[Federal Register Volume 68, Number 173 (Monday, September 8, 2003)]
[Proposed Rules]
[Pages 52857-52860]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-22682]


 ========================================================================
 Proposed Rules
                                                 Federal Register
 ________________________________________________________________________
 
 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
 
 ========================================================================
 

  Federal Register / Vol. 68, No. 173 / Monday, September 8, 2003 / 
Proposed Rules  

[[Page 52857]]



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: Proposed rule.

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

SUMMARY: This proposed rule would revise 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.

DATES: Comments must be postmarked, courier dated, or sent via the 
internet on or before October 8, 2003.

ADDRESSES: Interested persons are invited to submit written comments 
concerning this proposal. Comments are to be sent to the U.S. 
Department of Agriculture, Agricultural Marketing Service, Fruit and 
Vegetable Programs, Fresh Products Branch, 1400 Independence Ave., SW., 
Room 2049-S, Washington, DC 20250-0240, faxed to (202) 720-5136, or 
sent via email to [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: Rita Bibbs-Booth, USDA, 1400 
Independence Ave., SW., Room 2049-S, Washington, DC 20250-0240, 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, 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), AMS has considered the economic impact of this 
action on small entities.
    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 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 proposed 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

[[Page 52858]]

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 proposed rule should increase user fee revenue generated under 
the destination 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 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.
---------------------------------------------------------------------------

    \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 (Pub. L. 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, kiwifruit, 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 proposed 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.

Proposed 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 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.
    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 proposed 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,

[[Page 52859]]

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 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 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 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         $86.00.............  $99.00
     equivalent of each product.
    --Half carlot equivalent or  $72.00.............  $83.00
     less of each product.
    --For each additional lot    $14.00.............  $45.00
     of the same product*.
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         $72.00.............  $83.00
     equivalent of each product.
    --Half carlot equivalent or  $66.00.............  $76.00
     less of each product.
    --For each additional lot    $14.00.............  $45.00
     of 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.........  $43.00.............  $45.00
    --For each additional lot    $14.00.............  $45.00
     of any of the same
     product*.
    --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  1.1 cent...........  N/A
     less than 15 pounds.
    --For each package weighing  2.2 cents..........  2.5 cents
     less than 30 pounds
     (previously 15-29 pounds).
    --For each package weighing  3.3 cents..........  3.8 cents
     30 or more pounds.
    --Minimum charge per         $86.00.............  $99.00
     individual product.
    --Minimum charge for each    $14.00.............  $45.00
     additional lot of the same
     product.
Hourly rate for inspections      $43.00.............  $49.00
 performed 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      $21.50.............  $25.00
 rate (per hour additional) for
 all inspections performed
 outside the grader's regularly
 scheduled work week.
Hourly rate for inspections      $40.00.............  $49.00
 performed under 40 hour
 contracts during the grader's
 regularly scheduled work week*.
Rate for billable mileage......  $1.00..............  $1.00
------------------------------------------------------------------------

A thirty day comment period is provided for interested persons to 
comment on this proposed action. Thirty days is deemed appropriate 
because it is preferable to have any fee increase, if adopted, to be in 
place as close as possible to the beginning of the fiscal year, 
October, 1, 2003.

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) 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.

[[Page 52860]]

    (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: September 2, 2003.
A.J. Yates,
Administrator, Agricultural Marketing Service.
[FR Doc. 03-22682 Filed 9-5-03; 8:45 am]
BILLING CODE 3410-02-P