Amendment to Egg Research and Promotion Order To Increase the Rate of Assessment

DEPARTMENT OF AGRICULTURE

7 CFR Part 1250

[Docket No. PY-94-002]

RIN 0581-AB32

Amendment to Egg Research and Promotion Order To Increase the

Rate of Assessment

AGENCY: Agricultural Marketing Service.

ACTION: Final rule.

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SUMMARY: This rule amends the Egg Research and Promotion Order to

increase the assessment rate from 5 cents to 10 cents per 30-dozen case

of commercial eggs. The increase is authorized by amendments to the Egg

Research and Consumer Information Act, which were enacted December 14,

1993, and approved by egg producers voting in a referendum. This rule

also makes a conforming amendment to regulations.

EFFECTIVE DATE: February 1, 1995.

FOR FURTHER INFORMATION CONTACT: Janice L. Lockard, 202-720-3506.

SUPPLEMENTARY INFORMATION:

Executive Orders 12866 and 12778

This rule is exempt from Executive Order 12866 review.

This rule has been reviewed under Executive Order 12778, Civil

Justice Reform. It is not intended to have retroactive effect. This

rule would not preempt any State or local laws, regulations, or

policies, unless they present an irreconcilable conflict with this

rule.

The Act provides that administrative proceedings must be exhausted

before parties may file suit in court. Under section 14 of the Act, a

person subject to an order may file a petition with the Secretary

stating that such order, any provisions of such order or any

obligations imposed in connection with such order are not in accordance

with law; and requesting a modification of the order or an exemption

therefrom. Such person is afforded the opportunity for a hearing on the

petition. After a hearing, the Secretary would rule on the petition.

The Act provides that the district court of the United States in any

district in which such person is an inhabitant, or has his principal

place of business, has jurisdiction to review the Secretary's ruling on

the petition, if a complaint is filed within 20 days after date of the

entry of the ruling.

Effect on Small Entities

The Administrator of the Agricultural Marketing Service has

determined that this rule will not have a significant economic impact

on a substantial number of small entities, as defined by the Regulatory

Flexibility Act (5 U.S.C. 601 et seq.).

The exemption level was increased by regulation from 30,000 to

75,000 laying hens on August 1, 1994 (59 FR 38875). This action was

authorized by amendments to the Egg Research and Consumer Information

Act (7 U.S.C. 2711). Exempted were 253 small egg producers who

represented 41 percent of the egg producers currently paying

assessments, but only 4 percent of AEB's total assessment income.

Therefore, this change in the assessment rate affects only egg

producers owning more than 75,000 laying hens.

There are an estimated 365 producers in this category. Previously,

egg producers paid a mandatory assessment of 5 cents per 30-dozen case

of eggs marketed to fund the research and promotion activities

authorized by the Act. The 5-cent assessment is equivalent to

approximately 0.231 percent of the wholesale price of a 1-dozen carton

of Large eggs. An assessment rate of 10 cents per 30-dozen case is

equivalent to approximately 0.463 percent of the wholesale price of a

1-dozen carton of Large eggs. This is based on the Economic Research

Service's 3-year average wholesale price for New York City Grade A

Large cartoned eggs (1991-93) of 72 cents per dozen. AEB collected

approximately $7.5 million annually from the 5-cent assessment, and it

will collect approximately $14 million from the 10-cent assessment. It

is estimated that any additional costs will be offset by the benefits

to be derived from strengthened research and promotion programs.

Paperwork Reduction

Information collection requirements and recordkeeping provisions

contained in 7 CFR Part 1250 have been previously approved by the

Office of Management and Budget and assigned OMB Control No. 0581-0093

under the Paperwork Reduction Act of 1980.

No additional recordkeeping requirements would be imposed as a

result of this rule.

Background and Proposed Changes

On December 14, 1993, the Egg Research and Consumer Information Act

(7 U.S.C. 2711) was amended (Pub. L. 103-188) to increase the maximum

rate of assessment, raise the exemption level, and provide for research

project funding.

Under the amended section 8 of the Act, the maximum rate of

assessment was raised from 10 cents to 20 cents per case of commercial

eggs. The actual assessment rate is prescribed by the Egg Research and

Promotion Order and is currently 5 cents per case.

The Act amendments allowed AEB to recommend an increase in the

assessment rate to the Secretary, provided the recommendation was based

on a scientific study, marketing analysis, or other evidence

demonstrating a need for the increase. At the March 17, 1994, Board

meeting, AEB members voted to recommend that the assessment rate be

increased from 5 cents to 10 cents per 30-dozen case of commercial

eggs, and that such study be presented to the Secretary with a request

that a referendum be held on the increase.

Subsequently, a proposed rule to increase the assessment rate in

the Order was published in the Federal Register on June 17, 1994 (59 FR

31174). Comments were solicited from interested persons through August

16, 1994. Two comments were received; one from a major egg producer

organization in support and one from an egg producer in opposition to

the increase. Comments were addressed in a proposed rule and notice of

referendum published in the Federal Register on September 13, 1994 (59

FR 46936).

In accordance with the procedures for the conduct of referenda (7

CFR 1250.200 et seq.), a referendum was held September 26-October 14,

1994, to determine whether producers favored the increase to 10 cents

per case as proposed.

Section 9 of the Act requires approval by eligible egg producers

engaged in commercial egg production during the representative period

and at the time of voting. The representative period for the conduct of

the referendum was determined to be May 1, 1994, through July 31, 1994.

During the week of September 19, 1994, ballot packages were mailed

to 382 eligible commercial egg producers on record with the American

Egg Board as owning more than 75,000 laying hens. An additional seven

ballots were mailed in response to phone requests. The referendum was

widely publicized through USDA's news service, the trade press,

industry organizations, and the national referendum task force. Of the

total number of ballots mailed, 62 percent were returned.

For the Order amendment to be approved, it had to be favored by at

least two-thirds of the producers voting in this referendum or by a

majority of the producers voting if such majority represented not less

than two-thirds of the commercial eggs produced by all voters.

Of the producers voting, 66.4 percent favored the increased

assessment. Producers voting affirmatively represented 70.9 percent of

the May-July 1994 egg production of all those voting. Therefore, the

favorable vote, through volume of production, exceeded the statutory

requirement for passage.

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, Title 7, CFR Part 1250

is amended as follows:

PART 1250--EGG RESEARCH AND PROMOTION

1. The authority citation of Part 1250 is revised to read as

follows:

Authority: 7 U.S.C. 2701-2718.

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 regulations issued by the Board an assessment at a rate not to

exceed 10 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.

3. In section 1250.514, the first sentence is revised to read as

follows:

Sec. 1250.514 Levy of assessments.

An assessment rate of 10 cents per case of commercial eggs is

levied on each case of commercial eggs handled for the account of each

producer. * * *

Dated: December 9, 1994.

Patricia Jensen,

Acting Assistant Secretary, Marketing and Regulatory Programs.

[FR Doc. 94-30834 Filed 12-13-94; 8:45 am]

BILLING CODE 3410-02-U