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

DEPARTMENT OF AGRICULTURE

7 CFR Part 51

[Docket Number FV-95-306]

Fresh Fruits, Vegetables and Other Products (Inspection,

Certification, and Standards)

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: This rule revises the regulations governing inspection and

certification for fresh fruits, vegetables and other products by

increasing the fees charged for the inspection of these products at

destination markets. These revisions are necessary in order to recover,

as nearly as practicable, the costs of performing inspection services

at destination markets under the Agricultural Marketing Act of 1946.

EFFECTIVE DATE: November 10, 1996.

FOR FURTHER INFORMATION CONTACT:

Robert J. Huttenlocker, Fresh Products Branch, Fruit and Vegetable

Division, Agricultural Marketing Service, U.S. Department of

Agriculture, PO Box 96456, Room 2049 South Building, Washington, DC

20090-6456, (202) 720-0297.

SUPPLEMENTARY INFORMATION: This rule has been determined not

significant for purposes of Executive Order 12866 and, therefore, has

not been reviewed by the Office of Management and Budget.

Pursuant to the requirements set forth in the Regulatory

Flexibility Act (RFA), the Agricultural Marketing Service (AMS) has

considered the economic impact of this action on small entities.

There are more than 2,000 users of Fresh Products Branch's

destination market grading services. Some of these are small entities

under the criteria established by the Small Business Administration (13

CFR 121.601). This rule will raise the fees charged to businesses for

voluntary inspection services for fresh fruits and vegetables. Even

though fees will be raised, the increase is small (approximately five

percent) and will not significantly affect these entities. These

businesses are under no obligation to use these inspection services,

and any decision on their part to discontinue the use of the services

would not prevent them from marketing their products.

The Agricultural Marketing Service (AMS), has certified that this

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

small entities, as defined in the Regulatory Flexibility Act, (5 U.S.C.

601). The final rule reflects certain fee increases needed to recover

the costs of inspection services rendered in accordance with the

Agricultural Marketing Act (AMA) of 1946.

This rule has been reviewed under Executive Order 12988, Civil

Justice Reform. This action is not intended to have 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.

The AMA authorizes 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. This

final rule will amend the schedule for fees and charges for inspection

services rendered to the fresh fruit and vegetable industry to reflect

the costs currently associated with the program.

AMS regularly reviews these programs to determine if fees are

adequate. Employee salaries and benefits are major program costs that

account for approximately 86 percent of the total operating budget. A

general and locality salary increase for Federal employees, ranging

from 3.09 to 6.25 percent depending on locality, effective January

1995, has materially affected program costs. Another general and

locality salary increase, ranging from 2.39 to 2.87 percent depending

upon locality (amounting to approximately $253,000), was effective

January 1996. Further, since FY 94, the costs associated with the

development of U.S. grade standards have been and will continue to be

covered from user fee revenues (prior to this, these costs were funded

by Federal appropriation). Standardization activities increase the cost

of this program by approximately $100,000 per year.

While a concerted effort to cut costs resulted in overhead savings

of $350,000 in FY 95 over FY 94, the last

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fee increase of June 1994 did not result in the collection of enough

additional revenue to cover all these increases and still maintain an

adequate reserve balance (four months of costs) as called for by Agency

policy (AMS Directive 407.1) and principles of prudent financial

management. Projected FY 96 revenues for market inspection are $12.6

mil with costs projected at $11.6 mil and a reserve of $3.1 mil.

However, the Fresh Products Branch (FPB) trust fund reserve balance for

the market program is approximately $900,000 under the desired level of

$4 mil. Further action is necessary to meet rising costs and maintain

adequate reserve balances. This action will assist in moving the FPB

trust fund toward a more adequate level and will result in an estimated

$600,000 in additional revenues per year.

A notice of proposed rulemaking was published in the Federal

Register (61 FR 24247) on May 14, 1996, with a 60 day comment period.

The comment period closed July 15, 1996. Interested persons were

invited to participate in this rulemaking by submitting written

comments on the proposal to AMS. Two comments were received regarding

this rulemaking.

One comment was received by a State agency with which AMS has a

cooperative agreement for providing official certification in that

State. The comment was in favor of the increase and suggested that an

additional increase may be appropriate for additional lots of the same

product. While this option was considered, the proposed fee increases

should be sufficient to meet the current financial needs of the

program. Further, an effort was made to avoid increases which would be

unnecessarily burdensome on the industry.

The second comment was received from an industry association of

receivers. They support the proposed increase, provided that ``* * *

the Fresh Products Branch improve performance with respect to

inspection process, issuing certificates, and reduce the period of time

between the inspection request and the time that the inspection is

performed.'' FPB has responded to industry's concerns relating to the

timeliness and efficiency of inspections by developing and implementing

analytical procedures for assessing workload at various market offices

(i.e., inspection points). Information obtained during these analyses

is being used to audit staffing levels at the markets to ensure that

inspection workload is being effectively managed. The industry

association also suggests ``* * * that a committee composed of

government officials, terminal market receivers and other interested

persons should be created to discuss these issues, in order to realize

the highest return on the fees paid by the perishable industry for

inspection services.'' FPB officials routinely interact with industry

participants to discuss alternatives for improving inspection services.

AMS officials frequently meet to discuss industry's recommendations and

improvements are implemented where appropriate.

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.

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 1996 reserve balance of the program's trust fund is projected to

be approximately $1 million under the desired level necessary to ensure

the program's fiscal viability and the effective date will correspond

to the first available billing cycle.

List of Subjects in 7 CFR Part 51

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

Reporting and recordkeeping requirements, Trees, Vegetables.

For 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 continues to read as

follows:

Authority: 7 U.S.C. 1621-1627.

2. Section 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, the 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) $78 for over a half carlot equivalent of an individual product.

(B) $65 for a half carlot equivalent or less of an individual

product.

(C) $13 for each additional lot of the same product.

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

same conveyance:

(A) $65 for over a half carlot equivalent of an individual product.

(B) $60 for a half carlot equivalent or less of an individual

product.

(C) $13 for each additional lot of the same product.

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

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

(A) $277 for the first 5 products.

(B) $39 for each additional product.

(C) $13 for each additional lot of any of the same product.

(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) $39 for each individual product.

(ii) $13 for each additional lot of any of the same 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) $13 for each additional lot of any of the same product.

(3) A minimum charge of $78 for each product inspected.

(c) When performing inspections of products from sea containers

unloaded directly from sea transportation or when palletized products

unloaded directly from sea transportation are not offered for

inspection at dockside, the car-lot 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 $39 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

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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 $19.50 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: October 10, 1996.

Robert C. Keeney,

Director, Fruit and Vegetable Division.

[FR Doc. 96-26653 Filed 10-16-96; 8:45 am]

BILLING CODE 3410-02-M