[Federal Register: September 25, 2009 (Volume 74, Number 185)]
[Proposed Rules]
[Page 48868-48870]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr25se09-20]
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Proposed Rules
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.
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[[Page 48868]]
DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 1250
[Doc. No. AMS-PY-08-0032]
Amendment to Egg Research and Promotion Order and Regulations To
Increase the Rate of Assessment
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Proposed rule.
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SUMMARY: This proposed rule would amend the Egg Research and Promotion
Order to increase the assessment rate on egg producers paying
assessments to the American Egg Board (AEB) from 10 cents to 15 cents
per 30-dozen case of commercial eggs, provided the increase is approved
by egg producers voting in a referendum. This proposal would also make
a conforming amendment to the regulations. AEB, which administers the
Order, recommended this action to sustain and expand its national
promotion, research, and consumer information program.
DATES: Comments must be received on or before November 24, 2009.
ADDRESSES: Interested persons are invited to submit written comments on
the Internet at http://www.regulations.gov or to Angela C. Snyder;
Research and Promotion; Standards, Promotion, & Technology Branch;
Poultry Programs, AMS, U.S. Department of Agriculture; 1400
Independence Avenue, SW., Stop 0256; Washington, DC 20250-0259; fax
(202) 720-2930. Comments should reference the docket number and the
date and page number of this issue of the Federal Register and will be
available for public inspection in the Office of the Docket Clerk,
Poultry Programs, AMS, USDA, Room 3953-S, 1400 Independence Avenue,
SW., Washington, DC 20250-0259, during regular business hours or can be
viewed at: http://www.regulations.gov. All comments received will be
posted without change, including any personal information provided.
FOR FURTHER INFORMATION CONTACT: Angela C. Snyder; Research and
Promotion; Standards, Promotion & Technology Branch; Poultry Programs,
AMS, USDA, 1400 Independence Avenue, SW., Room 3932-S; Washington, DC
20250-0256; telephone: (202) 720-4476; fax (202) 720-2930; or e-mail:
Angie.Snyder@ams.usda.gov.
SUPPLEMENTARY INFORMATION:
Executive Order 12866
The Office of Management and Budget (OMB) has waived the review
process required by Executive Order 12866 for this action.
Executive Order 12988
This proposed rule has been reviewed under Executive Order 12988,
Civil Justice Reform. The rule is not intended to have a retroactive
effect and will not affect or preempt any State or Federal law
authorizing promotion or research relating to an agricultural
commodity.
The Act provides that administrative proceedings must be exhausted
before parties may file suit in court. Section 14 of the Act allows
those subject to the Order to file a written petition with the
Secretary of Agriculture (Secretary) if they believe that the Order,
any provision of the Order, or any obligation imposed in connection
with the Order, is not in accordance with the law. In any petition, the
person may request a modification of the Order or an exemption from the
Order. The petitioner will have the opportunity for a hearing on the
petition. Afterwards, an Administrative Law Judge (ALJ) will issue a
decision. If the petitioner disagrees with the ALJ's ruling, the
petitioner has 30 days to appeal to the Judicial Officer, who will
issue a ruling on behalf of the Secretary. If the petitioner disagrees
with the Secretary's ruling, the petitioner may file, within 20 days,
an appeal in the U.S. District Court for the district where the
petitioner resides or conducts business.
Initial Regulatory Flexibility Act Analysis and Paperwork Reduction Act
In accordance with the Regulatory Flexibility Act (RFA) (5 U.S.C.
601-612), AMS has considered the economic impact of this action on the
small producers that would be affected by this rule. The purpose of the
RFA is to fit regulatory action to scale on businesses subject to such
action so that small businesses will not be disproportionately
burdened.
According to AEB, approximately 245 producers are subject to the
provisions of the Order, including paying assessments. Under the
current Order, producers in the 48 contiguous United States and the
District of Columbia who own more than 75,000 laying hens each
currently pay a mandatory assessment of 10 cents per 30-dozen case of
eggs. Handlers are responsible for collecting and remitting assessments
to the Board. There are approximately 160 egg handlers who collect
assessments. Assessments under the program are used by AEB to finance
promotion, research, and consumer information programs designed to
increase consumer demand for eggs in domestic and international
markets. At the current rate of 10 cents per case, assessments generate
about $20 million in annual revenues. The Order is administered by AEB
under supervision of the U.S. Department of Agriculture.
In 13 CFR part 121, the Small Business Administration (SBA) defines
small agricultural producers as those having annual receipts of no more
than $750,000 and small agricultural service firms as those having
annual receipts of no more than $7 million. Under this definition, the
vast majority of the egg producers that would be affected by this rule
would not be considered small entities. Producers owning 75,000 or
fewer laying hens are exempt from this program.
Given that a laying hen produces approximately 22 dozen eggs per
year, production from 75,000 laying hens would result in 1.65 million
dozen eggs. With a wholesale price of $0.965 per dozen, total annual
receipts would be $1.59 million, which is well above the definition
used to describe a small farm. The wholesale price of eggs would need
to drop to approximately $0.45 per dozen before a producer with 75,000
hens could be classified as a small farm under the SBA definition.
The present 10-cent assessment is equivalent to approximately 0.28
percent of the wholesale price of a 30-dozen case of large eggs. An
assessment rate of 15 cents per 30-dozen case would be equivalent to
approximately 0.42 percent of the wholesale price of a 30-dozen case of
large eggs. This wholesale
[[Page 48869]]
price is based on the price per dozen Grade A large egg price reported
in the ``Weekly Combined Regional Shell Eggs'' report (WA--PY001)
published by USDA's Poultry Market News and Analysis Branch.
According to AEB, additional revenue is required in order to
sustain and expand its programs. This proposed increase is consistent
with sections 8 and 9 of the Act (7 U.S.C. 2701-2718) that permit AEB
to recommend an increase in the assessment rate up to 20 cents per case
and request that a referendum be held if such an increase is supported
by a scientific study, marketing analysis, or other similar competent
evidence.
AEB conducted a marketing analysis demonstrating that a 5-cent
increase in the assessment rate (to a total of 15 cents) is appropriate
to effectively strengthen AEB's programs. The marketing analysis
addressed the need for a funding increase due to the following factors:
(1) Inflation, including the overall increases in all costs associated
with doing business since the last increase in AEB's assessment rate in
1994; (2) AEB's advertising program, including the increased cost of
advertising expenditures as well as new media outlets; (3) AEB's
nutrition program, including additional research needed to examine both
the nutritional benefits of eggs and the relationship between eggs and
increased serum cholesterol levels and heart disease risk; and (4)
AEB's food safety program, specifically expanding research to cover
food safety as the public becomes more concerned about food safety
issues.
With the proposed increased assessment, the financial commitment of
the U.S. egg industry for generic research and promotion activity could
increase by 50 percent, from approximately $20 million to an estimated
$30 million annually.
AEB considered several alternatives, including the status quo of 10
cents per case, an increase to 20 cents per case, and an increase to 15
cents per case. AEB ultimately concluded that the status quo would not
allow AEB even to sustain its programs effectively, and that an
increase to 15 cents was sufficient to maintain and expand its
promotion, research, and consumer information programs.
This rule does not impose additional recordkeeping requirements on
egg producers or collecting handlers. There are no Federal rules that
duplicate, overlap, or conflict with this rule.
In accordance with OMB regulation 5 CFR part 1320 which implements
the Paperwork Reduction Act of 1995 [44 U.S.C. Chapter 35], the
information collection and recordkeeping requirements that are imposed
by the Order and Rules and Regulations have been approved previously
under OMB control number 0581-0093. This rule does not result in a
change to those information collection and recordkeeping requirements.
We have performed this Initial Regulatory Flexibility Analysis
regarding the impact of these proposed amendments to the Order and
Rules and Regulations on small entities, and we invite comments
concerning potential effects of these amendments on small businesses.
Background
The Egg Research and Consumer Information Act (7 U.S.C. 2701-2718,
hereinafter referred to as the ``Act'') established a national egg
research and promotion program--administered by AEB--that is financed
through industry assessments and subject to oversight by AMS. This
program of promotion, research, and consumer information is designed to
strengthen the position of eggs in the marketplace and to establish,
maintain, and expand markets for eggs.
This program is financed by assessments on egg producers owning
more than 75,000 laying hens. The Egg Research and Promotion Order
specifies that handlers are responsible for collecting and remitting
the producer assessments to AEB, reporting their handling of eggs, and
maintaining records necessary to verify their reports.
This rule proposes to increase the assessment rate on egg producers
from 10 cents to 15 cents per case of commercial eggs. Only producers
in the contiguous United States are subject to the program, and
producers owning 75,000 or fewer laying hens are exempt from paying
assessments.
In order to sustain and expand the promotion, research, and
consumer information programs at present levels, AEB believes that
additional revenue is required. The proposed increase is estimated to
generate $10 million in new revenue, depending upon production levels.
Currently, AEB collects approximately $20 million per year. A 5-cent
increase in the assessment rate is expected to increase the total to
about $30 million per year.
Section 8 of the Act provides for an assessment rate up to 20 cents
per case. Section 1250.347 currently provides for an assessment at a
rate not to exceed 10 cents per 30-dozen case of eggs, or equivalents
thereof. Any increase from the current 10-cent rate established in the
Order must be approved by egg producers voting in a referendum. Section
9 of the Act provides that if AEB determines, based on a scientific
study, marketing analysis, or other similar competent evidence, that an
increase in the assessment rate is necessary to effectuate the declared
policy of the Act, AEB may recommend the increase to the Secretary and
request that a referendum be held to vote on the assessment increase.
Marketing Analysis and AEB Recommendation
Consequently, AEB conducted a marketing analysis demonstrating that
a 5-cent increase in the assessment rate to a total of 15 cents was
appropriate to effectively strengthen AEB's programs.
Because of inflation, AEB estimates that an estimated $14.7 million
would be required to duplicate the same media program in 2008 as was
conducted for $7.9 million in 1995, when the assessment rate was last
increased.
Despite the success of the advertising program, AEB's media budget
has not kept pace with media inflation. Over the last 10 years, the
budget has remained relatively flat, averaging roughly $7.9 million
annually. Meanwhile, the cost of media has steadily increased at the
rate of 5 percent each year. If AEB's advertising budget matched
inflation, it would be more than 50 percent larger today than it is,
and it would reach $22 million in 2017. By not keeping up with
inflation, each year AEB has been reaching fewer consumers and less
often.
Ten years ago, AEB expanded its research to include studies on the
nutritional benefits of eggs, including satiety and weight control;
bioavailability of egg nutrients; egg protein and muscle retention in
the elderly; egg lutein and eye health; egg choline and brain
development, dietary choline requirements, and the relationship between
choline and reduction of heart-disease risk; and eggs and school
performance.
The expansion of the research programs over the past decade has
been an essential component of AEB's mission. To continue to fund the
best and most relevant research projects, AEB needs to increase its
level of research funding to account for the rising cost of studies
today compared to 10 years ago, the increased number of research
topics, and publicizing research findings.
In addition to research into egg nutrients, AEB has also funded
research and other programs related to food safety as the public's food
security concerns have increased. AEB has funded research on
Salmonella, avian influenza, transportation systems,
[[Page 48870]]
cooking methods, and statistical analyses. Not only do these studies
deal with current food safety issues, but they also help the egg
industry prepare for and address potential risks.
At the March 27, 2008, board meeting, AEB members voted unanimously
to recommend that the assessment rate be increased from 10 cents to 15
cents per 30-dozen case of commercial eggs.
Proposed Changes and Referendum
This rule would amend the Order as well as the implementing Rules
and Regulations. Section 1250.347 of the Order states that the
assessment rate is not to exceed 10 cents per 30-dozen case of eggs,
provided that no more than such assessment shall be made on any case of
eggs. Section 1250.514 provides for an assessment rate of 10 cents per
case of commercial eggs handled for the account of each producer, with
each case being subject to assessment only once. Accordingly, section
1250.347 of the Order and section 1250.514 of the Rules and Regulations
would be revised to reflect an assessment rate of 15 cents per case. In
order to better reflect the provisions of the Act, section 1250.347 of
the Order would be amended to reflect both the maximum assessment rate
authorized under the Act as well as the assessment rate itself.
A 60-day comment period is provided to allow interested parties to
respond to this proposal. All written comments received by the date
specified in response to this rule will be considered prior to
conducting the referendum.
After an opportunity for public comment, a referendum will be held
among egg producers not exempt from the Act. Producers engaged in the
production of commercial eggs during a representative period determined
by the Secretary will be eligible to vote on the assessment rate change
recommended by AEB.
All known eligible egg producers will receive information in the
mail regarding the referendum.
The increase in the assessment rate shall become effective if the
change is approved or favored by not less than two-thirds of the
producers voting in the referendum, or a majority of such producers if
they represent not less than two-thirds of the commercial eggs produced
by those voting.
List of Subjects in 7 CFR Part 1250
Administrative practice and procedure, Advertising, Agricultural
research, Eggs and egg products, Reporting and recordkeeping
requirements.
For the reasons set forth in the preamble 7 CFR part 1250 is
proposed to be amended as follows:
PART 1250--EGG RESEARCH AND PROMOTION
1. The authority citation of part 1250 continues to read as
follows:
Authority: 7 U.S.C. 2701-2718 and 7 U.S.C. 2401.
2. Section 1250.347 is revised to read as follows:
Sec. 1250.347 Assessments.
Each handler designated in Sec. 1250.349 and pursuant to
regulations issued by the Board shall collect from each producer,
except for those producers specifically exempted in Sec. 1250.348, and
shall pay to the Board at such times and in such manner as prescribed
by regulation issued by the Board an assessment at a rate of 15 cents
per 30-dozen case of eggs, or the equivalent thereof, for such expenses
and expenditures, including provisions for a reasonable reserve and
those administrative costs incurred by the Department of Agriculture
after this subpart is effective, as the Secretary finds are reasonable
and likely to be incurred by the Board and the Secretary under this
subpart, except that no more than one such assessment shall be made on
any case of eggs. The assessment rate shall not exceed 20 cents per
case (or the equivalent of a case) of commercial eggs.
3. In Sec. 1250.514, the first sentence is revised to read as
follows:
Sec. 1250.514 Levy of assessments.
An assessment rate of 15 cents per case of commercial eggs is
levied on each case of commercial eggs handled for the account of each
producer. * * *
Dated: September 21, 2009.
Rayne Pegg,
Administrator, Agricultural Marketing Service.
[FR Doc. E9-23150 Filed 9-24-09; 8:45 am]
BILLING CODE 3410-02-P