement costs
are included in the normal operations of the Science and Technology
field service laboratories. In addition, operational costs include
expenses for office and laboratory supplies, chemicals, reagents,
security and guard services, waste removal, robots, cleaning and
internal building maintenance, billing and collection services, and a
Laboratory Information Management System (LIMS). Infrastructure costs
are mainly laboratory instruments and capital equipment with service
and maintenance contracts and replacement spare parts. Infrastructure
expenses include consumable supply costs associated directly with the
proper operation of analytical instruments and laboratory equipment.
Stakeholders demand that AMS provide cost effective and timely product
testing requiring modern and sometimes automated instrumentation. These
instruments are expensive and undergo equipment capitalization for
determining costs. Equipment capitalization is the determined cost per
year to replace the equipment after its useful service life has been
established. Infrastructure costs include database acquisitions and
maintenance for ebusiness. Infrastructure costs include large computer
hardware and software expenses. Agency and Program overhead is the pro
rated share, attributable to a particular service, of the agency's
management and support costs. Management and administrative support
costs include the costs of providing budget and accounting services,
regulatory services, investigative and enforcement services, debt
management services, personnel services, public information services,
legal services, statistical services, and other general program and
agency management services of support activities above the local
laboratory level. Overhead expenditures are allocated across the Agency for each direct hour of laboratory service.
AMS no longer uses the Billings and Collections System (BLCO) for billings and collections through the National Finance Center (NFC) in New Orleans, LA. The Agency now uses the ``accounts receivable'' functions in Foundation Financial Information System (FFIS) as the document feeder system for customer billings and the collections now come through our lockbox. Accordingly, Sec. 91.42 would be updated to reflect these changes. The regulations also are updated to identify current facility addresses.
This proposed rule would also remove and reserve 7 CFR part 92.
Part 92 is obsolete because it relates to the mandatory testing of
imported tobacco for prohibited pesticide residues and the statutory
requirement for such testing has been removed by the Fair and Equitable
Tobacco Reform Act of 2004 (7 U.S.C. 518). The tests had been conducted
by Science and Technology (S&T) Programs for the AMS Tobacco Program,
which sampled imported tobacco and administered the program for imported tobacco.
Executive Order 12866, Regulatory Flexibility Act, and Paperwork Reduction Act
This proposed rule has been reviewed under Executive Order 12866. Although not economically significant, this rule has been determined to be significant for the purposes of Executive Order 12866 and, therefore, has been reviewed by the Office of Management and Budget (OMB).
An economic analysis follows to review the impacts on laboratory customers of the proposed revisions in AMS voluntary user fees for laboratory services. The economic analysis provides a costbenefit analysis as required by Executive Order 12866 and an analysis of the potential economic effects on small entities as required by the Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq.). In accordance with 5 U.S.C. 603, AMS has performed an Initial Regulatory Flexibility Analysis for this proposed rule. AMS is inviting comments about this proposed rule as it relates to small entities. In particular, AMS is interested in obtaining information concerning the number and kind of small entities who may incur benefits or costs from implementation of this proposed rule and the impact of those benefits or costs on decisions to utilize AMS voluntary testing services.
Regulations must be designed in the most costeffective manner possible to obtain the objective of a sustainable cost recovery program while imposing the least burden on society. AMS has prepared a Regulatory Impact Assessment (RIA) consisting of a statement of the need for the proposed action, an examination of alternative approaches, and an economic analysis of the benefits and costs.
Need for Proposed Action.
The AMS laboratory testing programs are voluntary, user fee services conducted under the authority of the Agricultural Marketing Act of 1946 (AMA), as amended (7 U.S.C. 1621, et seq.). The AMA authorizes the Secretary of Agriculture to provide Federal analytical testing services that facilitate marketing and trade. The AMA also requires that reasonable fees be collected from the users of the services to cover as nearly as practicable the costs of maintaining the programs.
Science and Technology (S&T) Programs of AMS regularly reviews its userfeefinanced laboratory service programs to determine if the fee levels are adequate. The most recent review determined that the existing fee schedule, effective October 27, 2000 (65 FR 64302) does not generate sufficient revenues to recover operating costs. For fiscal year 2005 the Science and Technology program reported a $702,000 deficit at the current fee levels. The Science and Technology program costs and revenues for fiscal year 2005 were $6,393,000 and $5,691,000, respectively. Program obligations for fiscal year 2006 are projected at $6,602,000 and revenues are projected at $5,834,000 for an estimated deficit of $768,000. With this proposed action, the Agency expects to collect an estimated $6,521,000, $7,186,000, and $7,553,000 in fiscal years 2007 through 2009 respectively, to cover the cost of routine laboratory services, appeal requests, overtime, and holiday services for Science and Technology customers and other program stakeholders. Alternatives
Alternatives to the proposed rate increase were considered by the
Agency. One alternative to this proposed rule would be to make no
changes to the current user fees. As a result, AMS would not recover
the full cost of program activities and services would have to be
reduced or terminated. Were this to happen, the users of AMS laboratory
services would be unable to meet certain AMS program requirements,
would find it more difficult to meet foreign government or importer
testing requirements, and would lose the opportunity to support [[Page 55376]]
their marketing efforts with what they believe to be preferred
government laboratory test results. Consequently, AMS does not consider this alternative to be reasonable.
Another alternative considered would be to calculate the fee increases needed over the next three year period and then spread this overall increase evenly in annual increments. Because the increases are necessary to cover ongoing costs, e.g., rent, salaries and benefits, and equipment replacement, and financial stability needs to be maintained for this program, adequate funds must be generated immediately, rather than spread over a three year period. Thus, AMS does not consider this alternative to be reasonable.
To ensure full costs are being covered as they are incurred, the preferred alternative is to match fee increases with expected costs on an annual basis over the next three years. This alternative will assure costs are appropriately covered and that laboratory testing services remain available as program customers request them. With this proposed action, the Agency expects to collect an estimated $6,521,000, $7,186,000, and $7,553,000 in fiscal years 2007 through 2009, respectively, to cover the cost of routine laboratory services, appeal requests, overtime, and holiday services.
Summary of Impacts
Under this proposal AMS would continue to offer laboratory testing services under the Agricultural Marketing Act of 1946 as amended, to facilitate marketing and allow products to obtain grade designations or meet marketing standards. As such, the program provides a viable option for a wide variety of clients by delivering scientific and analytical support services to the agricultural community and provides a valuable resource for those businesses and industries that wish to use a USDA shield.
Further, by proposing a three year fee increase instead of a single year fee increase, the Agency would help ensure that the fee increases are effective at the beginning of each fiscal year on October 1. An increase over three fiscal years would permit customers and other program stakeholders an opportunity to plan for annual changes in costs of laboratory service and to incorporate them into their budgetary plans.
For analytical purposes, projected collections are based on calculations using an effective date of October 1, 2006 for the proposed fiscal year 2007 user fees. There are essentially three rate increases being proposed for the basic laboratory services$45 to $60 or 33.3 percent in fiscal year 2007, $60 to $63 or 5.0 percent in fiscal year 2008 and $63 to $67 or 6.4 percent in fiscal year 2009. The rate increases for overtime and appeals are $67.50 to $71 or 5.2 percent, $71 to $74 or 4.2 percent, and $74 to $78 or 5.4 percent in fiscal years 2007, 2008, and 2009, respectively. The rate increases for holiday service are $67.50 to $82 or 21.5 percent, $82 to $85 or 3.7 percent, and $85 to $89 or 4.7 percent in fiscal years 2007, 2008, and 2009, respectively. This is a voluntary program and the costs to each user would be proportional to their use of laboratory services each year. The increased fees will cover inflation and national and locality pay raises and replacement of equipment and other infrastructure improvements.
Under the Regulatory Flexibility Act, the impact ofthis proposed rule on small businesses must be analyzed. There are 811 current users of AMS laboratory testing services. Such users of services include food processors, handlers, growers, Federal and State government agencies, and exporters. Many of these users are small entities under the criteria established by the Small Business Administration (13 CFR 121.201). Any decision by stakeholders and customers to discontinue the use of the laboratory services because of increased fees would not hinder food processors or other industry members from marketing their products.
For the following cost analysis, certain assumptions are used. First, base year data is actual fiscal year 2005 amount billed for voluntary services performed for the public. Second, seven percent of the total amount billed represents overtime costs and five percent represents costs related to appeals. Third, the calculated amounts in fiscal year 2007 are using the base year data as if the base year was fiscal year 2006. Fourth, each of the 811 customers had the exact same tests, using the same amount of time, and thus were billed the exact same amount. This customer is the ``average'' laboratory customer.
Table 14 sets the total levels for the dollar ($) amounts billed in the base year (Fiscal Year 2006).
Table 14.Base Year Data (Fiscal Year 2006)
Total Billed............................................ $1,536,688
Basic Laboratory Services............................... 1,352,285
Overtime Costs (7%)..................................... 107,568
Appeal Costs (5%)....................................... 76,834
Table 15 presents the base year costs and estimates costs in fiscal
year 2007, fiscal year 2008, and fiscal year 2009 for the ``average''
laboratory customer. The base year values are derived by dividing basic
laboratory services, overtime costs, and appeal costs by 811. The
values for fiscal years 2007, 2008, and 2009 are derived multiplying each year by the appropriate percentage rate.
Table 15.Costs ($) for the ``Average'' Customer, Base Year Through Fiscal Year 2009
Total
Base year FY 2007 FY 2008 FY 2009 Diff.\1\
Lab Services................................... 1,667 2,223 2,334 2,483 816
Overtime....................................... 133 140 146 154 21
Appeals........................................ 95 100 104 110 15
Total...................................... 1,895 2,463 2,584 2,747 852 \1\ Net difference calculated between costs in dollars ($) between base year and Fiscal Year 2009.
After the third increase, the customer will pay an additional
average of $852 for all laboratory services. This is a 44.96 percent
increase over the base year. The percentage increase for the basic
laboratory services is 49.0 percent, overtime is 15.8 percent, and an appeal sample is 15.8 percent.
[[Page 55377]]
Table 16.Costs ($) for a ``Large Business'' Customer, Base Year Through Fiscal Year (FY) 2009
Total
Base year FY 2007 FY 2008 FY 2009 diff.\1\
Lab Services................................... 704,000 938,432 985,354 1,048,417 344,417
Overtime....................................... 56,000 58,912 61,386 64,701 8,701
Appeals........................................ 40,000 42,080 43,847 46,215 6,215
Total...................................... 800,000 1,039,424 1,090,587 1,159,333 359,333 \1\ Net difference calculated between costs in dollars ($) between base year and Fiscal Year 2009.
Table 16 presents the base year costs and estimates costs in fiscal years 2007, 2008, and 2009 for a ``large business'' laboratory customer. While the numerical values increase significantly, the percentages are the same. Even though the ``large business'' customer is paying $359,333 more then what was paid for the same services in the base year, the increase is still approximately 44.9 percent above what was billed in the base year.
The same is true for a ``small business'' customer. Table 17 presents the costs associated with a customer billed $29,000. Again the total difference between the billing in fiscal year 2009 and the base year is significantly smaller than the billing of an ``average'' customer, but the percentage increase is still near 44.9 percent. Table 17.Costs ($) for a ``Small Business'' Customer, Base Year Through Fiscal Year (FY) 2009 Total Base year FY 2007 FY 2008 FY 2009 diff.\l\ Lab Services................................... 25,520 34,018 35,719 38,005 12,485 Overtime....................................... 2,030 2,136 2,226 2,346 316 Appeals........................................ 1,450 1,525 1,589 1,675 225
Total...................................... 29,000 37,679 39,534 42,026 13,026 \1\ Net difference calculated between costs in dollars ($) between base year and FY 2009.
Under the Regulatory Flexibility Act, the impact of this proposed rule on small businesses must be considered. The Agency estimates that 25 percent of the laboratory fees billed in fiscal year 2005 was to small businesses. Thus, a total of $384,172 was billed to small businesses. If the entire proposed fee increase had been implemented, small businesses would have been billed $556,665, a 44.9 percent increase.
One question is how each of these customers including small businesses will react to cost increases at these amounts. The increases are spread over a three year period which will mitigate some of the impact. But the focus should be on the reaction to the increase occurring in fiscal year 2007 which is a one third increase over the base year. The answer is dependent on the customer's business, and is proportional to the number of samples involved. The lower the cost per unit of product being sampled, the higher the probability the customer will continue to use AMS laboratory services and pass on some or all of the additional costs, the exact amount of which is not known. Also, use of AMS laboratory services is voluntary and other private or public laboratory options are available.
This proposed rule contains no new information collection or recordkeeping requirements that are subject to the Office of Management and Budget (OMB) approval under the Paperwork Reduction Act of 1995 (44 U.S.C. 35013520). AMS is committed to implementation of the Government Paperwork Elimination Act which provides for the use of information resources to improve the efficiency and effectiveness of governmental operations, including providing the public with the option of submitting information or transacting business electronically to the extent practicable. USDA has not identified any relevant Federal rules that duplicate, overlap, or conflict with this rule.
Unfunded Mandate Analysis
Title II of the Unfunded Mandate Reform Act of 1995 (UMRA), Public Law 1044, establishes requirements for Federal agencies to assess the effects of their regulatory actions on State, local, and tribal governments and the private sector. Under section 202 of UMRA, the Department generally must prepare a written statement, including a cost benefit analysis, for proposed and final rules with ``Federal mandates'' that may result in expenditures to State, local, or tribal governments, in the aggregate, or to the private sector, of $100 million or more in anyone year. When such a statement is needed for a rule, section 205 of UMRA generally requires that the Department identify and consider a reasonable number of regulatory alternatives and adopt the least costly, more costeffective or least burdensome alternative that achieves the objectives of the rule.
This rule contains no Federal mandates (under the regulatory provisions of Title II of the UMRA) that impose costs on State, local, or tribal governments or to the private sector of $100 million or more in anyone year. Thus, this rule is not subject to the requirements of sections 202 and 205 of UMRA.
Civil Justice Reform (Executive Order 12988)
This proposed rule has been reviewed under Executive Order 12988, Civil Justice Reform. It is not intended to have retroactive effect. This proposed rule would not preempt any State or local laws, regulation, or policies, unless they present an irreconcilable conflict with this rule. There are no administrative procedures which must be exhausted prior to any judicial challenge to this rule or the application of its provisions.
Civil Rights Review
AMS has considered the potential civil rights implications of this
rule on minorities, women, or persons with disabilities to ensure that
no person or group shall be discriminated against on the basis of race, color, national origin,
[[Page 55378]]
gender, religion, age, disability, sexual orientation, marital or
family status, political beliefs, parental status, or protected genetic
information. AMS has included at Sec. 91.7 the provision in the
regulation under part 91 to describe in detail the requirements for
nondiscrimination when reviewing or granting any person or entity the
benefits of Science and Technology Programs laboratory service. This
regulation is consistent with USDA regulations which prohibit discrimination in its programs and activities.
This proposed rule would not require affected entities to relocate or alter their operations in ways that could adversely affect such persons or groups. Further, this proposed rule would not deny any persons or groups the benefits of the program or subject any persons or groups to discrimination.
AMS has reviewed this proposed rule in accordance with the Department Regulation 43004, ``Civil Rights Impact Analysis.'' AMS has determined this proposed action ensures the civil rights of all Science and Technology Programs applicants and customers. They represent minorities (24.4%), women (51.1%), and persons with disabilities (14.5%) in the same percent proportions to the entire customer base as their compositions are represented in the total approximate general population (299 million) of the United States of America available in descriptive tables at http://www.census.gov/. In addition, each and every customer would receive the same user fee for each identical service.
Comments
A thirty day comment period is provided for interested persons to comment on this proposed action. All comments received by October 23, 2006 will be considered. A thirty day period for public comment is justified in order to allow the agency to recover the full cost of operating a voluntary user fee laboratory testing program. The existing fee schedules have been in place since October 2000. AMS regularly reviews its userfeesupported programs to determine if the voluntary fees are adequate to cover expenses. Due to the length of the rulemaking process, the fiscal year has partially elapsed by the time the agency publishes a final rule to amend its fees. As a result the agency is unable to recover the full cost of its services in a timely manner. Therefore, a thirty day comment period is reasonable. List of Subiects
7 CFR Part 91
Administrative practice and procedure, Agricultural commodities, Laboratories, Reporting and recordkeeping requirements.
7 CFR Part 92
Agricultural commodities, Laboratories, Pesticides and pests, Tobacco.
Under the authority of 7 U.S.C. 1622 and 1624, the Agricultural Marketing Service proposes to amend parts 91 and 92 of Title 7, chapter I, subchapter E, of the Code of Federal Regulations as follows: PART 91SERVICES AND GENERAL INFORMATION [AMENDED]
1. The authority citation for part 91 continues to read as follows:
Authority: 7 U.S.C. 1622, 1624.
2. Section 91.5 is revised to read as follows:
Sec. 91.5 Where services are offered.
(a) Services are offered to applicants at the Science and Technology laboratories and facilities as listed below.
(1) Science and Technology Programs National Science Laboratory. A
variety of proximate, chemical, microbiological and biomolecular tests
and laboratory analyses performed on fruits and vegetables, poultry,
meat and meat products, fiber products and processed foods are
performed at the Science and Technology Programs (S&T) laboratory
located at: USDA, AMS, Science and Technology Programs, National
Science Laboratory (NSL), 801 Summit Crossing Place, Suite B, Gastonia, North Carolina 280542193.
(2) Science and Technology (S&T) Programs Science Satellite
Laboratories. The specialty satellite laboratories performing aflatoxin
and other testing on peanuts, peanut products, dried fruits, grains,
edible seeds, tree nuts, shelled corn products, oilseed products,
vegetable oils, juices, citrus products, and other commodities are located as follows:
(i) USDA, AMS, Science & Technology, Citrus Laboratory, 98 Third Street, SW., Winter Haven, Florida 338802905.
(ii) USDA, AMS, Science & Technology, 6567 Chancey Mill Road, Blakley, Georgia 398232785.
(iii) USDA, AMS, Science & Technology, c/o Golden Peanut Company
LLC, (Mail: P.O. Box 272), 715 Martin Luther King Drive, Dawson, Georgia 398421002.
(iv) USDA, AMS, Science & Technology, 107 South Fourth Street, Madill, Oklahoma 734463431.
(v) USDA, AMS, Science & Technology, (Mail: P.O. Box 1130), 308 Culloden Street, Suffolk, VA 234344706.
(3) Program laboratories. Laboratory services are available in all
areas covered by cooperative agreements providing for this laboratory
work and entered on behalf of the Department with cooperating Federal
or State laboratory agencies pursuant to authority contained in Act(s)
of Congress. Also, services may be provided in other areas not covered
by a cooperative agreement if the Administrator determines that it is possible to provide such laboratory services.
(4) Other alternative laboratories. Laboratory analyses may be
conducted at alternative Science and Technology Programs laboratories
and can be reached from any commodity market in which a laboratory
facility is located to the extent laboratory personnel are available.
(5) The Plant Variety Protection (PVP) Office. The PVP office and
plant examination facility of the Science and Technology programs
issues certificates of protection to developers of novel varieties of
plants which reproduce sexually. The PVP office is located as follows:
USDA, AMS, Science & Technology Programs, Plant Variety Protection
Office, National Agricultural Library Building, Room 401, 10301 Baltimore Boulevard, Beltsville, MD 207052351.
(6) Science and Technology Programs headquarters offices. The
examination, licensure, quality assurance reviews, laboratory approval/
certification and consultation services are provided by headquarters
staff located in Washington, DC. The main headquarters office is
located as follow: USDA, AMS, Science and Technology Programs, Office
of the Deputy Administrator, South Agriculture Bldg., Mail Stop 0270, 1400 Independence Ave., SW., Washington, DC 202500270.
(7) The Information Technology (IT) Group. The IT office of the
Science and Technology Programs is headed by the Associate Deputy
Administrator for Technology/Chief Information Officer and provides
information technology services and management systems to the Agency
and other agencies within the USDA. The main IT office is located as
follows: USDA, AMS, Science and Technology, Office of the Associate
Deputy Administrator for Technology, 1752 South Agriculture Bldg., Mail Stop
[[Page 55379]]
0204, 1400 Independence Ave., SW., Washington, DC 202500204.
(8) Statistics Branch Office. The Statistics Branch office of
Science and Technology Programs (S&T) provides statistical services to
the Agency and other agencies within the USDA. In addition, the
Statistics Branch office generates sample plans and performs consulting
services for research studies in joint efforts with or in a leading
role with other program areas of AMS or of the USDA. The Statistics
Branch office is located as follows: USDA, AMS, S&T Statistics Branch,
0603 South Agriculture Bldg., Mail Stop 0223, 1400 Independence Ave., SW., Washington, DC 202500223.
(9) Technical Services Branch Office. The Technical Services Branch
office of Science and Technology (S&T) provides technical support
services to all Agency programs and other agencies within the USDA. In
addition, the Technical Services Branch office provides certification
and approval services of private and State government laboratories as
well as oversees quality assurance programs; import and export
certification of laboratory tested commodities. The Technical Services
Branch mailing address is as follows: USDA, AMS, S&T Technical Services
Branch, South Agriculture Bldg., Mail Stop 0272, 1400 Independence
Ave., SW., Washington, DC 202500272. The Technical Services Branch
office is located as follows: USDA, AMS, Science and Technology
Technical Services Branch, Room 306, Cotton Annex Bldg., 300 12th Street, SW., Washington, DC 20250.
(10) Monitoring Programs Office. Services afforded by the Pesticide
Data Program (PDP) and Microbiological Data Program (MDP) are provided
by USDA, AMS, Science and Technology Monitoring Programs Office, 8609 Sudley Road, Suite 206, Manassas, VA 201108411.
(11) Pesticide Records Branch Office. Services afforded by the
Federal Pesticide Record Keeping Program for restricteduse pesticides
by private certified applicators are provided by USDA, AMS, Science and
Technology, Pesticide Records Branch, 8609 Sudley Road, Suite 203, Manassas, VA 201108411.
(b) The addresses of the various laboratories and offices appear in
the pertinent parts of this subchapter. A prospective applicant may
obtain a current listing of addresses and telephone numbers of Science
and Technology Programs laboratories, offices, and facilities by
addressing an inquiry to the Administrative Officer, Science and
Technology Programs, Agricultural Marketing Service, United States
Department of Agriculture (USDA), 1400 Independence Ave., SW., Room
0725, South Agriculture Building, Mail Stop 0271, Washington, DC 20250 0271.
3. Sections 91.37 through 91.39 are revised to read as follows:
Sec. 91.37 Standard hourly fee rate for laboratory testing, analysis, and other services.
(a) The standard hourly fee rate in this section for the individual
laboratory analyses cover the costs of Science and Technology
laboratory services, including issuance of certificates and personnel
and overhead costs other than the commodity inspection fees referred to
in 7 CFR 52.42 through 52.46, 52.48 through 52.51, 55.510 through
55.530, 55.560 through 55.570, 58.38 through 58.43, 58.45 through
58.46, 70.71 through 70.72, and 70.75 through 70.78. The hourly fee
rates in this part 91 apply to all commodity and processed commodity
products. The new fiscal year for Science and Technology Programs
commences on October 1 of each calendar year. The rate for laboratory
services is $60.00 per hour in fiscal year 2007, $63.00 per hour in fiscal year 2008, and $67.00 per hour in fiscal year 2009.
(b) Printed updated schedules of the laboratory testing fees for
processed fruits and vegetables (7 CFR part 93), poultry and egg
products (7 CFR part 94), and meat and meat products (7 CFR part 98)
will be available for distribution to Science and Technology's
constituents and stakeholders by the individual Laboratory Managers of
Science and Technology laboratories listed in Sec. 91.5. These single
test laboratory fee schedules are based upon the applicable hourly fee rate stated in Sec. 91.37(a).
(c) Except as otherwise provided in this section, charges will be
made at the applicable hourly rate stated in Sec. 91.37(a) for the
time required to perform the service. A charge will be made for service pursuant to each request or certificate issued.
(d) When a laboratory test service is provided for AMS by a
commercial or State government laboratory, the applicant will be
assessed a fee which covers the costs to the Science and Technology program for the service provided.
(e) When Science and Technology staff provides applied and
developmental research and training activities for microbiological,
physical, chemical, and biomolecular analyses on agricultural
commodities the applicant will be charged a fee on a reimbursable cost to AMS basis.
Sec. 91.38 Additional fees for appeal of analysis.
(a) The applicant for appeal sample testing will be charged a fee
at the hourly rate for laboratory service that appears in this
paragraph. The new fiscal year for Science and Technology Programs
commences on October 1 of each calendar year. The appeal rate for
laboratory service is $71.00 per hour in fiscal year 2007, $74.00 per
hour in fiscal year 2008, and $78.00 per hour in fiscal year 2009.
(b) The appeal fee will not be waived for any reason if analytical
testing was completed in addition to the original analysis.
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 at hourly rates for laboratory service that appear
in this paragraph. The new fiscal year for Science and Technology
Programs commences on October 1 of each calendar year. The laboratory
analysis rate for overtime service is $71.00 per hour in fiscal year
2007, $74.00 per hour in fiscal year 2008, and $78.00 per hour in
fiscal year 2009. The laboratory analysis rate for Federal holiday or
designed holiday service is $82.00 per hour in fiscal year 2007, $85.00
per hour in fiscal year 2008, and $89.00 per hour in fiscal year 2009.
(b) Information on legal holidays or what constitutes overtime
service at a particular Science and Technology laboratory is available from the Laboratory Manager or facility supervisor.
4. Section 91.42 is revised to read as follows:
Sec. 91.42 Billing.
(a) Each billing cycle will end on the 25th of the month. The
applicant will be billed by the National Finance Center (NFC) using the Foundation Financial Information System (FFIS) on the 1st
[[Page 55380]]
day, following the end of the billing cycle in which voluntary
laboratory services and other services were rendered at a particular Science and Technology laboratory or office.
(b) The total charge or fee shall normally be stated directly on
the analysis report or on a standardized official certificate form for
the laboratory analysis of a specific agricultural commodity and related commodity products.
(c) The actual bill for collection will be issued by the USDA,
National Finance Center Billings and Collection Branch, (Mail: P.O. Box
60075), 13800 Old Gentilly Road, New Orleans, Louisiana 701600001. PART 92[REMOVED AND RESERVED]
5. Part 92 is removed in its entirety and reserved.
Dated: September 14, 2006.
Lloyd C. Day,
Administrator, Agricultural Marketing Service.
[FR Doc. 067821 Filed 92106; 8:45 am]
BILLING CODE 341002M
FOR FURTHER INFORMATION CONTACT
Dr. Robert L. Epstein, Science and Technology Programs, Agricultural Marketing Service, United States Department of Agriculture, Mail Stop 0270, 1400 Independence Avenue, SW., Washington, DC 202500270, telephone number (202) 7205231; fax (202) 7206496, and email: Robert.epstein@usda.gov.