[Federal Register Volume 71, Number 132 (Tuesday, July 11, 2006)]
[Proposed Rules]
[Pages 39017-39019]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-10768]


 ========================================================================
 Proposed Rules
                                                 Federal Register
 ________________________________________________________________________
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 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. 71, No. 132 / Tuesday, July 11, 2006 / 
Proposed Rules  

[[Page 39017]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 52

[FV-05-379]
RIN 0581-AC56


Processed Fruits and Vegetables

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

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SUMMARY: This proposed rule would revise the regulations governing 
inspection and certification for processed fruits, vegetables, and 
processed products. A projected fee increase ranging from 19 to 26 
percent is proposed. Furthermore, it is proposed that an applicant 
entering into a year round inspection contract with AMS will incur 
costs for the plant survey and sanitation inspection. Finally, it is 
proposed that an applicant entering into a year round inspection 
contract, less than year round (four or more consecutive 40 hour weeks) 
contract, or lot inspection will incur costs for Sunday differential 
when an employee works on Sunday. 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 and to 
ensure the program's financial stability. Also affected are the fees 
charged to persons required to have inspections on imported commodities 
in accordance with the Agricultural Marketing Act of 1937. In addition, 
various editorial changes are being proposed to enhance clarity.

DATES: Comments must be postmarked, courier dated, or sent via the 
internet on or before August 10, 2006.

ADDRESSES: Interested persons are invited to submit comments via the 
Internet or by mail or courier concerning this proposal. Comments 
submitted by mail or courier must be sent in duplicate to the Office of 
the Branch Chief, Processed Products Branch, Fruit and Vegetable 
Programs, Agricultural Marketing Service, U.S. Department of 
Agriculture, STOP 0247, Washington, DC 20250-0247, telephone (202) 720-
4693, or e-mail [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 and on the Internet at http://www.ams.usda.gov/fv/ppbdocklist.htm.

FOR FURTHER INFORMATION CONTACT: Mr. Terry B. Bane at the above 
address, call (202) 720-4693, or e-mail [email protected].

SUPPLEMENTARY INFORMATION:

Executive Order 12866 and Regulatory Flexibility Act

    This rule has been determined to be not significant for purposes of 
Executive Order 12866 and, therefore, has not 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 Agency has and will continue to identify and implement appropriate 
changes to reduce its costs. Such actions can reduce the need for fee 
increases. The processed fruit and vegetable grading and inspection 
service administers a number of user-fee programs with established fee 
schedules to offset the cost of the service. The fee schedule for the 
subject lot, year-round, and less than year-round processed fruit and 
vegetable inspection programs was last revised on October 30, 2003 (68 
FR 61733). However, even with cost control efforts, the existing fee 
schedule for these programs will not generate sufficient revenues to 
cover costs and sustain an adequate reserve balance, 4 months of costs, 
as called for by Agency policy (AMS Directive 408.1).
    At the start of Fiscal Year (FY) 2006, the processed fruit and 
vegetable grading and inspection service had a reserve balance of $8 
million, of which, the lot, year-round, and less than year-round 
programs accounted for $3.5 million. AMS projects that the costs for 
the services covered by this proposal will rise from $15 million in FY 
2005 to $15.4 million in FY 2006. Revenues for FY 2006 are projected to 
be at $15.0 million. The increase in costs is primarily a result of 
rising employee salaries and benefits. For example, since the last fee 
schedule change, employees have received a 3.1 and 3.4 percent pay 
increase effective January 2005 and January 2006, respectively.
    For FY 2006, the end-of-year reserve balance will decline from $3.4 
million to $3.0 million, and the months of reserve will fall from 2.6 
months to 2.4 months. For FY 2007, without a fee increase, the end-of-
year reserve balance would be $2.5 million; the months of reserve would 
be 1.9; with the projected costs of 15.8 million and revenues of $15.3 
million.
    With the proposed fee increase these services will generate 
sufficient revenue so that by the end of FY 2007, the reserve balance 
would be $5.3 million and 4.0 months. AMS will perform fee analyses to 
determine if further fee adjustments in FY 2007 are necessary to 
maintain an adequate reserve and ensure fiscal stability.
    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 first action would 
increase user fee revenue generated under the lot inspection program 
and the year-round and less than year-round inspection programs by an 
estimated $1.5 million in FY 2006 and FY 2007. The second action would 
recoup the cost for a plant survey and sanitation inspection performed 
in plants entering into an in-plant inspection contract with AMS. 
Currently, fees that are charged for a plant survey and sanitation 
inspection under Sec.  52.48 are credited back to plants entering into 
an in-plant inspection contract with AMS within 60 days of the survey. 
There are presently 239 plants with an in-plant inspection contract not 
being charged for the plant survey and sanitation inspection. Billing 
for the plant survey and sanitation inspection would increase user fee 
revenue generated under the year-round and less than year-round 
inspection programs by approximately $143,000 annually. The third 
action would recoup the cost for Sunday differential for plants 
entering into a year-round in-plant contract, entering into a less than 
year-round in-plant (four or more

[[Page 39018]]

consecutive 40 hour weeks) contract, and not under contract. During 
calendar year 2004, there were 3,562 Sunday differential hours not 
being charged at premium rate to plants. Billing plants for Sunday 
differential would increase user fee revenue generated under the lot 
inspection program, the year-round inspection program, and the less 
than year-round inspection program by approximately $35,000 annually. 
The forth action would change the word ``approvement'' to ``approved'' 
in Sec.  52.2, Inspection Services; types of, paragraph (d) Pack 
certification.
    These actions are 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 Processed Products Branch's lot, 
year-round, and less than 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).
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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 in 7 CFR parts 944 
and 999.
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    There will be no additional reporting, recordkeeping, or other 
compliance requirements imposed upon small entities as a result of this 
rule. AMS has not identified any other federal rules which may 
duplicate, overlap, or conflict with this proposed rule.
    The impact on all businesses, including small entities, is very 
similar. Further, even though fees will be increased, the amount of the 
increase should not significantly affect these entities. With regard to 
alternatives, this proposed fee increase will move the program towards 
an adequate reserve and financial stability. Without the fee increase, 
this result would not be accomplished. 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.

Proposed 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 would 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 AMS continues to pursue opportunities to 
reduce its costs, the existing fee schedule will not generate 
sufficient revenues to cover lot, year-round, and less than year-round 
inspection program costs while maintaining an adequate reserve balance.
    Based on the Agency's analysis of increasing program costs, AMS is 
proposing to (1) increase the fees relating to lot, year-round, and 
less than year-round inspection services, (2) bill in-plant applicants 
for plant survey and sanitation inspection, and (3) bill applicants for 
Sunday differential when applicable. For inspection services charged 
under Sec.  52.42, overtime and holiday work would continue to be 
charged as provided in that section.
    At the start of Fiscal Year (FY) 2006, the processed fruit and 
vegetable grading and inspection service had a reserve balance of $8 
million, of which, the lot, year-round, and less than year-round 
programs accounted for $3.5 million. AMS projects that the costs for 
the services covered by this proposal will rise from $15 million in FY 
2005 to $15.4 million in FY 2006. Revenues for FY 2006 are projected to 
be at $15.0 million. The increase in costs is primarily a result of 
rising employee salaries and benefits. For example, since the last fee 
schedule change, employees have received a 3.1 and 3.4 percent pay 
increase effective January 2005 and January 2006, respectively.
    For FY 2006, the end-of-year reserve balance will decline from $3.4 
million to $3.0 million, and the months of reserve will fall from 2.6 
months to 2.4 months. For FY 2007, without a fee increase, the end-of-
year reserve balance would be $2.5 million; the months of reserve would 
be 1.9; with the projected costs of $15.8 million and revenues of $15.3 
million.
    With the proposed fee increase these services will generate 
sufficient revenue so that by the end of FY 2007, the reserve balance 
would be $5.3 million and 4.0 months. AMS will perform fee analyses to 
determine if further fee adjustments in FY 2007 are necessary to 
maintain an adequate reserve and ensure fiscal stability.
    For inspection services charged on a contract basis under Sec.  
52.51, overtime work would also continue to be charged as provided in 
that section. The following fee schedule compares current fees and 
charges with proposed fees and charges for processed fruit and 
vegetable inspection as found in 7 CFR Sec. Sec.  52.42-52.51. Unless 
otherwise provided for by written agreement between the applicant and 
the Administrator, the charges in the schedule of fees as found in 
Sec.  52.42 are:

------------------------------------------------------------------------
                  Current                             Proposed
------------------------------------------------------------------------
$52.00/hr.................................  $62.00/hr.
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    Charges for travel and other expenses as found in Sec.  52.50 are:

------------------------------------------------------------------------
                  Current                             Proposed
------------------------------------------------------------------------
$52.00/hr.................................  $62.00/hr.
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    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                             Proposed
------------------------------------------------------------------------
$39.00/hr.................................  $49.00/hr.
------------------------------------------------------------------------

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

------------------------------------------------------------------------
                  Current                             Proposed
------------------------------------------------------------------------
$52.00/hr.................................  $65.00/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:

[[Page 39019]]



------------------------------------------------------------------------
                  Current                             Proposed
------------------------------------------------------------------------
$52.00/hr.................................  $65.00/hr.
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    Furthermore, AMS would recoup the cost for a plant survey and 
sanitation inspection performed in plants entering into an in-plant 
inspection contract with AMS. Currently, fees that are charged for a 
plant survey and sanitation inspection are credited back to plants 
entering into an in-plant inspection contract with AMS within 60 days 
of the survey. There are presently 239 plants with an in-plant 
inspection contract not being charged for the plant survey and 
sanitation inspection. Billing for the plant survey and sanitation 
inspection would increase user fee revenue generated under the year-
round and less than year-round inspection programs by approximately 
$143,000 annually. In addition, AMS would recoup the cost for Sunday 
differential for plants entering into a year-round in-plant contract, 
entering into a less than year-round in-plant (four or more consecutive 
40 hour weeks) contract, and not under contract. During calendar year 
2004, there were 3,562 Sunday differential hours not being charged to 
plants. Billing plants for Sunday differential would increase user fee 
revenue generated under the lot inspection program, the year-round 
inspection program, and the less than year-round inspection program by 
approximately $35,000 annually. Finally, the last action would change 
the word ``approvement'' to ``approved'' in Sec.  52.2, Inspection 
Service; types of, paragraph (d) Pack certification.
    A thirty day comment period is provided for interested persons to 
comment on this proposed action. Thirty days is deemed appropriate 
because any fee increase, if adopted, should be in place as soon as 
possible in order to move the program towards an adequate reserve and 
financial stability.

List of Subjects in 7 CFR Part 52

    Food grades and standards, Food labeling, Frozen foods, Fruit 
juices, Fruits, Reporting and recordkeeping requirements, and 
Vegetables.

    For the reasons set forth in the preamble, 7 CFR part 52 is 
proposed to be 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.  52.2  [Amended]

    2. In Sec.  52.2, paragraph (d) under the term ``pack 
certification'' the word ``approvement'' is revised to read 
``approved''.
    3. In Sec.  52.42, the figure ``$52.00'' is revised to read 
``$62.00'' and a sentence is added at the end of the section to read as 
follows:


Sec.  52.42  Schedule of fees.

    * * * A twenty-five (25) percent Sunday differential charge will be 
made for all work performed on Sunday.
    4. Section 52.48 is revised to read as follows:


Sec.  52.48  Charges for plant survey and inspection.

    The fees to be charged for a plant survey and inspection shall be 
at the rates prescribed in Sec.  52.42 and Sec.  52.51, respectively.
    5. In Sec.  52.50, the figure ``$52.00'' is revised to read 
``$62.00''.
    6. In Sec.  52.51, paragraph (c)(1), the figure ``$39.00'' is 
revised to read ``$49.00'', in paragraph (c)(2), the figure ``$52.00'' 
is revised to read ``$65.00'', and in paragraph (d)(1), the figure 
``$52.00'' is revised to read ``$65.00'', and new paragraphs (c)(6) and 
(d)(6) are added to read as follows:


Sec.  52.51  Charges for inspection services on a contract basis.

* * * * *
    (c) * * *
    (6) Sunday differential. A 25 percent Sunday differential will be 
charged for all work performed on Sunday.
    (d) * * *
    (6) Sunday differential. A 25 percent Sunday differential will be 
charged for all work performed on Sunday.
* * * * *

    Dated: July 3, 2006.
Lloyd C. Day,
Administrator, Agricultural Marketing Service.
[FR Doc. E6-10768 Filed 7-10-06; 8:45 am]
BILLING CODE 3410-02-P