[Federal Register Volume 72, Number 44 (Wednesday, March 7, 2007)]
[Rules and Regulations]
[Pages 10035-10038]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-3937]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 52

[Docket  AMS-FV-07-0025; FV-05-379]
RIN 0581-AC56


Processed Fruits and Vegetables

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: This rule revises the regulations governing inspection and 
certification for processed fruits, vegetables, and processed products 
by increasing the fees charged for these products by 19 to 26 percent. 
Furthermore, it revises the regulations so applicants entering into an 
in-plant inspection contract with the Agricultural Marketing Service 
(AMS) will incur the costs for the plant survey and sanitation 
inspection. Finally, the revision provides that applicants 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. Also 
affected are the fees charged to persons required to have inspections 
on imported commodities in accordance with the Agricultural Marketing 
Agreement Act of 1937. In addition, various editorial changes are being 
made to enhance clarity. 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.

DATES: Effective April 6, 2007.

FOR FURTHER INFORMATION CONTACT: Mr. Terry B. Bane at 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].

SUPPLEMENTARY INFORMATION: 

[[Page 10036]]

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 $3.4 million. AMS projects that the costs for 
the services covered by this final rule 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 will 
be 1.9; with the projected costs of $15.8 million and revenues of $15.3 
million.
    With the fee increase, these services will generate sufficient 
revenue so that by the end of FY 2007, the reserve balance will 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 
increases 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 2007. The second action will 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 will increase user fee revenue 
generated under the year-round and less than year-round inspection 
programs by approximately $143,000 annually. The third action will 
recoup the cost for Sunday differential when an employee works on 
Sunday 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 charged at premium 
rate to applicants. Billing applicants for Sunday differential will 
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 
will 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 [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 two 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 are 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 final 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.
    This fee increase moves the program towards an adequate reserve and 
financial stability. Considering the alternatives, 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 doesn't 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 final rule.

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 final rule amends 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

[[Page 10037]]

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 
(1) increasing the fees relating to lot, year-round, and less than 
year-round inspection services, (2) billing in-plant applicants for 
plant survey and sanitation inspection, and (3) billing applicants for 
Sunday differential when applicable.
    At the start of 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 
$3.4 million. AMS projects that the costs for the services covered by 
this final rule 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 fee increase these services will generate sufficient 
revenue so that by the end of FY 2007, the reserve balance will 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 will 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 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                               Final
 
              $52.00/hr.                           $62.00/hr.
 

    Charges for travel and other expenses as found in Sec.  52.50 are:

 
              Current                               Final
 
              $52.00/hr.                           $62.00/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
 
              $39.00/hr.                           $49.00/hr.
 

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

 
              Current                               Final
 
              $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:

 
              Current                               Final
 
              $52.00/hr.                           $65.00/hr.
 

    Furthermore, AMS will 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 will increase user fee revenue generated under the year-
round and less than year-round inspection programs by approximately 
$143,000 annually. In addition, AMS will 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 charged to plants. 
Billing plants for Sunday differential will 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 will change 
the word ``approvement'' to ``approved'' in Sec.  52.2, Inspection 
Service; types of, paragraph (d) Pack certification.
    A notice of proposed rulemaking was published in the Federal 
Register on July 11, 2006, (71 FR, No. 132, 39017) with a thirty-day 
comment period. AMS received two comments during this period.
    The first comment was received from the Association of Food 
Industries, Inc. (AFI). AFI asked how this revision would affect 
imported products. The fee increase applies to the voluntary inspection 
and certification of processed fruits and vegetables whether domestic 
or imported. Further, as noted previously under 8e of the Agricultural 
Marketing Agreement Act of 1937, certain imported processed commodities 
are subject to import regulations which include inspection 
requirements.
    The second comment was received from an individual who expressed 
concurrence with the revision.

List of Subjects in 7 CFR Part 52

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


0
For the reasons set forth in the preamble, 7 CFR part 52 is amended as 
follows:

PART 52--[AMENDED]

0
1. The authority citation for part 52 continues to read as follows:

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


Sec.  52.2  [Amended]

0
2. In Sec.  52.2, under the term ``Inspection Service; types of'', in 
paragraph (d) under the term ``pack certification'' the word 
``approvement'' is revised to read ``approved''.

0
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.

0
5. 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.


Sec.  52.50  [Amended]

0
6. In Sec.  52.50, the figure ``$52.00'' is revised to read ``$62.00''.

[[Page 10038]]


0
7. 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: March 1, 2007.
Lloyd C. Day,
Administrator, Agricultural Marketing Service.
 [FR Doc. E7-3937 Filed 3-6-07; 8:45 am]
BILLING CODE 3410-02-P