[Federal Register Volume 72, Number 147 (Wednesday, August 1, 2007)]
[Rules and Regulations]
[Pages 41885-41888]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-14826]



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 Rules and Regulations
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  Federal Register / Vol. 72, No. 147 / Wednesday, August 1, 2007 / 
Rules and Regulations  

[[Page 41885]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 51

[Docket AMS-FV-07-0099; 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: Final rule.

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

SUMMARY: This 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 each fiscal year. This rule 
would increase fees 30 days after publication in FY-2007 and again in 
March 2008. 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: Effective Date: August 31, 2007.

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 therefore 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 action described 
herein is being taken for several reasons, including that additional 
user fee revenues are needed to cover the costs for: (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. 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 approximately $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 approximately $6.5 
million for FY-2007 (3.6 months) and approximately negative $600,000 
for FY-2008 (-0.3 months).
    This 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). However, fees would not be 
increased until later in FY-2007. Further, as a result, the next fee 
increase is delayed until March 2008 instead of the start of FY-2008. 
These increases 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 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 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

[[Page 41886]]

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 TDC. With appropriated funding now depleted, FPB is 
now obligated to support the TDC under revenues from the terminal 
market user fee inspection program.
    This rule should increase user fee revenue generated under the 
destination market program by approximately 15 percent each fiscal 
year. 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 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.
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    \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 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.
---------------------------------------------------------------------------

    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. The impact on all businesses, including 
small entities, is very similar. However, 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. 
Further, even though fees will be raised, the increase is not excessive 
and should not significantly affect these entities.

Executive Order 12988

    This 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.

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 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. 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 approximately $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 approximately $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 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 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 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 
TDC. 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

[[Page 41887]]

will 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 changes 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 each product......         $114.00         $131.00         $151.00
     Half carlot equivalent or less of each product.....           95.00          109.00          125.00
     For each additional lot of the same product........           52.00           60.00           69.00
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 each product......           95.00          109.00          125.00
     Half carlot equivalent or less of each product.....           87.00          100.00          115.00
     For each additional lot of the same product........           52.00           60.00           69.00
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 the same product.           52.00           60.00           69.00
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 30 pounds......         \1\2.9          \1\3.3          \1\3.8
     For each package weighing 30 or more pounds........         \1\4.4          \1\5.1          \1\5.9
     Minimum charge per individual product..............          114.00          131.00          151.00
     Minimum charge for each additional lot of the same            52.00           60.00           69.00
     product....................................................
Hourly rate for inspections performed for other purposes during
 the grader's regularly scheduled work week:
     Hourly rate for non-carlot equivalent inspections             56.00           64.00           74.00
     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 all inspections                    29.00           33.00           38.00
 performed outside the grader's regularly scheduled work week...
Holiday pay.....................................................           29.00           66.00           74.00
Hourly rate for inspections performed under 40 hour contracts              56.00           64.00           74.00
 during the grader's regularly scheduled work week..............
Rate for billable mileage.......................................            1.00            1.15            1.32
----------------------------------------------------------------------------------------------------------------
\1\In cents.

    A notice of proposed rulemaking was published in the Federal 
Register on December 1, 2006, (71 FR 69497). FPB received one comment 
after the comment period closed.
    As previously stated, because the FY-2007 fee increase in effect in 
the latter part of the fiscal year, AMS is changing the effective date 
of the FY-2008 fee increase to March 1, 2008, to provide a sufficient 
amount of time between the two fee increases. Finally, the regulatory 
text in the proposed section 51.38(e) is corrected to reflect separate 
fees for overtime and holiday note that appeared in the supplementary 
information section of the proposed rule.

List of Subjects in 7 CFR Part 51

    Agricultural commodities, Food grades and standards, Fruits, Nuts, 
Reporting and recordkeeping requirements, Trees, Vegetables.

0
For reasons set forth in the preamble, 7 CFR Part 51 is amended as 
follows:

PART 51--[AMENDED]

0
1. The authority citation for 7 CFR Part 51 continues to read as 
follows:

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


0
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, on or after March 1, 2008) for over a half carlot 
equivalent of an individual product;
    (ii) $109 ($125, on or after March 1, 2008) for a half carlot 
equivalent or less of an individual product;
    (iii) $60 ($69, on or after March 1, 2008) 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, on or after March 1, 2008) for over a half carlot 
equivalent of an individual product;
    (ii) $100 ($115, on or after March 1, 2008) for a half carlot 
equivalent or less of an individual product;
    (iii) $60 ($69, on or after March 1, 2008) 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, on or after March 1, 2008) for each individual 
product:
    (ii) $60 ($69, on or after March 1, 2008) 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, on or after March 1, 2008) cents per package weighing 
less than 30 pounds;
    (ii) 5.1 (5.9, on or after March 1, 2008) cents per package 
weighing 30 or more pounds;

[[Page 41888]]

    (iii) Minimum charge of $131 ($151, on or after March 1, 2008) per 
individual product;
    (iv) Minimum charge of $60 ($69, on or after March l, 2008) 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 ``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, on or 
after March 1, 2008) 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 for overtime and $66 for holiday work ($38 for overtime and $74 
for holiday work, on or after March 1, 2008) 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: July 26, 2007.
Lloyd C. Day,
Administrator, Agricultural Marketing Service.
 [FR Doc. E7-14826 Filed 7-31-07; 8:45 am]
BILLING CODE 3410-02-P