[Federal Register Volume 65, Number 215 (Monday, November 6, 2000)]
[Rules and Regulations]
[Pages 66485-66487]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-28414]



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 Rules and Regulations
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  Federal Register / Vol. 65, No. 215 / Monday, November 6, 2000 / 
Rules and Regulations  

[[Page 66485]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 52

[FV-00-326]


Processed Fruits and Vegetables

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: This final rule revises the regulations governing inspection 
and certification for processed fruits, vegetables, and processed 
products made from them by increasing by approximately three to nine 
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.

EFFECTIVE DATE: November 19, 2000.

FOR FURTHER INFORMATION CONTACT: Mr. James R. Rodeheaver, 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, telephone (202) 720-
4693, or e-mail [email protected]. 

SUPPLEMENTARY INFORMATION:

Executive Order 12866 and Regulatory Flexibility Act

    This rule has been determined not significant for purposes of 
Executive Order 12866 and has been reviewed by the Office of Management 
and Budget. Also, pursuant to the requirements of 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 Processed Products Branch (PPB) of the 
Fruit and Vegetable Programs, AMS, has and will continue to seek out 
cost savings opportunities and implement appropriate changes to reduce 
its costs. Such actions can provide alternatives to fee increases. The 
fee schedule was last revised on October 4, 1998 (63 FR 50745). 
However, even with such efforts, the existing fee schedule will not 
generate sufficient revenues to cover lot, year round, and less than 
year round inspection program costs and sustain an adequate reserve 
balance. PPB programs for lot, year round, and less than year round 
will have obligations in FY 2000 of approximately $12.9 million, 
necessitating a reserve of $4.3 million. The current reserve is $2.6 
million. Current revenue projections for FY 2000 without a fee increase 
are $12.0 million while program costs increase to approximately $13.1 
million in FY 2001. These cost increases will result primarily from 
increases in salaries and benefits. Accounting for a significant 
portion of the total operating budget, salaries rose from 3.54 to 4.02 
percent, effective January 1999, increasing the cost of operating these 
programs by $295,000. A 4.8 percent pay increase effective January 1, 
2000, increased program costs another $385,000. The revenue 
projections, that include final fees, are $13.5 million for FY 2001. 
The final fee increase of approximately 3 to 9 percent, should result 
in an estimated approximately $1.0 million in FY 2001 and should enable 
PPB to cover its costs and re-establish adequate program reserves.
    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. This action would 
increase user fee revenue generated under the lot inspection program 
and the year round and less than year round inspection programs by 
approximately $1,020,000 annually. This action is authorized under the 
AMA of 1946 [see 7 U.S.C. 1622(h)] which provides that the Secretary of 
Agriculture 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 1,250 users of PPB's lot, and less than year 
round and year round inspection services (including applicants who must 
meet 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 121.201). There will be no additional 
reporting, recordkeeping, or other compliance requirements imposed upon 
small entities as a result of this rule. PPB has not identified any 
other federal rules which may duplicate, overlap or conflict with this 
final 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.
    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.
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    Inspection services covered by this final rule are voluntary, 
except when required for certain imported commodities under 7 CFR Parts 
944 and 999. The total 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 increased, the amount 
of the increase is small (three to nine percent), and should not 
significantly affect these entities. Finally, except for those 
applicants who are required to obtain inspections in connection with 
certain imports these businesses are under no obligation to use these 
inspection services.

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.

[[Page 66486]]

Final Action

    The AMA authorizes official inspection, grading, and certification 
for processed fruits, vegetables, and processed products made from 
them. The AMA provides that the Secretary collect reasonable fees from 
the users of the services to cover, as nearly as practicable, the costs 
of the services rendered. This 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.
    AMS regularly reviews its user fee programs to determine if the 
fees are adequate. While PPB continues to pursue opportunities to 
reduce its costs, the existing fee schedule will not generate 
sufficient revenues to cover lot, less than year round and year round 
inspection program costs while maintaining an adequate reserve balance.
    PPB programs for lot, year round, and less than year round will 
have obligations in FY 2000 of approximately $12.9 million, 
necessitating a reserve of $4.3 million. The current reserve is $2.6 
million. Current revenue projections for FY 2000 without a fee increase 
are $12.0 million while program costs increase to approximately $13.1 
million in FY 2001. These cost increases will result primarily from 
increases in salaries and benefits. Accounting for a significant 
portion of the total operating budget, salaries rose from 3.54 to 4.02 
percent, effective January 1999, increasing the cost of operating these 
programs by $295,000. A 4.8 percent pay increase effective January 1, 
2000, increased program costs another $385,000. The revenue 
projections, that include final fees, are $13.5 million for FY 2001. 
The final fee increase of approximately 3 to 9 percent, should result 
in an estimated approximately $1.0 million in FY 2001 and should enable 
PPB to cover its costs and re-establish adequate program reserves.
    Based on the aforementioned analysis of increasing program costs, 
AMS is increasing 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 final fees and charges for processed fruit and vegetable 
inspection as found in 7 CFR Secs. 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                               Final
------------------------------------------------------------------------
43.00/hr...................................  $47.00/hr.
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    Charges for travel and other expenses as found in Sec. 52.50 are:

------------------------------------------------------------------------
                  Current                               Final
------------------------------------------------------------------------
$43.00/hr..................................  $47.00/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                               Final
------------------------------------------------------------------------
$35.00/hr..................................  $36.00/hr.
------------------------------------------------------------------------

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

------------------------------------------------------------------------
                  Current                               Final
------------------------------------------------------------------------
$45.00/hr..................................  $48.00/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                               Final
------------------------------------------------------------------------
$45.00/hr..................................  $48.00/hr.
------------------------------------------------------------------------

    A notice of proposed rulemaking was published in the Federal 
Register (65 FR 39824) on June 28, 2000, with a 60-day comment period. 
The comment period closed on August 28, 2000. Interested persons were 
invited to participate in this rulemaking proceeding by submitting 
written comments on the proposal to the Agricultural Marketing Service. 
Two comments were received regarding this proposed rule.
    The first, from a student, concerned with the specific cost-
reducing alternatives considered by AMS to offset salary increases, 
inflation and to maintain fiscal stability in the program. The second 
comment was from a processor, which urged that we reduce the rate of 
the proposed increase by applying cost savings.
    AMS is continually seeking ways to reduce costs to the industry and 
increase operational efficiency. Since the last fee increase for 
processed fruit and vegetable grading and certification services in 
October 1998, AMS downsized a field office to an inspection point, 
closed three inspection points, eliminated several grading and clerical 
positions, and postponed filling several vacated positions. These steps 
have resulted in a cumulative cost saving of approximately $561,500.
    The processor expressed concern with the rate of the fee increase, 
characterizing it as ``very steep.'' The commenter indicated that the 
rate increases exceeded inflation since 1998 and that its own hourly 
rate for its manufacturing personnel and its selling prices have not 
risen as much as the fee rates over the past two years. The processor 
concluded that the cost burden of the fee increases to manufacturers 
would be substantial and noted that over the past ten years the hourly 
fee has increased from $28.00 per hour to $48.00. The commenter 
observed that the rate of increase would exceed wage increases in that 
time frame.
    As discussed above, the AMA provides that AMS collect reasonable 
fees from users of the services to cover, as nearly as practicable, the 
costs of the services rendered. While cost increases may result 
primarily from increases in salaries and benefits, other overhead costs 
such as rent and materials are also covered. The fees proposed in this 
rulemaking appropriately reflect the cost of providing the services 
rendered. Actually, the rate of the proposed increase is below the 
average rate of increase for these services since 1989. Since December 
1989, fees increased by an annualized rate of about 4.13 percent. The 
proposed increase will represent an annualized increase of only about 
1.9 percent. Further, we will continue our efforts to reduce costs to 
the industry and increase efficiencies whenever possible.
    With regard to the commenter's concerns regarding the application 
of overtime charges, the proposed fee increase does not change the way 
overtime is charged for both hourly and contract fees. AMS has numerous 
service options available with respect to duration, regularity of 
hours, and fees for inspection services. The Agency is available to 
work with applicants for services to select the type of service which 
most efficiently meets its needs.
    In light of the continuing need to maintain the AMS grading program 
on a financially sound basis, AMS 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

[[Page 66487]]

publication in the Federal Register because: (1) the fiscal year 2000 
reserve balance of the program's trust fund is under the desired level 
necessary to ensure an adequate reserve balance; (2) the fee change 
adopted herein should be implemented as soon as possible to begin 
replenishing the operating reserve and bring revenue in line with 
costs; and (3) the fee increase is to be effective November 19, 2000.

List of Subjects in 7 CFR Part 52

    Food grades and standards, Food labeling, Frozen foods, Fruit 
juices, Fruits, Reporting and record keeping requirements.


    For the reasons set forth in the preamble, 7 CFR Part 52 is amended 
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 ``$43.00'' is revised to read 
``$47.00''.


Sec. 52.50  [Amended]

    3. In Sec. 52.50, the figure ``$43.00'' is revised to read 
``$47.00''.


Sec. 52.51  [Amended]

    4. In Sec. 52.51, paragraph (c)(1), the figure ``$35.00'' is 
revised to read ``$36.00'', in paragraph (c)(2), the figure ``$45.00'' 
is revised to read ``$48.00'', and in paragraph (d)(1), the figure 
``$45.00'' is revised to read ``$48.00''.

    Dated: November 1, 2000.
Robert C. Keeney,
Deputy Administrator, Fruit and Vegetable Programs.
[FR Doc. 00-28414 Filed 11-3-00; 8:45 am]
BILLING CODE 3410-02-P