[Federal Register Volume 71, Number 231 (Friday, December 1, 2006)]
[Proposed Rules]
[Pages 69497-69500]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-20315]


 ========================================================================
 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. 71, No. 231 / Friday, December 1, 2006 / 
Proposed Rules  

[[Page 69497]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 51

[Docket Number FV-06-308]
RIN 0581-AC63


Multi-Year 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 certain fees charged for the inspection of these 
products at destination markets for the next two fiscal years (FY-2007 
and FY-2008) by approximately 15 percent. 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 inspection 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 January 2, 2007.

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 0640-S, Washington, DC 20250-0295, faxed to (202) 720-5136, sent 
via e-mail to [email protected], or via the Internet: http://www.regulations.gov. 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 CONTACT INFORMATION: 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, and has not been reviewed by the 
Office of Management and Budget.
    Also, pursuant to the requirement set forth in the Regulatory 
Flexibility Act (RFA), AMS has considered the economic impact of this 
action on small entities. Accordingly, AMS proposes this initial 
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 proposed action 
described herein is being taken for several reasons, including that 
additional user fee revenues are needed to cover the costs or: (1) 
Providing current program operations and services: (2) improving the 
timeliness in 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. FPB has reduced costs by approximately 
$2 million. However, even with these efforts, FPB's existing fee 
schedule will not generate sufficient revenue to cover program costs 
while maintaining the Agency mandated reserve balance. Current revenue 
projections for FPB's destination market inspection work during FY-2006 
are $15.3 million with costs projected at $20.4 million and an end-of-
year reserve balance of $12.7 million. However, this reserve balance is 
due in part, 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 $21.6 million during FY-2007 and $22.5 million during FY-
2008. Revenues are projected to be $15.3 million for end of the fiscal 
year. The reserve balance for FY-2007 and FY-2008, will fall below the 
Agency's mandated four-month reserve level. The reserve balance is 
projected to be $6.5 million for FY-2007 (3.6 months) and a negative 
$584,000 for FY-2008 (-0.3) months).
    This proposed fee increase should result in an estimated average of 
$2.4 million in additional revenues per year (effective in FY-2007, if 
the fees were implemented by October 1, 2006). This will not cover all 
of FPB's costs. FPB will need to continue to increase fees 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-2008 will be needed to 
sustain the program in the future. However, we will continue to reduce 
costs, wherever possible.
    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 2.87 
to 5.62 percent depending on locality, effective January 2006, has 
significantly increased program costs and will continue to increase 
costs at a similar rate in future years. 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. 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) the Fresh Electronic Inspection 
Reporting/Resource System (FEIRS) to

[[Page 69498]]

replace its manual paper and pen inspection reporting process. FEIRS 
was implemented in 2004. This system has been put in place to enhance 
and streamline FPB's fruit and vegetable inspection process, however 
additional revenue is required to maintain FEIRS. FPB has also begun to 
cover the costs associated with the Training and Development Center 
(TDC) in Fredericksburg, VA. A portion of the appropriated funds 
received in October 2001 were for infrastructure improvements including 
the development and maintenance of the inspector Training and 
Development Center. With appropriated funding now depleted, FPB is now 
obligated to support the TDC under revenues from the terminal market 
user fee inspection program.
    This proposed rule should increase user fee revenue generated under 
the destination market program by approximately 15 percent. 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 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 marketing 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.
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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 
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 cost 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 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. FPB has reduced costs by approximately 
$2 million. However, even with these efforts, FPB's existing fee 
schedule will not generate sufficient revenue to cover program costs 
while maintaining the Agency mandated reserve balance. Current revenue 
projections for FPB's destination market inspection work during FY-2006 
are $15.3 million with costs projected at $20.4 million and an end-of-
year reserve balance of $12.7 million. However, this reserve balance is 
due in part, 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 $21.6 million during FY-2007 and $22.5 million during FY-
2008. Revenues are projected to be $15.3 million for end of the fiscal 
year. The reserve balance for FY-2007 and FY-2008, will fall below the 
Agency's mandated four-month reserve level. The reserve balance is 
projected to be $6.5 million for FY-2007 (3.6 months) and a negative 
$584,000 for FY-2008 (-0.3) months).
    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 2.87 
to 5.62 percent depending on locality, effective January 2006, has 
significantly increased program costs, and will continue to increase 
costs at a similar rate in future years. 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. In addition, inflation also impacts FPB's non-
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 appropriate funds) an automated system known as 
FEIRS, to replace its manual paper and pen inspection reporting 
process. Approximately $10,000 in additional revenue per month will be 
needed to maintain the system. This system has been put in place to 
enhance FPB's fruit and vegetable inspection processes. FPB has also 
begun to cover the costs associated with the Training and Development 
Center (TDC) in Fredericksburg, VA. A portion of the appropriated funds 
received in October 2001 were for infrastructure improvements including 
the

[[Page 69499]]

development and maintenance of the inspector Training and Development 
Center. With appropriated funding now depleted, FPB is now obligated to 
support the TDC under revenues from the terminal market user fee 
inspection program.
    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. Unless otherwise provided 
for by regulation or written agreement between the applicant and the 
Administrator, the charge in the schedule of fees as found in Sec.  
51.38 are:

------------------------------------------------------------------------
                  Service                    Current    2007      2008
------------------------------------------------------------------------
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       $114.00   $131.00   $151.00
     each product.........................
    --Half carlot equivalent or less of        95.00    109.00    125.00
     each product.........................
    --For each additional lot of the same      52.00     60.00     69.00
     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 equivalent of         95.00    109.00    125.00
     each product.........................
    --Half carlot equivalent or less of        87.00    100.00    115.00
     each product.........................
    --For each additional lot of the same      52.00     60.00     69.00
     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....................     52.00     60.00     69.00
    --For each additional lot of any of        52.00     60.00     69.00
     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 less than    \1\ 2.9   \1\ 3.3   \1\ 3.8
     30 pounds............................
    --For each package weighing 30 or more   \1\ 4.4   \1\ 5.1   \1\ 5.9
     pounds...............................
    --Minimum charge per individual           114.00    131.00    151.00
     product..............................
    --Minimum charge for each additional       52.00     60.00     69.00
     lot of the same product..............
Hourly rate for inspections performed for
 other purposes during the grader's
 regularly scheduled work week:
    --Hourly rate for non-carlot               56.00     64.00     74.00
     equivalent inspections such as count,
     size, temperature, container, etc. or
     work associated with inspections such
     as digital image services will be
     charged at a rate that reflects the
     cost of providing the service........
Overtime rate (per hour additional) for        29.00     33.00     38.00
 all inspections performed outside the
 grader's regularly scheduled work week...
Holiday pay:
    Hourly rate for inspections performed      56.00     64.00     74.00
     under 40 hour contracts during the
     grader's regularly scheduled work
     week.................................
    Rate for billable mileage.............      1.00      1.15     1.32
------------------------------------------------------------------------
\1\ Cents.

    A thirty-day comment period is provided for interested persons to 
comment on this proposed action. Given the current financial status of 
the program, thirty days is deemed appropriate in order to have any fee 
increase, if adopted, to be in place as close as possible to the 
beginning of the fiscal year 2007.

List of Subjects in 7 CFR Part 51

    Agricultural commodities, Food grades and standards, Fruits, Nuts, 
Reporting and record keeping 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 air or land conveyance:
    (i) $131 ($151) for over a half carlot equivalent of an individual 
product;
    (ii) $109 ($125) for a half carlot equivalent or less of an 
individual product;
    (iii) $60 ($69) 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) $109 ($125) for over a half carlot equivalent of an individual 
product;
    (ii) $100 ($115) for a half carlot equivalent or less of an 
individual product;
    (iii) $60 ($69) 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) $60 ($69) for each individual product:
    (ii) $60 ($69) 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) 3.3 (3.8) cents per package weighing less than 30 pounds;
    (ii) 5.1 (5.9) cents per package weighing 30 or more pounds;
    (iii) Minimum charge of $131 ($151) per individual product;
    (iv) Minimum charge of $60 ($69) for each additional lot of the 
same product
    (2) [Reserved]

[[Page 69500]]

    (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 ``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 inspections shall be based on the time consumed by the grader in 
connection with such inspections, computed at a rate of $64 ($74) per 
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 $33 ($38) 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: November 27, 2006.
Lloyd C. Day,
Administrator, Agriculture Marketing Service.
 [FR Doc. E6-20315 Filed 11-30-06; 8:45 am]
BILLING CODE 3410-02-P