Fresh Fruits, Vegetables and Other Products (Inspection, Certification, and Standards)

SUMMARY: This final rule revises the regulations governing inspection

and certification for fresh fruits, vegetables and other products

(other products are: raw nuts, Christmas trees and evergreens, flowers

and flower bulbs, and onion sets) by adjusting the fees charged for the

inspection of these products at destination markets and by clarifying

other charge-related regulations. The fee increases are necessary to

offset the costs of developing and maintaining U.S. grade standards for

fresh fruits, vegetables and other products and to recover the costs of

providing Federal inspection service for these products at destination

markets as authorized by the Agricultural Marketing Act (AMA) of 1946.

Regulations regarding fees for inspection of small lots (fifty packages

or less) are added to provide a fee commensurate with the level of

effort typically required to conduct such inspections. Finally,

regulations regarding charges for waiting time are added and conditions

governing the applicability of dock-side inspection fees are clarified.

EFFECTIVE DATE: June 27, 1994.

FOR FURTHER INFORMATION CONTACT: Mr. Douglas C. Bailey, Fresh Products

Branch, Fruit and Vegetable Division, Agricultural Marketing Service,

U.S. Department of Agriculture, P.O. Box 96456, Room 2056 South

Building, Washington, DC 20090-6456, telephone (202) 720-5870.

SUPPLEMENTARY INFORMATION: This rule has been determined not

significant for purposes of Executive Order 12866, and has been

reviewed by the Office of Management and Budget.

This final rule has been reviewed under Executive Order 12778,

Civil Justice Reform. It is not intended to have a retroactive effect.

This rule will not preempt any State or local laws, regulations, 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 the provisions of this rule.

Pursuant to the requirements set forth in the Regulatory

Flexibility Act (5 U.S.C. 601 et. seq.), the Administrator of the

Agricultural Marketing Service (AMS) has certified that this action

will not have a significant economic impact on a substantial number of

small entities. This final rule for the revision of the Regulations

governing inspection, certification and standards for fresh fruits,

vegetables and other products will not impose substantial direct

economic cost, recordkeeping, or personnel workload changes on small

entities, and will not alter the market share or competitive position

of these entities relative to large businesses.

The regulations were last revised in November 1992. This final rule

reflects fee increases needed to offset the cost of developing and

maintaining U.S. grade standards for fresh fruits and vegetables

previously funded through an appropriation and to recover the costs of

Federal fruit and vegetable inspection service at destination markets

rendered in accordance with the AMA of 1946.

In the Agriculture Appropriations Bill for fiscal year 1994,

Congress directed AMS to establish a user fee program, pursuant to 31

U.S.C. 9701, to recover the cost of developing, reviewing, and

maintaining agricultural commodity standards that describe product

quality attributes. This rule amends fees and charges applied to users

at destination markets to recover the portion of the cost for fresh

fruit and vegetable standardization that is applicable to these users.

The AMA authorizes voluntary official inspection, grading, and

certification on a user-fee basis, of fresh fruits, vegetables, and

other products such as raw nuts, Christmas trees, and flowers. The AMA

provides that reasonable fees be collected from the user of the program

services to cover as nearly as practicable the costs of services

rendered. The program seeks to maintain an unobligated balance that is

at least equal to 4 months of operating expense. The unobligated

balance for the Federal inspection service at destination markets at

the end of fiscal year 1993 was 1.1 months of operating expense.

Approximately $240,000 in increases are expected in the cost the

service pays for General Services Administration office rent and

Federal Telecommunications Service, and a $120,000 increase is expected

for the cost of implementing a locality-based pay system in January

1994. The service is implementing cost-cutting actions during fiscal

year 1994 that will save approximately $350,000 in destination market

costs each fiscal year beginning in fiscal year 1995. These cost-

cutting actions will offset most of the expected increases in service

costs; however, further action is necessary to meet all rising costs

and for the program's unobligated balance to grow to the 4 month level

necessary to provide contingency funding. This final rule amends the

schedule for fees and charges for services rendered to the fresh fruit

and vegetable industry at destination markets to reflect the costs

currently associated with the program.

A notice of proposed rulemaking was published in the Federal

Register (59 FR 8871-8873) on February 24, 1994 with a thirty day

comment period. The comment period closed on March 28, 1994. Interested

persons were invited to participate in this rulemaking proceeding by

submitting written comments on the proposal to the Agricultural

Marketing Service.

Four written comments were received from field inspection

personnel. Two of these comments noted the need to provide guidance on

whether product shipped in a bulk bin is to be considered a single

package when determining fees under Sec. 51.38. AMS will issue

inspection instructions that state the net weight of product in bulk

bins is to be divided by the net weight of the common package for that

product to determine the number of packages represented by a bulk bin.

The third comment noted that the charge for additional lots reported on

an inspection certificate fails to recover the full cost of sampling

product inspected in accordance with Florida citrus standards. Florida

citrus standards specify a number of samples to be examined for each

reported lot that is higher than the number of samples typically used

for other standards. AMS believes that a separate charge for additional

lots reported for products inspected in accordance with the Florida

citrus standards would be confusing and should not be imposed.

The fourth comment suggested eliminating the proposed $264 flat

rate for inspections of 5 or more products unloaded from land or air

transportation, and substituting carlot fees for the first four

products, and a $37 fee for each additional product. This suggestion

would increase fees for quality and condition inspections another $6 to

$33 beyond the increase currently proposed. For this reason, AMS is not

adopting this suggestion.

The fourth comment also suggested the implementation of a charge

for additional lots reported on an inspection certificate for product

inspected at dock-side in place of the proposed fee increase in the

dock-side package rates. The commenter noted that requests from

applicants for dock-side inspections vary significantly not only in the

number of packages but also in the number of lots to be separately

sampled and reported on an inspection certificate. By implementing a

charge for additional lots when performing dock-side inspections, as

AMS currently does for inspections of product from land or air

conveyances, the commenter believed that dock-side fees charged to each

applicant would more accurately reflect AMS's cost of performing the

requested inspection. The total revenue to be generated from charges

for additional lots would be approximately equal to the total revenue

that would have been generated from the proposed increase in package

rates. Because this suggestion allows AMS fees at dock-side to more

equitably reflect the cost of providing the requested service, and

because the suggestion would not raise fees beyond the level initially

proposed, this suggestion has been adopted in the final rule.

Two written comments were received from the industry. Industry

commenters, both wholesale fruit and vegetable receivers, opposed the

fee increase as they believe the current fee levels should be

sufficient to fund the service. However, AMS projects that, without a

fee increase, the program will exhaust its unobligated balance and

become insolvent early in Fiscal Year 1996. One commenter further

believes that the lack of a competing inspection service may cause the

program to operate inefficiently. While this inspection service is the

only authorized inspection service under the AMA, nonetheless, the

service is not relying solely on fee increases to defray rising costs.

Currently, the program is phasing out a third of its permanent billing

and collection staff and releasing office space in 11 cities to save an

estimated $250,000 annually. Moreover, the service is planning to

reorganize its management structure to eliminate one of three

management layers to save users of destination market services over

$100,000 annually.

In light of the continuing need to maintain this AMS grading

program on a financially sound basis, the Agency has decided to proceed

with the fee increase as set forth in the proposal, with one

modification regarding dock-side fees in accordance with a comment

received.

When product is inspected at dock-side, the number of different

lots (i.e. varieties, sizes, brands) present in the product, along with

the number of total packages, determines the time required to sample

and report inspection results. Therefore, in lieu of increasing the

package fees as had been proposed, AMS is implementing a $12 fee for

each additional lot reported on an inspection certificate for product

inspected at dock-side. This is the same fee that is currently charged

for each additional lot reported on an inspection certificate for

product unloaded from land or air transportation. Revenue from the

additional lot fee is expected to be equivalent to that of the

previously proposed package fee increase. By implementing the

additional lot fee for dock-side inspections, charges for these

inspections will more fairly reflect AMS's cost of providing the

requested service, so that inspections of products with few varieties,

sizes, or brands reported separately on the inspection certificate will

be charged at a lower fee than inspections of products with the same

total number of packages but with comparatively more varieties, sizes,

or brands reported separately on the inspection certificate.

Pursuant to 5 U.S.C. 553, it is found and determined that good

cause exists for not postponing the effective date of this action until

30 days after publication in the Federal Register because the fiscal

year 1994 reserve balance of the program's trust fund is projected to

be less than one month's operating reserve which is well below the

four-month level necessary to ensure the program's fiscal viability.

List of Subjects in 7 CFR Part 51

Agricultural commodities, Food grades and standards, Fruits, Nuts,

Reporting and recordkeeping requirements, Vegetables.

For the reasons set forth in the preamble, 7 CFR Part 51 is amended

as follows:

PART 51--[AMENDED]

1. The authority citation for 7 CFR part 51 is revised to read as

follows:

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

2. Sec. 51.38 is revised to read as follows:

Sec. 51.38 Basis for fees and rates.

(a) When performing inspections of product unloaded directly from

land or air transportation, charges shall be determined on the

following basis:

(1) For products in quantities of 51 or more packages:

(i) Quality and condition inspection of 1 to 4 products unloaded

from the same conveyance:

(A) $74 for over a half carlot equivalent of an individual product.

(B) $62 for a half carlot equivalent or less of an individual

product.

(C) $12 for each additional lot identified on an inspection

certificate for the same product.

(ii) Condition only inspection of 1 to 4 products unloaded from the

same conveyance:

(A) $62 for over a half carlot equivalent of an individual product.

(B) $57 for a half carlot equivalent or less of an individual

product.

(C) $12 for each additional lot identified on an inspection

certificate for the same product.

(iii) Quality and condition inspection and/or condition only

inspection of 5 or more products unloaded from the same conveyance:

(A) $264 for the first 5 products.

(B) $37 for each additional product.

(C) $12 for each additional lot identified on an inspection

certificate for any of the products.

(2) For quality and condition inspection and/or condition only

inspection of products in quantities of 50 or less packages unloaded

from the same conveyance:

(i) $37 for each individual product.

(ii) $12 for each additional lot identified on an inspection

certificate for any product.

(b) When performing inspections of palletized products unloaded

directly from sea transportation or when palletized product is first

offered for inspection before being transported from the dock-side

facility, charges shall be determined on the following basis:

(1) For each package inspected according to the following rates:

(i) 1 cent per package weighing less than 15 pounds;

(ii) 2 cents per package weighing 15 to 29 pounds; and

(iii) 3 cents per package weighing 30 or more pounds.

(2) $12 for each additional lot identified on an inspection

certificate for the same product.

(3) A minimum charge of $74 for each product inspected.

(c) When performing inspections of products in sea containers

unloaded directly from sea transportation or when palletized products

unloaded directly from sea transportation are not offered for

inspection at dock-side, the carlot fees in Sec. 51.38(a) shall apply.

(d) When performing inspections for Government agencies, or for

purposes other than those prescribed in the preceding paragraphs,

including weight-only and freezing-only inspections, fees for

inspection shall be based on the time consumed by the grader in

connection with such inspections, computed at a rate of $37.00 an hour:

Provided, That:

(1) Charges for time shall be rounded to the nearest half hour;

(2) The minimum fee shall be two hours for weight-only inspections,

and one-half hour for other inspections;

(3) When weight certification is provided in addition to quality

and/or condition inspection, a one-hour charge shall be added to the

carlot fee.

(4) When inspections are performed to certify product compliance

for Defense Personnel Support Centers, the daily or weekly charge shall

be determined by multiplying the total hours consumed to conduct

inspections by the hourly rate. The daily or weekly charge shall be

prorated among applicants by multiplying the daily or weekly charge by

the percentage of product passed and/or failed for each applicant

during that day or week. Waiting time and overtime charges shall be

charged directly to the applicant responsible for their incurrence.

(e) When performing inspections at the request of the applicant

during periods which are outside the grader's regularly scheduled work

week, a charge for overtime or holiday work shall be made at the rate

of $18.50 per hour or portion thereof in addition to the carlot

equivalent fee, package charge, or hourly charge specified in this

subpart. Overtime or holiday charges for time shall be rounded to the

nearest half hour.

(f) When an inspection is delayed because product is not available

or readily accessible, a charge for waiting time shall be made at the

prevailing hourly rate in addition to the carlot equivalent fee,

package charge, or hourly charge specified in this subpart. Waiting

time shall be rounded to the nearest half hour.

Dated: June 9, 1994.

Lon Hatamiya,

Administrator.

[FR Doc. 94-14886 Filed 6-17-94; 8:45 am]

BILLING CODE 3410-02-P