Proposed Rule, Process for Establishing Rates Charged for AMS Services

WASHINGTON, Sept. 10, 2014 What does the rule propose and why is it necessary?

The proposed rule published by the Agricultural Marketing Service (AMS) would simplify the process for setting fees across all of our voluntary user fee programs (e.g., grading services for fruits and vegetables, classification services for cotton, laboratory services). Specifically, this action would establish common formulas for staff time, benefits, and indirect costs across AMS’ voluntary grading, inspection, certification, auditing, and laboratory services. This action provides stakeholders with greater transparency about how AMS derives the fees that we charge for our services. This action would also enable AMS customers to better plan for the cost of AMS services through publication of a list of fees every year.

Which AMS fees would be included in this approach?

The fees included in this approach would apply to AMS services for meat, poultry, fruits and vegetables, eggs, dairy products, and cotton and tobacco. These AMS services are voluntary and requested by producers, handlers, processors, importers and exporters of these agricultural commodities.

Should industry expect fees to increase as a result of this action?

This action would not necessarily result in annual fee increases. This process uses the same criteria as in the past, but publishes the formulas that will be used to determine the fee for AMS services. As in the past, the fees that result from using these formulas would only increase if AMS’ costs to provide these services (e.g., salaries and benefits, inflation) increase. As always, AMS will continue to seek and implement efficiencies across our voluntary programs to ensure fees are reasonable for businesses of all sizes. What costs would be included in the formula to determine the fee for each AMS service?

This action proposes formulas to capture hourly costs of providing various services (e.g., regular rate, overtime rate, holiday rate, benefits rate for employees). For example, the regular rate for a service would be:

Regular rate = (Total program personnel direct pay ÷ direct hours for previous year) × (Cost of living increase) + benefits rate + operating rate + allowance for bad debt rate + travel expenses (if applicable).

Personnel direct pay, staff time, and other rates used in the formulas to calculate fees would be based on AMS’ prior fiscal year’s actual costs or historical costs, workload data, and projection of expenses impacting program costs. Cost of living and inflation factors would be based on the most recent Office of Management and Budget (OMB) economic data and assumptions.

How would AMS communicate the list of fees to the industry?

If we finalize this action, AMS would use these formulas to publish a notice that lists all fees by June 1 of each year. This notice would specify the fees that would take effect at the start of the fiscal year, crop year, or as required by specific laws. This annual notice would include a per-hour rate and, in some cases, the equivalent per-unit cost for those industries that historically use a per-unit cost as basis for payment (e.g., cotton and certain produce).

How can the industry provide their input on the proposed approach?

Stakeholders can submit any comments on this proposal during the 30-day comment period through To view the docket:!documentDetail;D=AMS-LPS-13-0050-0001. The comment period ends on October 10, 2014.