Fees for Destination Market Inspections of Fresh Fruits, Vegetables and Other Products

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 51

[Docket Number FV-99-302]

RIN 0581-AB63

Fees for Destination Market Inspections of Fresh Fruits,

Vegetables and Other Products

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

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SUMMARY: This proposed rule would revise the regulations governing the

inspection and certification for fresh fruits, vegetables and other

products by increasing by approximately 14 percent for most of the fees

charged for the inspection of these products at destination markets.

The fees for inspecting multiple lots of the same product during

inspections would be increased more significantly and the per package

fees for dock-side inspections would be increased and changed from a

three interval schedule, based on weight, to a two interval schedule

based on different weight thresholds. 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. The fees charged to persons required to have

inspections on imported commodities in accordance with the Agricultural

Marketing Agreement Act of 1937 and for imported peanuts under the

Agricultural Act of 1949 would also be affected.

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

November 19, 1999.

ADDRESSES: Interested persons are invited to submit written comments

concerning this proposal. Comments are to be sent to the Fresh Products

Branch, Fruit and Vegetable Programs, Agricultural Marketing Service,

U.S. Department of Agriculture, P.O. Box 96456, Room 2049-South,

Washington, DC 20090-6456; faxed to (202) 720-5136 or sent via e-mail

to FPB.DocketC[email protected]. 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: Rob Huttenlocker, Assistant Chief,

Fresh Products Branch, at the above address or call (202) 720-9771.

SUPPLEMENTARY INFORMATION:

Executive Order 12866 and Regulatory Flexibility Act

This rule has been reviewed by the Office of Management and Budget

and has been determined to be not significant for the purposes of

Executive Order 12866.

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.

AMS regularly reviews its user-fee financed programs to determine

if the fees are adequate. The Fresh Products Branch (FPB) of the Fruit

and Vegetable Programs, AMS, has and will continue to seek out cost

saving opportunities and implement appropriate changes to reduce its

costs. Such actions can provide alternatives to fee increases. However,

even with these efforts, FPB's existing fee schedule will not generate

sufficient revenues to cover program costs while maintaining an

adequate reserve balance. Current revenue projections for FPB's

destination market inspection work during FY 99 are $13.7 million with

costs projected at $13.9 million and an end-of-year reserve of $2.2

million. However, FPB's trust fund balance for this program will be

approximately $2.4 million under the approximate $4.6 million deemed

necessary to provide an adequate reserve balance in light of increasing

program costs. Further, FPB's costs of operating the destination market

program are expected to increase to approximately $14.5 million during

FY 00 and to approximately $15.0 million during FY 01. These cost

increases will result from inflationary increases with regard to

current FPB operations and services (primarily salary and benefits),

the training and equipment required to promote improved workplace

safety, and the acquisition of additional computer-related technology.

Employee salaries and benefits are major program costs that account

for approximately 80 percent of FPB's total operating budget. A general

and locality salary increase for Federal employees, ranging from 3.54

to 4.02 percent depending on locality, effective January 1999, has

significantly increased program costs. In addition, inflation also

impacts FPB's non-salary costs. These factors have increased FPB's

costs of operating this program by approximately $500,000 per year. In

addition, a general and locality salary increase of at least 4.4

percent is anticipated in January 2000. This salary adjustment will

increase FPB's costs by over $600,000 per year.

Additional revenues are also necessary in order for FPB to cover

the costs of the additional staff, office space, and equipment

($150,000) needed in two federal market offices that were established

during FY 99 (e.g., Brooklyn, New York, and Oklahoma City, Oklahoma).

Additional, revenues are also needed to cover the costs of providing

safety orientation training to FPB's personnel and purchasing safety

shoes for FPB's inspection personnel ($50,000). Finally, FPB needs an

additional $200,000 per year to cover the costs of securing the

equipment (e.g., digital imaging cameras and computers and necessary

information systems upgrades) needed to expand FPB's services and to

make existing services more efficient in the future.

This proposed fee increase should result in an estimated $2.5

million in additional revenues per year (only $1.8 million during FY 00

since any fee increase would be effective on or after January 1, 2000)

and should enable FPB to cover its costs while building its reserves

from the current level of $2.2 million to closer to the $4.6 million

level by the end of FY 2001.

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 proposed action

described herein is being taken for several reasons, including that

additional user fee revenues are needed to cover the costs of: (1)

Providing current program operations and services; (2) improving

[[Page 50775]]

the timeliness with which inspection services are provided; (3)

creating a safer working environment; and (4) acquiring technological

advancements (e.g., digital imaging cameras and computers and necessary

information systems upgrades) aimed at expanding FPB's services and

making them more efficient in the future. This proposed rule should

increase user fee revenue generated under the destination market

program by approximately $2.5 million or approximately 18 percent per

year. While most of the fees would increase by approximately 14

percent, the fee for inspections of multiple lots of the same product

during inspections, commonly referred to as ``sublots,'' would be

increased from $14-$32 because FPB's current fee does not nearly cover

the costs of performing these inspections (between 20-25 percent of the

destination market inspections conducted by FPB involve sublots). In

addition, the per package rates for dock-side inspections would be

increased and changed from a three interval schedule (based on package

weight) to a two interval schedule (based on different weight

thresholds). The two interval schedule would be simpler to administer

and more appropriate given current packaging trends. This action is

authorized under the Agricultural Marketing Act (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 2,000 users of FPB's destination market grading

services (including applicants who must meet import requirements \1\--

inspections which amount to under 2.5 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 would be no additional reporting, recordkeeping, or

other compliance requirements imposed upon small entities as a result

of this proposed rule. In compliance with the Paperwork Reduction Act

of 1995 (44 U.S.C. Chapter 35), the information collection and

recordkeeping requirements in Part 51 have been approved previously by

OMB and assigned OMB No. 0581-0125. FPB 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. 601-674), 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 during those periods when

domestic marketing order regulations are in effect.

Currently, there are 15 commodities subject to 8e import

regulations: avocados, dates (other than dates for processing),

filberts, grapefruit, kiwifruit, limes, olives (other than Spanish-

style green olives), onions, oranges, Irish potatoes, prunes,

raisins, table grapes, tomatoes and walnuts. A current listing of

the regulated commodities can be found under 7 CFR parts 944, 980

and 999. Section 999.600 establishes minimum quality,

identification, certification and safeguard requirements for foreign

produced farmers stock, shelled and cleaned in-shell peanuts

presented for importation into the United States. Import

requirements applicable to peanuts may be found under subparagraph

(f)(2) of section 108B of the Agricultural Act of 1949 (7 U.S.C.

1445c-3), as amended November 28, 1990, and August 10, 1993, and

section 155 of the Federal Agriculture Improvement and Reform Act of

1996 (7 U.S.C. 7271).

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The destination market grading services are voluntary (except when

required for imported commodities) and the fees charged to users of

these services vary with usage. However, the impact on all businesses,

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

would be raised, the increase would not be excessive (approximately

fourteen percent for the most common fees) and should not significantly

affect these entities. Finally, except for those persons who are

required to obtain inspections, most of these businesses are typically

under no obligation to use these inspection services, and, therefore,

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

should not prevent them from marketing their products.

Executive Order 12988

This proposed rule has been reviewed under Executive Order 12988,

Civil Justice Reform. This proposed action is not intended to have

retroactive effect. This proposed 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 proposed rule.

Proposed Action

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 users of the services to cover,

as nearly as practicable, the costs of the services rendered. This

proposed rule would amend the schedule for fees and charges for

inspection services rendered to the fresh fruit and vegetable industry

to reflect the costs necessary to operate the program.

AMS regularly reviews its user-fee programs to determine if the

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

reduce its costs, the existing fee schedule will not generate

sufficient revenues to cover program costs while maintaining an

adequate reserve balance. Current revenue projections for destination

market inspection work during FY 99 are $13.7 million with costs

projected at $13.9 million and an end-of-year reserve of $2.2 million.

However, FPB's trust fund balance for this program will be

approximately $2.4 million under the approximate $4.6 million deemed

necessary to provide an adequate reserve balance in light of increasing

program costs. Further, FPB's costs of operating the destination market

program are expected to increase to approximately $14.5 million during

FY 00 and to approximately $15.0 million during FY 01. These cost

increases (which are outlined below) will result from inflationary

increases with regard to current FPB operations and services (primarily

salary and benefits), the training and equipment required to promote

improved workplace saftey, and the acquisition of additional computer

and related technology.

Employee salaries and benefits are major program costs that account

for approximately 80 percent of FPB's total operating budget. A general

and locality salary increase for Federal employees, ranging from 3.54

to 4.02 percent depending on locality, effective January 1999,

significantly increased program costs. In addition, inflation also

impacts FPB's non-salary costs. These factors have increased FPB's

costs of operating this program by approximately $500,000 per year. In

addition, a general and locality salary increase of at least 4.4

percent is anticipated in January 2000. This salary adjustment will

increase FPB's costs by over $600,000 per year.

Additional revenues are also necessary in order for FPB to cover

the costs of the additional staff, office space, and equipment

($150,000) needed in two federal market offices that were established

during FY 99 (e.g., Brooklyn, New York, and Oklahoma City, Oklahoma).

Additional, revenues are also needed to cover the costs of providing

safety orientation training to FPB's personnel and purchasing safety

shoes for FPB's inspection personnel ($50,000). Finally, FPB needs an

additional $200,000 per year to cover the costs of securing the

equipment (e.g., digital imaging cameras and computers and information

systems upgrades) needed to expand FPB's

[[Page 50776]]

services and to make existing services more efficient in the future.

This proposed fee increase should result in an estimated $2.5

million in additional revenues per year (only $1.8 million during FY 00

since any fee increase would be effective on or after January 1, 2000)

and should enable FPB to cover its costs while building its reserves

from the current level of $2.2 million to closer to the $4.6 million

level by the end of FY 2001.

Based on the aforementioned analysis of this program's increasing

costs, AMS proposes to increase the fees for destination market

inspection services. The following table compares current fees and

charges with the proposed fees and charges for fresh fruit and

vegetable inspection as found in 7 CFR 51.38. This table also reflects

the proposed change to the per package fees for dock-side inspections

that are currently on a three interval schedule based on weight, to a

two interval schedule based on different weight thresholds. 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. 51.38 are:

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Service Current Proposed

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Quality and condition inspections of

one to four products each in

quantities of 51 or more packages and

unloaded from the same land or air

conveyance:

--Over a half carlot equivalent of $86................................ $98.

each product.

--Half carlot equivalent or less of $72................................ $82.

each product.

--For each additional lot of the $14................................ $32.

same product.

Condition only inspections of one to

four products each in quantities of 51

or more packages and unloaded from the

same land or air conveyance:

--Over a half carlot equivalent of $72................................ $82.

each product.

--Half carlot equivalent or less of $66................................ $75.

each product.

--For each additional lot of the $14................................ $32.

same product.

Quality and condition and condition

only inspections of five or more

products each in quantities of 51 or

more packages and unloaded from the

same land or air conveyance:

--For the first five products...... $305............................... $348.

--For each additional product...... $43................................ $49.

--For each additional lot of any of $14................................ $32.

the same product.

Quality and condition and condition

only inspections of products each in

quantities of 50 or less packages

unloaded from the same land or air

conveyance:

--For each product................. $43................................ $49.

--For each additional lot of any of $14................................ $32.

the same product.

Dock-side inspections of an individual

product unloaded directly from the

same ship:

--For each package weighing less 1.1 cents.......................... NA.

than 15 pounds.

--For each package weighing 15 to 2.2 cents.......................... NA.

29 pounds.

--For each package weighing 30 or 3.3 cents.......................... NA.

more pounds.

--For each package weighing less NA................................. 2.5 cents.

than 26 pounds.

--For each package weighing 26 or NA................................. 3.5 cents.

more pounds.

--For each additional lot of any of $14................................ $32.

the same product.

--Minimum charge per individual $86................................ $98.

product.

Inspections performed for other $43 per hour....................... $49 per hour.

purposes during the grader's regularly

scheduled work week.

Overtime or holiday premium rate (per $21.50 per hour.................... $24.50 per hour.

hour additional) for all inspections

performed outside the grader's

regularly scheduled work week.

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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 proposed to

be 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) $98 for over a half carlot equivalent of an individual product.

(B) $82 for a half carlot equivalent or less of an individual

product.

(C) $32 for each additional lot of the same product.

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

same conveyance:

(A) $82 for over a half carlot equivalent of an individual product.

(B) $75 for a half carlot equivalent or less of an individual

product.

(C) $32 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) $348 for the first 5 products.

(B) $49 for each additional product.

(C) $32 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) $49 for each individual product.

(ii) $32 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) 2.5 cents per package weighing less than 26 pounds; and

(ii) 3.5 cents per package weighing 26 or more pounds.

(2) $32 for each additional lot of any of the same product.

(3) A minimum charge of $98 for each product inspected.

[[Page 50777]]

(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 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 $49 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; and

(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 $24.50 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: September 15, 1999.

Robert C. Keeney,

Deputy Administrator, Fruit and Vegetable Programs.

[FR Doc. 99-24438 Filed 9-17-99; 8:45 am]

BILLING CODE 3410-02-P