[Federal Register: December 16, 2003 (Volume 68, Number 241)]
[Rules and Regulations]               
[Page 69941-69944]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr16de03-1]                         






Rules and Regulations
                                                Federal Register
________________________________________________________________________

This section of the FEDERAL REGISTER contains regulatory documents 
having general applicability and legal effect, most of which are keyed 
to and codified in the Code of Federal Regulations, which is published 
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[[Page 69941]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 51

[Docket Number FV-03-301]
RIN 0581-AB63

 
Revision of Fees for the Fresh Fruit and Vegetable Terminal 
Market Inspection Services

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: This rule revises the regulations governing the inspection and 
certification for fresh fruits, vegetables and other products by 
increasing by approximately 15 percent certain fees charged for the 
inspection of these products at destination markets. The fees for 
inspecting multiple lots of the same product during inspections will be 
increased from $14.00 to $45.00, and the per package fees for dock-side 
inspections will be 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 (AMA 
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 section 1308 of 
the Farm Security and Rural Investigation Act of 2002.

EFFECTIVE DATE: January 15, 2004.

FOR FURTHER INFORMATION CONTACT: Rita Bibbs-Booth, USDA, 1400 
Independence Ave., SW., Room 0640-S, Washington, DC 20250-0295, or call 
(202) 720-0391.

SUPPLEMENTARY INFORMATION:

Executive Order 12866 and Regulatory Flexibility Act

    This rule has been determined to be ``non-significant'' for the 
purposes of Executive Order 12866. Therefore, it has not been reviewed 
by the Office of Management and Budget.
    Also, pursuant to the requirements set forth in the Regulatory 
Flexibility Act (RFA), AMS has considered the economic impact of this 
action on small entities. Accordingly, AMS has proposed this final 
regulatory flexibility analysis.
    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 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 the timeliness 
with which inspection services are provided; and (3) improving the work 
environment.
    AMS regularly reviews its user-fee financed programs to determine 
if the fees are adequate. The Fresh Products Branch (FPB) 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 the Agency mandated reserve balance. 
Current revenue projections for FPB's destination market inspection 
work during FY-03 are $12.0 million with costs projected at $18.3 
million and an end-of-year reserve of $14.8 million. However, this 
reserve balance is due to appropriated funding received in October 
2001, for infrastructure, workplace, and technological improvements. 
FPB's costs of operating the destination market program are expected to 
increase to approximately $18.9 million during FY-04 and to 
approximately $19.4 million during FY-05. The current fee structure 
with the infusion of the appropriated funding is expected to fund the 
terminal market inspection services until FY-2006, when FPB will fall 
below the Agency's mandated four-month reserve level.
    This fee increase should result in an estimated $1.8 million in 
additional revenues per year (effective in FY 04, if the fees are 
implemented by October 1, 2003). This will not cover all of FPB's 
costs. FPB will need to continue to increase fees bi-yearly in order to 
cover the program's operating cost and maintain the required reserve 
balance. FPB believes that increasing fees incrementally is appropriate 
at this time. Additional fee increases beyond FY-2004 will be needed to 
sustain the program in the future.
    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 4.02 
to 4.87 percent depending on locality, effective January 2003, has 
significantly increased program costs. This salary adjustment will 
increase FPB's costs by over $700,000 per year. Increases in health and 
life insurance premiums, along with workers compensation will also 
increase program costs. Since FPB's last fee increase, many employees 
have converted to or were hired under the Federal Employees Retirement 
System (FERS), which has also contributed to the increase in program 
costs. In addition, inflation also impacts FPB's non-salary costs. 
These factors have increased FPB's costs of operating this program by 
over $600,000 per year.
    Additional funds of approximately $155,000 are necessary in order 
for FPB to continue to cover the costs associated with additional staff 
and to maintain office space and equipment. Additional revenues are 
also necessary to improve the work environment by providing training 
and purchasing needed equipment. In addition, FPB began in 2001, 
developing (with appropriated funds) an automated system recently named 
the Fresh Electronic Inspection Reporting/Resource System (FEIRS) to 
replace its manual paper and pen inspection reporting process. 
Approximately $200,000 in additional funds are needed to complete the 
development and deployment of FEIRS, and it will take approximately 
$10,000 per month to maintain the system. This system has been put in 
place to enhance FPB's fruit and vegetable inspection processes.
    This rule should increase user fee revenue generated under the 
destination

[[Page 69942]]

market program by approximately $1.8 million or 15 percent. While most 
of the fees will increase by approximately 15 percent, the fee for 
inspections of multiple lots of the same product during inspections, 
commonly referred to as ``sublots,'' would be increased from $14 to $45 
because FPB's current fee does not nearly cover the costs of performing 
these inspections (between 30 to 35 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 of 1946 (AMA of 1946) (see 7 U.S.C. 
1622(h)), which provides 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 121.201). 
There would be no additional reporting, recordkeeping, or other 
compliance requirements imposed upon small entities as a result of this 
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 rule.
---------------------------------------------------------------------------

    \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. Section 1308 of 
the Farm Security and Rural Investment Act of 2002 (Public Law 107-
171), 7 U.S.C. 7958, required USDA among other things to develop new 
peanut quality and handling standards for imported peanuts marketed 
in the United States.
    Currently, there are 14 commodities subject to 8e import 
regulations: Avocados, dates (other than dates for processing), 
filberts, grapefruit, kiwi fruit, olives (other than Spanish-style 
green olives), onions, oranges, potatoes, prunes, raisins, table 
grapes, tomatoes and walnuts. A current listing of the regulated 
commodities can be found under 7 CFR parts 944, 980, 996, and 999.
---------------------------------------------------------------------------

    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 
will be raised, the increase is not excessive 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 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.

Action

    The AMA of 1946 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 
of 1946 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 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.
    The Agricultural Marketing Service (AMS) regularly reviews its 
user-fee programs to determine if the fees are adequate. While the 
Fresh Products Branch (FPB) of the Fruit and Vegetable Programs, AMS, 
continues to search for opportunities to reduce its costs, the existing 
fee schedule will not generate sufficient revenues to cover program 
costs while maintaining the Agency mandated reserve balance. Current 
revenue projections for destination market inspection work during FY-03 
are $12.0 million with costs projected at $18.3 million and an end-of-
year reserve of $14.8 million. However, this reserve balance is due to 
appropriated funding received from Congress in October of 2001. These 
funds were established to build up the terminal market inspection 
reserve fund and for infrastructure improvements including development 
and maintenance of the inspector training center, workplace and 
technological improvements, including digital imaging and automation of 
the inspection process. However, by FY-07, without increasing fees, 
FPB's trust fund balance for this program will be below the agency 
mandated four-months of operating reserve (approximately $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 
$18.9 million during FY-04 and to approximately $19.4 million during FY 
05. These cost increases (which are outlined below) will result from 
inflationary increases with regard to current FPB operations and 
services (primarily salaries and benefits), increased inspection 
demands, and the acquisition and maintenance of computer technology 
(i.e., FEIRS).
    This rule should increase user fee revenue generated under the 
destination market program by approximately $1.8 million or 15 percent 
per year. While most of the fees will increase by approximately 15 
percent, the fee for inspections of multiple lots of the same product 
during inspections, commonly referred to as ``sublots,'' would be 
increased from $14 to $45 because FPB's current fee does not nearly 
cover the costs of performing these inspections (between 30 to 35 
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.
    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 4.02 
to 4.87 percent depending on locality, effective January 2003, has 
significantly increased program costs. This salary adjustment will 
increase FPB's costs by over $700,000 per year. Increases in health and 
life insurance premiums, along with workers compensation will also 
increase program costs. Since FPB's last fee increase, many employees 
have converted to or were hired under the Federal Employees Retirement 
System (FERS), which has also contributed to

[[Page 69943]]

the increase in program costs. In addition, inflation also impacts 
FPB's non-salary costs. These factors have increased FPB's costs of 
operating this program by over $600,000 per year.
    Additional revenues (approximately $155,000) are necessary in order 
for FPB to continue to cover the costs associated with additional staff 
and to maintain office space and equipment. Additional revenues are 
also necessary to continue to improve the work environment by providing 
training and purchasing needed equipment. In addition, FPB began in 
2001, developing (with appropriated funds) an automated system recently 
named the Fresh Electronic Inspection Reporting/Resource System (FEIRS) 
to replace its manual paper and pen inspection reporting process. 
Approximately $200,000 in additional revenue is needed to complete the 
development and deployment of FEIRS, and it will take approximately 
$10,000 per month to maintain the system. This system has been put in 
place to enhance FPB's fruit and vegetable inspection processes.
    Based on the aforementioned analysis of this program's increasing 
costs, AMS to increase the fees for destination market inspection 
services. The following table compares current fees and charges with 
the fees and charges for fresh fruit and vegetable inspection as found 
in 7 CFR 51.38. This table also reflects the 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:

----------------------------------------------------------------------------------------------------------------
                 Service                                     Current                             Proposed
----------------------------------------------------------------------------------------------------------------
Quality and condition inspections of
 products each in quantities of 51 or
 more packages and unloaded from the
 same land or air conveyance:
    --Over a half carlot equivalent of    $86.00.......................................  $99.00
     each product.
    --Half carlot equivalent or less of   $72.00.......................................  $83.00
     each product.
    --For each additional lot of the      $14.00.......................................  $45.00
     same product[hairsp]*.
Condition only inspections of products
 each in quantities of 51 or more
 packages and unloaded from the same
 land or air conveyance:
    --Over a half carlot equivalent of    $72.00.......................................  $83.00
     each product.
    --Half carlot equivalent or less of   $66.00.......................................  $76.00
     each product.
    --For each additional lot of the      $14.00.......................................  $45.00
     same product[hairsp]*.
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..................  $43.00.......................................  $45.00
    --For each additional lot of any of   $14.00.......................................  $45.00
     the same product[hairsp]*.
    --Lots in excess of carlot
     equivalents will be charged
     proportionally by the quarter
     carlot
Dock side inspections of an individual
 product unloaded directly from the same
 ship:
    --For each package weighing N/A less  1.1 cent.....................................  N/A
     than 15 pounds.
    --For each package weighing less      2.2 cents....................................  2.5 cents.
     than 30 pounds (previously 15-29
     pounds).
    --For each package weighing 30 or     3.3 cents....................................  3.8 cents.
     more pounds.
    --Minimum charge per individual       $86.00.......................................  $99.00
     product.
    --Minimum charge for each additional  $14.00.......................................  $45.00
     lot of the same product.
Hourly rate for inspections performed     $43.00.......................................  $49.00
 for other purposes during the grader's
 regularly scheduled work week.
    --Hourly rate for other work
     performed during the graders
     regular scheduled work week will be
     charged at a reasonable rate
Overtime or holiday premium rate (per     $21.50.......................................  $25.00
 hour additional) for all inspections
 performed outside the grader's
 regularly scheduled work week.
Hourly rate for inspections performed     $40.00.......................................  $49.00
 under 40 hour contracts during the
 grader's regularly scheduled work
 week[hairsp]*.
Rate for billable mileage...............  $1.00........................................  $1.00
----------------------------------------------------------------------------------------------------------------

    A notice of proposed rulemaking was published in the Federal 
Register on September 8, 2003 (7 CFR part 51). The workplan for the 
proposed FPB fee increase was classified as non-significant and 
approved by OMB on June 10, 2003. The comment period ended on October 
8, 2003, and FPB received two comments during this period.
    The first comment was received from the Washington State Potato 
Commission (WSPC) opposed raising inspection fees at this time. WSPC 
asked ``is it necessary to raise salaries'' and the answer is yes. 
General and locality salary increases for Federal employees are 
mandated by Federal law. WSPC also recommended that FPB use its reserve 
funds. FPB is indeed utilizing its reserve fund to sustain the Federal 
market inspection program. However, if fees are not increased, the 
reserve fund would become depleted. The market inspection program 
reserve level is set by the Agency. A fee increase is necessary in 
order to prevent falling below the mandated four-month reserve level in 
FY-2007.
    The second comment received from the California Grape and Tree 
Fruit League (CGTFL) did not oppose the proposed fee increase. CGTFL 
recommended that FPB make every effort to minimize costs and maximize 
the efficiency of the program, to maintain training programs for 
inspections and oversight, to make more inspection data available to 
the industry, and to seek input from the produce industry. FPB has been 
and remains committed to such recommendations. Further, FPB has and 
will continue to seek out cost saving opportunities within the program. 
Accordingly, in light of the continuing need to maintain the inspection 
program on a financially sound basis, the Agency has decided to proceed 
with the fee increase as set forth in the proposal.

List of Subjects in 7 CFR Part 51

    Agricultural commodities, Food grades and standards, Fruits, Nuts, 
Reporting and recordkeeping requirements, Trees, Vegetables.

0
For the reasons set forth in the preamble, 7 CFR part 51 is amended as 
follows:

[[Page 69944]]

PART 51--[AMENDED]

0
1. The authority citation for 7 CFR part 51 continues to read as 
follows:

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


0
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) Quality and condition inspections of products in quantities of 
51 or more packages and unloaded from the same land or air conveyance:
    (i) $99 for over a half carlot equivalent of an individual product;
    (ii) $83 for a half carlot equivalent or less of an individual 
product;
    (iii) $45 for each additional lot of the same product.
    (2) Condition only inspection of products each in quantities of 51 
or more packages and unloaded from the same land or air conveyance:
    (i) $83 for over a half carlot equivalent of an individual product;
    (ii) $76 for a half carlot equivalent or less of an individual 
product;
    (iii) $45 for each additional lot of the same product.
    (3) For quality and condition inspection and condition only 
inspection of products in quantities of 50 or less packages unloaded 
from the same conveyance:
    (i) $45 for each individual product;
    (ii) $45 for each additional lot of any of the same product. Lots 
in excess of carlot equivalents will be charged proportionally by the 
quarter carlot.
    (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) Dock side inspections of an individual product unloaded 
directly from the same ship:
    (i) 2.5 cents per package weighing less than 30 pounds;
    (ii) 3.8 cents per package weighing 30 or more pounds;
    (iii) Minimum charge of $99 per individual product;
    (iv) Minimum charge of $45 for each additional lot of the same 
product.
    (2) [Reserved]
    (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 paragraph (a) of this 
section shall apply.
    (d) When performing inspections for Government agencies, or for 
purposes other than those prescribed in paragraphs (a) through (c) of 
this section, 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;
    (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 $25.00 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: December 9, 2003.
A.J. Yates,
Administrator, Agricultural Marketing Service.
[FR Doc. 03-30999 Filed 12-15-03; 8:45 am]

BILLING CODE 3410-02-P