Processed Fruits and Vegetables

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 52

[FV-98-327]

Processed Fruits and Vegetables

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

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SUMMARY: This proposed rule would revise the regulations governing

inspection and certification for processed fruits, vegetables, and

processed products made from them by increasing by approximately three

to seven percent fees charged for the inspection services. These

revisions are necessary in order to recover, as nearly as practicable,

the costs of performing inspection services under the Agricultural

Marketing Act of 1946. The fees charged to persons required to have

inspections on imported commodities in accordance with the Agricultural

Marketing Act of 1937 would also be affected. This rule would also

incorporate miscellaneous changes to revise a citation number and

revise a statement in a footnote in regards to sample size.

DATES: Comments must be postmarked or courier dated on or before July

30, 1998.

ADDRESSES: Interested persons are invited to submit written comments

concerning this proposal. Comments must be sent in duplicate to the

Office of the Branch Chief, Processed Products Branch, Fruit and

Vegetable Programs, Agricultural Marketing Service, U.S. Department of

Agriculture, P.O. Box 96456, Room 0709 South Building, Washington, DC

20090-6456. Comments should make reference to the date and page number

of this issue of the Federal Register and will be made available for

public inspection in the above office during regular business hours.

FOR FURTHER INFORMATION CONTACT: Mr. James R. Rodeheaver at the above

address or call (202) 720-4693.

SUPPLEMENTARY INFORMATION:

Executive Order 12866 and Regulatory Flexibility Act

This rule has been determined not significant for purposes of

Executive Order 12866, and has not been reviewed by the Office of

Management and Budget. Also, 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. Accordingly, the required analyses are set forth below.

AMS regularly reviews its user fee financed programs to determine

if the fees are adequate. The existing fee schedule will not generate

sufficient revenues to cover lot, and year round and less than year

round inspection program costs while maintaining an adequate reserve

balance (four months of costs) as called for by Agency policy (AMS

Directive 408.1). Current revenue projection for work in regards to

these inspection programs during FY 1998 is $11.7 million with costs

projected at $13.1 million and an end-of-year reserve balance of $3.9

million. The PPB trust fund reserve balance for these programs will be

approximately $0.5 million under the four-month level of approximately

$4.4 million, which is called for by Agency policy. Further, PPB's cost

of operating the user fee financed programs are expected to increase to

approximately $13.5 million during FY 1999 and to approximately $13.9

million in FY 2000. These cost increases will result from inflationary

increases with regard to current PPB operations and services.

The Processed Products Branch (PPB) estimates that without a fee

increase the trust fund reserve as called for by Agency policy (four-

months) will significantly decrease, that will result in an operating

reserve balance of approximately $3.0 million in FY 1999 and $2.6

million in FY 2000. This relates to only 2.9 months and 2.3 months of

operating reserve for the respective years.

Employee salaries and benefits are major program costs that account

for approximately 85 percent of the total operating budget. A general

and locality salary increase for Federal employees, ranging from 2.30

to 7.11 percent depending on locality, effective January 1997,

significantly increased program costs. Another locality salary increase

ranging from 2.30 to 7.27 percent depending on locality, effective

January 1998, also increased program costs. These increases have

increased PPB's cost of operating these programs by $400,000 per year.

The proposed fee increase of approximately 3 to 7 percent, should

result in an estimated $500,000 in additional revenue per year and

should enable PPB to cover its costs and re-establish program reserves

(current operating reserves are being maintained at a level below that

provided for by Agency policy).

The purpose of the RFA is to fit regulatory actions to the scale of

businesses subject to such actions in order that small businesses will

not be unduly or disproportionately burdened. The objective of the

proposed rule is to increase user fee revenue generated under the lot

inspection program, and the year round and less than year round

inspection programs by approximately $500,000 annually. This action is

authorized under the AMA of 1946 [see 7 U.S.C. 1622(h)] which states

that the Secretary of Agriculture may assess and collect ``such fees as

will be reasonable and as nearly as may be to cover the costs of

services rendered * * *''.

There are more than 1239 users of PPB's lot, and less than year

round and year round inspection services (including applicants who must

meet

[[Page 35545]]

import requirements,\1\ inspections which amount to under 2 percent of

all lot inspections performed). A small portion of these users are

small entities under the criteria established by the Small Business

Administration (13 CFR 121.601). There will be no additional reporting,

recordkeeping, or other compliance requirements imposed upon small

entities as a result of this proposed rule. PPB has not identified any

other federal rules which may duplicate, overlap or conflict with this

proposed rule.

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\1\ Section 8e of the Agricultural Marketing Agreement Act of

1937, as amended (7 U.S.C. 601-604), requires that whenever the

Secretary of Agriculture issues grade, size, quality or maturity

regulations under domestic marketing orders for certain commodities,

the same or comparable regulations on imports of those commodities

must be issued. Import regulations apply only during those periods

when domestic marketing order regulations are in effect.

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Currently, there are 4 processed commodities subject to 8e import

regulations: canned ripe olives, dates, prunes, and processed raisins.

A current listing of the regulated commodities can be found under 7 CFR

parts 944 and 999.

Inasmuch as the inspection services are voluntary (except when

required for imported commodities), and since the fees charged to users

of these services vary with usage, the impact on all businesses,

including small entities, is very similar. Further, even though fees

will be raised, the increase is small (three to seven percent) and

should not significantly affect these entities. Finally, except for

those applicants who are required to obtain inspections, most of these

businesses are typically under no obligation to use these inspection

services, and therefore, any decision to discontinue the use of the

services should not prevent them from marketing their products.

Executive Order 12988

The rule has been reviewed under Executive Order 12988, Civil

Justice Reform. This rule is not intended to have a retroactive effect

and 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.

Proposed Action

The AMA authorizes official inspection, grading and certification

for processed fruits, vegetables, and processed products made from

them. The AMA provides that reasonable fees be collected from the users

of the services to cover, as nearly as practicable, the costs of the

services rendered. This proposed rule will amend the schedule for fees

for inspection services rendered to the processed fruit and vegetable

industry to reflect the costs necessary to operate the program and

incorporates miscellaneous changes to revise a citation number and to

revise a statement in a footnote in regards to sample size.

AMS regularly reviews its user fee programs to determine if the

fees are adequate. While PPB continues to search for opportunities to

reduce its costs, the existing fee schedule will not generate

sufficient revenues to cover lot, and less than year round and year

round inspection program costs while maintaining an adequate reserve

balance (four months of costs) as called for by Agency policy (AMS

Directive 408.1). The current revenue projection for work in regards to

these inspection programs during FY 1998 is $11.7 million with cost

projected at $13.1 million and an end-of-year reserve of $3.9 million.

This will result in a decrease of PPB's trust fund balance of

approximately $0.5 million under the four-month level ($4.4 million)

called for by Agency policy. Further, PPB's cost of operating these

inspection programs is expected to increase to approximately $13.5

million during FY 1999 and to approximately $13.9 million in FY 2000,

resulting in a decrease of the trust fund balance to approximately $3.0

in FY 1999, and to approximately $2.6 million in FY 2000. These cost

increases will result from inflationary increases with regard to

current PPB operations and services.

Employee salaries and benefits are major program costs that account

for approximately 85 percent of the total operating budget. A general

and locality salary increase for Federal employees, ranging from 2.30

to 7.11 percent depending on locality, effective January 1997,

significantly increased program costs. Another general and locality

salary increase ranging from 2.30 to 7.27 percent depending on

locality, effective January 1998, also increased program costs. These

increases will increase PPB's costs of operating these inspection

programs by approximately $400,000 per year. Therefore, the salary

increases necessitate additional funding under the program. This

proposed fee increase of approximately 3 to 7 percent should result in

an estimated additional revenue of $500,000 per year, and should enable

PPB to cover the costs of doing business and re-establish program

reserves (current operating reserves are at a level below that provided

for by Agency policy). In order to reach and maintain a four-month

reserve, a further increase in fees may be likely in future years.

Based on the aforementioned analysis of increasing program costs,

AMS proposes to increase the fees relating to lot inspection service

and the fees for less than year round and year round inspection

services. For inspection services charged under Sec. 52.42, overtime

and holiday work would continue to be charged as provided in that

section. For inspection services charged on a contract basis under

Sec. 52.51 overtime work would also continue to be charged as provided

in that section. The following fee schedule compares current fees and

charges with proposed fees and charges for processed fruit and

vegetable inspection as found in 7 CFR 52.42-52.51. Unless otherwise

provided for by regulation or written agreement between the applicant

and the Administrator, the charges in the schedule of fees as found in

Sec. 52.42 are:

Current $41.00/hr.

Proposed $43.00/hr.

Charges for travel and other expenses as found in Sec. 52.50 are:

Current: $41.00/hr.

Proposed: $43.00/hr.

Charges for year-round in-plant inspection services on a contract

basis as found in Sec. 52.51(c) are:

(1) For inspector assigned on a year-round basis:

Current: $34.00/hr.

Proposed: $35.00/hr.

(2) For inspector assigned on less than a year-round basis: Each

inspector:

Current: $42.00/hr.

Proposed: $45.00/hr.

Charges for less than year-round in-plant inspection services (four

or more consecutive 40 hour weeks) on a contract basis as found in

Sec. 52.51(d) are:

(1) Each inspector:

Current: $42.00/hr.

Proposed: $45.00/hr.

Also, AMS revises Secs. 52.21 and 52.38 (Table II, footnote number

2), of 7 CFR part 52 to make editorial changes.

In Sec. 52.21, Sec. 52.50 is referenced as providing information

regarding the purchase of additional copies of certificates. This

should be revised to read Sec. 52.49.

In Sec. 52.38, Table II, footnote number 2, the statement that

describes the sample size for Group 3 containers that weigh over 10

pounds is omitted. Table II, footnote number 2 is revised to include

the sample size for Group 3 containers that are over 10 pounds.

List of Subjects in 7 CFR Part 52

Food grades and standards, Food labeling, Frozen foods, Fruit

juices,

[[Page 35546]]

Fruits, Reporting and recordkeeping requirements, and Vegetables.

For the reasons set forth in the preamble, 7 CFR part 52 is amended

to read as follows:

PART 52--[AMENDED]

1. The authority citation for part 52 continues to read as follows:

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

Sec. 52.42 [Amended]

2. In Sec. 52.42, the figure ``$41.00'' is revised to read

``$43.00''.

Sec. 52.50 [Amended]

3. In Sec. 52.50, the figure ``$41.00'' is revised to read

``$43.00''.

Sec. 52.51 [Amended]

4. In Sec. 52.51, paragraph (c)(1), the figure ``$34.00'' is

revised to read ``$35.00'', in paragraph (c)(2), the figure ``$42.00''

is revised to read ``$45.00'', and in paragraph (d)(1), the figure

``$42.00'' is revised to read ``$45.00''.

Sec. 52.21 [Amended]

5. In Sec. 52.21, the words ``Sec. 52.50'' is revised to read

``Sec. 52.49''.

Sec. 52.38 [Amended]

6. In Sec. 52.38, Table II, footnote number 2 is revised to read as

follows:

\2\ When a standard sample size is not specified in the U.S.

grade standards, the sample units for the various container size

groups are as follows: Groups 1 and 2--1 container and its entire

contents. Group 3 containers up to 10 pounds--1 container and its

entire contents. Group 3 containers over 10 pounds--approximately

three pounds of product. When determined by the inspector that a 3-

pound sample unit is inadequate, a larger sample unit or 1 or more

containers and their entire contents may be substituted for 1 or

more sample units of 3 pounds.

Dated: June 24, 1998.

Robert C. Keeney,

Deputy Administrator, Fruit and Vegetable Programs.

[FR Doc. 98-17297 Filed 6-29-98; 8:45 am]

BILLING CODE 3410-02-P