[Federal Register Volume 89, Number 81 (Thursday, April 25, 2024)]
[Proposed Rules]
[Pages 31690-31708]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-08676]


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DEPARTMENT OF COMMERCE

National Oceanic and Atmospheric Administration

50 CFR Part 260

[Docket No. 240412-0106]
RIN 0648-BH37


Inspection and Certification of Establishments, Fishery Products, 
and Other Marine Ingredients

AGENCY: National Marine Fisheries Service (NMFS or Agency), National 
Oceanic and Atmospheric Administration (NOAA), Commerce.

ACTION: Proposed rule; request for comments.

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SUMMARY: The NMFS Office of International Affairs, Trade, and Commerce 
proposes to revise its current implementing regulations to improve the 
uniformity and reliability of seafood inspection services by adopting 
recognized best practices for inspection. NMFS has not significantly 
revised or updated the existing regulations since first issuing them in 
1971, though it has modified many operating procedures since 
implementation of the current regulations. NMFS anticipates that these 
revisions will benefit the seafood industry by streamlining seafood 
inspection services and providing improved, more accurate inspection 
results, as described below.

DATES: Written comments must be received by May 28, 2024.

ADDRESSES: Written comments on this action, identified by NOAA-NMFS-
2024-0022, may be submitted by either of the following methods:
     Electronic Submissions: Submit all electronic public 
comments via the Federal eRulemaking Portal. Go to http://www.regulations.gov/document/NOAA-NMFS-240412-0106, click the 
``Comment'' icon, complete the required fields, and enter or attach 
your comments.
     Mail: Steven Wilson, Chief, Seafood Inspection Program, 
Office of International Affairs, Trade, and Commerce, 1315 East-West 
Highway, Silver Spring, MD 20910. All comments received are a part of 
the public record and will generally be posted to https://www.regulations.gov without change. All personal identifying 
information (for example, name and address) voluntarily submitted by 
the commenter may be publicly accessible. Do not submit confidential 
business information or otherwise sensitive or protected information.
    NMFS will accept anonymous comments. Enter N/A in the required 
fields if you wish to remain anonymous. Attachments to electronic 
comments will be accepted in Microsoft Word, Excel, WordPerfect, or 
Adobe portable document file (PDF) formats only.
    Written comments regarding the burden-hour estimates or other 
aspects of the collection-of-information requirements contained in this 
proposed rule may be submitted to the NMFS Office of International 
Affairs, Trade, and Commerce and by email to: 
[email protected] or fax to (202) 395-7285.

FOR FURTHER INFORMATION CONTACT: Steven Wilson, Chief, Seafood 
Inspection Program, by email at [email protected] or by phone at 
301-427-8312.

SUPPLEMENTARY INFORMATION:

Background

    Under the authority of the Agricultural Marketing Act (AMA) of 1946 
(7 U.S.C. 1621 et seq.), and in accordance with the Reorganization Plan 
Number 4 of 1970 (84 Stat. 2090), NOAA administers a voluntary Seafood 
Inspection Program (SIP or Program) which offers inspection and grading 
services for seafood and other marine products, as well as audit and 
consultative services to domestic and international processors, 
importers, and international competent food safety authorities. SIP 
also authorizes the use of certain marks and shields to processors 
meeting specific safety, quality, and other program requirements. The 
existing regulations codified at 50 CFR part 260 have not been 
significantly revised or updated since NMFS first issued them in 1971, 
36 FR 21037 (November 3, 1971), and currently do not reflect the 
changes in industry practices or the expanding role of SIP since that 
time. On October 15, 2019, NMFS issued an advance notice of proposed 
rulemaking (ANPR) requesting input from stakeholders and interested 
parties on focused areas of the Seafood Inspection Program regulations. 
Based on the eight public comments received and NMFS' overall 
assessment of the current program, NMFS proposes these comprehensive 
updates to the existing regulations. NMFS looks forward to receiving 
comments on the updates and modernizations proposed here.
    The revisions proposed herein incorporate the significant changes 
and updates that SIP has already made and those that it still needs to 
implement to simplify its administrative, inspection, and certification 
procedures. These changes and updates will lead to

[[Page 31691]]

increased uniformity of and efficiencies associated with inspections, 
while retaining the reliability and validity of inspection results. In 
an effort to minimize costs, streamline operations, and enable updates 
in a cost-effective and timely fashion, SIP is proposing to remove 
certain provisions from 50 CFR part 260 and place them in the NMFS 
Fishery Products Inspection Manual (SIP Manual), which can be found 
online at https://www.fisheries.noaa.gov/national/seafood-commerce-certification/seafood-inspection-manual. The proposed rule does not 
change the way SIP currently operates but removes outdated regulatory 
text, adds relevant text to incorporate current practices, and moves 
certain provisions to the SIP Manual so that the regulations would both 
more accurately reflect current industry practices and allow for 
adaptation to potential changes in technologies and product 
requirements. NMFS anticipates that these revisions will benefit the 
seafood industry by clarifying and simplifying the procedures for 
obtaining seafood inspection services and providing improved, more 
accurate and consistent inspection results, as compared with the 
current published regulations. Table 1 below summarizes the proposed 
rule's impacts on section number and title changes, as well as 
identifying provisions that would be deleted from the regulations.

1. Modernize Definitions and Administrative Procedures

    With respect to administrative procedures, NMFS proposes to remove 
specific provisions that are no longer in use, such as the option to 
request inspection service via telegraph, from the regulatory text. The 
requirement to request inspection services would be retained, while the 
specific, detailed procedures for requesting such service would be 
moved from the regulatory text to the online SIP Manual, where they can 
more readily be updated and modified as new technologies and procedures 
are implemented. Putting these strictly procedural matters in the 
online manual would make implementing cost-neutral and cost-saving 
procedural changes more timely and efficient for both government and 
industry.

Definitions

    The proposed rule would update definitions in Sec.  260.6 (proposed 
Sec.  260.2) to reflect the current use and meaning of certain terms 
used throughout part 260 and in general use in industry. Terms such as 
``Approved Establishment,'' ``Fish,'' ``Fishery Product,'' ``Marine 
Ingredient,'' ``NMFS Fishery Products Inspection Manual (SIP Manual),'' 
``Processing,'' and ``Product'' would be added to align with current 
SIP policies and procedures, as well as current U.S. Standards for 
Grades (50 CFR part 261), Food and Drug Administration (FDA) Hazard 
Analysis and Critical Control Point (HACCP) regulations (21 CFR part 
123), and Good Manufacturing Practices (GMPs) (21 CFR part 117). Other 
terms, such as ``Deviant,'' ``Deviation,'' and ``Plant'' would be 
removed because they are either no longer commonly used in the context 
of seafood inspection or are more accurately defined in other terms. In 
general, only terms that pertain specifically to the regulations in 
this part are defined therein.

Inspection Service and Appeal Inspection

    The existing regulations at Sec. Sec.  260.12-260.41 are out of 
date and inconsistent with current procedures for requesting inspection 
services, performance of inspections and product grading activities, 
issuance of certificates, and appeal of inspection results. The 
proposed regulations reflect the now-common use of the internet and the 
online Seafood Inspection Services Portal (online portal) system for 
requesting SIP inspection services, as well as the use of electronic 
documents (e.g., inspection certificates), which the current 
regulations do not address. The online portal, first deployed in 2008 
for inspection services requests and issuance of certificates and 
reports, enables SIP staff to address the needs of industry in a more 
timely and consistent manner. Tracking service requests through the 
online portal system also enables SIP management to better allocate 
resources to meet the needs of its customers. Public comment on the 
ANPR supported the increased use of the online portal for requesting 
all inspection services and continued electronic transfer of records. 
In addition to the increases in efficiency, the use of the online 
portal for the generation of official inspection certificates, whether 
printed on water-marked paper or delivered electronically, has reduced 
government costs by eliminating the need to print and secure the old 
carbon-copy controlled certificate books, whereby each inspector or 
office had to secure a log and retain a copy of each certificate type 
issued.
    While the proposed regulations would still allow for inspection 
services to be requested by fax, the move to the online portal system 
reduces the cost to seafood businesses by allowing computer access to 
all services in one account, storing information, reducing the amount 
of time required to make a request, and eliminating the need to have a 
separate fax machine, which many smaller businesses do not otherwise 
use or need. The proposed rule would consolidate the current sections 
associated with applying for service (Sec. Sec.  260.14-260.17) into a 
new Sec.  260.6, with language updated to reflect the current practice 
of applying for inspection services through the online portal system 
per the instructions in the SIP Manual, found in part 1, chapter 12. 
The regulatory language in Sec.  260.21(b)(1-5) (proposed Sec.  
260.10(b)(1-4)) would be updated to reflect the current product 
inspection grade and compliance assessment practices. SIP's intent is 
to consolidate and harmonize the current U.S. Grade Standards outside 
of this rulemaking action, and to keep current product inspection and 
quality assessment procedures detailed in the SIP Manual. This shift 
will allow SIP to keep current with changes and improvements in 
inspection techniques, as well as any changes to finished product 
specifications and the approval process of buyer and customer 
specifications.
    NMFS proposes removing Sec.  260.23, Postponement of Inspection 
Service, from regulatory text, and placing this procedure in the SIP 
Manual, part 1, chapter 12. This specific activity is strictly 
procedural in nature and does not need to be regulated in part 260.
    The proposed rule would modify the existing provisions for 
requesting and performing appeal inspections found in Sec. Sec.  
260.36-260.41 by removing the procedures to file the request for appeal 
(Sec.  260.36; proposed Sec.  260.19) and the mechanics of numbering 
and dating the appeal inspection certificates (Sec.  260.41; proposed 
Sec.  260.23) from part 260 and placing them in the SIP Manual, part 1, 
chapter 14. NMFS proposes to leave the remainder of the appeal process 
in regulatory text and add provisions for appeals of audits and other 
services (the current regulations only address appeal of fishery 
product inspections) to ensure that all customers get equitable and 
consistent treatment, regardless of their level of participation in 
SIP. For example, a person requesting one lot inspection would have the 
same right to appeal as a company with multiple facilities and vessels 
participating in SIP as an Approved Establishment.

Fees and Charges

    NMFS proposes to consolidate the current subgroup Fees and Charges 
(Sec. Sec.  260.69--260.81) into a new Sec.  260.30,

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Inspection Fees, Payment Guarantees, Charges and Payments, and remove 
the details of individual fees and charges from regulatory text. The 
current fees for all SIP services are available in the SIP Manual, part 
1, chapter 13 and on the SIP website at https://www.fisheries.noaa.gov/national/seafood-commerce-trade/inspection-and-analytical-services-fees. Putting the specific fees and charges in the SIP Manual, rather 
than in the regulatory text, would allow for annual updates and any 
modifications to the fee structure to be accurately reflected in a 
timely manner without additional rulemaking. SIP would continue to 
provide notice of fee updates and modifications to the fee structure in 
the Federal Register consistent with existing Sec. Sec.  260.70 and 
260.81.
    In response to the ANPR, one commenter suggested that travel costs 
be the same for all participants in SIP and not based on their 
contract/non-contract type or level of participation. The commenter 
also suggested that HACCP contract rates have become too high for many 
small businesses and that when a participant regularly demonstrates 
compliance and minimal deficiencies in an audit, the frequency of HACCP 
audits should be reduced to twice yearly. Another comment suggested 
that with the online portal system, where most certificate information 
is filled out online by the requestor instead of SIP staff, the cost of 
certificates should be reduced, while another commenter suggested that 
the fees charged for scoresheets and duplicate certificates should be 
re-evaluated. NMFS also received one comment suggesting that SIP 
clarify its billing processes and activity time charges and make them 
consistent across the regions and offices. The same commenter expressed 
concern that any changes made to sampling plans not increase the cost 
of inspection.
    While there may be an incremental cost increase for small entities 
choosing to participate in the activities of SIP, all of the fees 
assessed by SIP are analyzed and updated regularly and are set in such 
a way as to offset the costs of the program while not generating a 
profit per the Financial Policy outlined in the SIP Manual in part 1, 
chapter 13. This includes certificate fees, whether or not issued 
through the online portal. All travel costs incurred with inspection 
services, including mileage, transportation, travel time, and lodging 
and per diem when required, are billed to the requestor. Lodging, per 
diem, and the personal vehicle mileage rate are set annually by the 
U.S. General Services Administration (GSA) and are applied equally to 
all users, so any disparity in these charges between regions can be 
attributed to cost variations in different parts of the country. 
Billing for travel-related costs is detailed in the SIP Manual, part 4, 
chapter 18, and in part 1, chapter 14. Any changes proposed to sampling 
plans resulting from this proposed rule are expected to have a positive 
impact on associated costs and will be detailed in the SIP Manual, part 
4, chapter 19. These positive impacts could include using smaller 
sample sizes and less destructive sampling, which would decrease both 
the cost of the samples themselves as well as the time required for 
sampling and inspecting said samples. The frequency of HACCP and 
surveillance audits is established and detailed in the SIP Manual in 
part 3, chapters 11 and 12 and appendix 1. Audit frequency may be 
increased or tightened based on the results of an audit as determined 
by the Regional Inspection Branch. NMFS has set the minimum audit 
frequency at levels appropriate to ensure that federal regulations and 
Program requirements are being met.

Policies and Procedures

    The proposed rule would update the current Sec.  260.84, Policies 
and procedures (see proposed Sec.  260.34), to reflect that NOAA no 
longer publishes a hard-copy inspection manual, formerly known as NOAA 
Handbook 25. All SIP policies and procedures are now contained in the 
SIP Manual, which is publicly available online at https://www.fisheries.noaa.gov/national/seafood-commerce-certification/seafood-inspection-manual. The SIP Manual moved to the online format over a 
decade ago to allow for updates and corrections in real time. The 
online version is always current and available to inspection staff, 
program participants, and the general public at all times and in any 
location with internet access. Any update to a policy or procedure can 
be uploaded to the SIP Manual and broadcast to all users within hours. 
The move to the online format also saves the government money by 
eliminating the costs of printing and postage, as well as eliminating 
the need for inspectors to spend time each quarter manually removing 
old pages and adding new pages to the hard-copy handbook.
    NMFS is proposing to remove the section on Political Activity 
(currently Sec.  260.88), since it is now specifically governed through 
the Hatch Act, as amended (see 5 U.S.C. 7321-7326), and its inclusion 
in the updated SIP regulations is redundant.
    A few minor updates are proposed to Sec.  260.93, Debarment and 
suspension (proposed Sec.  260.39), to reflect the use of more modern 
terms (i.e., ``Grade A Equivalent'' and ``processing establishment'' 
instead of ``plant''). In addition, the requirement to file five copies 
of all documents would be removed from Sec.  260.93(h)(1), as that 
practice is no longer necessary. Any documents filed today are likely 
to be converted to electronic format, if not submitted electronically.

Approved Establishments

    Under the proposed rule, the provisions regarding Approved 
Establishments would be moved and updated. Requirements for Plants 
Operating Under Continuous Inspection on a Contract Basis, currently 
Sec. Sec.  260.96-260.104, would be renumbered Sec. Sec.  260.31-260.33 
and retitled Requirements for Approved Establishments for purposes of 
clarity and to reflect current practices. In this proposed format, the 
requirements for becoming an Approved Establishment are set out prior 
to specifying the benefits of being an Approved Establishment, such as 
the ability to use marks and official statements on seafood products, 
providing a more logical flow for these provisions. Section 260.96, 
Application for fishery products inspection service on a contract basis 
at official establishments, would be re-titled Application for SIP 
Approved Establishment and re-numbered as Sec.  260.31. The requirement 
to submit an application to SIP for inspection services would remain in 
the part 260 regulations, but the specific details of the application 
procedures would be placed into the SIP Manual, part 3, chapter 5. This 
movement aligns directly with the Agency's goal of keeping the 
operational requirements and procedures of SIP up to date as 
technologies and methods of communication change, as well as staying 
current with industry practices.
    Sections 260.97(a) and Sec.  260.97(b) would be modified to reflect 
that the requirements for receiving inspection services at 
establishments are based on an establishment's good standing, which is 
assessed by the Agency through the combination of systems, process and 
product auditing and inspection activities. Approved Establishments are 
included in a list published on the Program's website and periodically 
in hard copy. Inclusion on this list is contingent upon the firm's 
continued adherence to the Program requirements, which are addressed in 
detail in the SIP Manual at part 3. They also include FDA and U.S. 
Department of Commerce (USDC) regulations governing the construction 
and maintenance of

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facilities and equipment, processing techniques, and employee 
practices, all of which are verified by on-site facility and product 
audits. The provisions in Sec.  260.97(b) would be retained in proposed 
Sec.  260.32(c). Sub-sections 260.97(c)(3-6) and (14) regarding the use 
of labels and other NOAA marks would be addressed in the proposed 
Sec. Sec.  260.35 and 260.36. Sub-sections 260.97(c)(1-2), regarding 
raw materials and lot identification, and 260.97(c)(8-10), regarding 
office and lab space and laundry service, would be moved to Sec.  
260.32(d)(1-4). The procedures currently at Sec.  260.97(c)(7), (12-
13), and (15-16) detailing furnishing NOAA with reports, product 
specifications, label proofs, and other insignia, would also be removed 
entirely from the regulations in this part and placed in the SIP 
Manual, parts 3 and 4. Again, this move from regulatory text to the SIP 
Manual is an effort to align with the Agency's goal of being able to 
adapt to changes in policies and industry practices in real time. 
Section 260.97(c)(11) would be removed completely from the rule since 
the practice of having contracting parties provide clerical and 
stenographic assistance to the Agency is obsolete.
    For purposes of clarity, Sec.  260.97(c)(17) (proposed Sec.  
260.32(d)(5)) would be re-worded to cover all inspection services, and 
Sec.  260.97(d), Termination of Inspection Services, would be moved to 
Sec.  260.32(f). Current section 260.97(d)(1)(iii) would be separated 
into two sub-items: Sec.  260.32(f)(1)(iii) would detail how service 
may be terminated due to failure of the contracting party to meet 
financial obligations and Sec.  260.32(f)(1)(iv) would detail how 
service may be terminated due to failure of the contracting party to 
meet statutory or regulatory requirements, including the provisions of 
the regulations in this part.
    With one exception, Sec. Sec.  260.98-260.104 would be condensed 
into one new Sec.  260.33, Compliance with Statutory and Regulatory 
Requirements, which would read: ``Approved Establishments shall comply 
with all statutory and regulatory requirements and provisions 
pertaining to the production of fish and fishery products and other 
marine ingredients for human or animal consumption.'' This provision 
would underscore that participation as an Approved Establishment does 
not exempt an establishment from any statutory or regulatory 
requirements. The audit criteria for Approved Establishments detailed 
in the SIP Manual, part 3, encompasses all of the requirements 
previously covered in regulatory text in these sections regarding 
premises, buildings and structures, facilities, lavatory 
accommodations, equipment, effective sanitation programs, and 
personnel. The Agency is not adopting by reference other agencies' 
regulations as part of this rulemaking, specifically FDA HACCP 
regulations (21 CFR part 123) and GMPs (21 CFR part 117), which already 
cover the requirements for premises, sanitation programs, and 
personnel.
    The current Sec.  260.103(f) detailing the authority of NMFS to 
reject product and retain equipment would be relocated to Sec.  
260.32(e). This move aligns with NMFS' goal of streamlining the 
regulatory text and consolidating the requirements for Approved 
Establishments but in no way diminishes the authority of NMFS to 
identify, isolate, and hold any product that has been deemed mislabeled 
or unwholesome or any equipment that has been deemed unsanitary or 
likely to contaminate processed product in any way. Any product or 
equipment that has been placed on such hold and identified with the 
word ``RETAINED'' may not be used or disposed of until inspection or 
testing has been completed and the NMFS inspector has removed the 
``RETAINED'' identification.

2. Modernize Sampling Plan and Lot Compliance Determination Procedures

    NMFS proposes several adjustments to the current section 
``Licensing of Samplers and Inspectors'' (Sec. Sec.  260.47-260.51). 
The text currently at Sec.  260.48 regarding the application to become 
a licensed sampler would be removed. The Agency no longer requires 
formal application for a person to become a licensed sampler, though 
the person's qualifications must still meet the standards outlined in 
the SIP Manual, part 1, chapter 6, and be approved by an authorized 
employee of the Agency. The current sections on Licensed Sampler (Sec.  
260.47) and Inspectors (Sec.  260.49) would be reversed in order and 
renumbered as Sec.  260.24-25. The intent of this renumbering is to 
emphasize the role of inspectors, NOAA employees who are qualified to 
perform the full catalog of inspection services, over the role of 
licensed samplers, who are only authorized to pull samples.

Sampling

    The changes proposed to the section Sampling, currently under 
Sec. Sec.  260.57-260.63 (proposed Sec. Sec.  260.28-29), are intended 
to make sampling less restrictive and more flexible for both industry 
and government. The opportunity and flexibility to use different 
sampling plans for lot inspections is detailed in the SIP Manual in 
part 4, chapter 19, and for grading standards in part 5, chapter 5. The 
use of more flexible sampling plans is expected to reduce the amount of 
destructive sampling and the time and costs associated with the act of 
sampling itself and increase the reliability of the results based on 
the samples used. Since 1966, when the current sampling plan (Sec.  
260.61) was established, many improvements have been made by both 
industry and government in terms of sampling and lot compliance 
determination. NMFS has determined that using a static sample size of 
six and acceptance number of zero, regardless of the lot size, will 
both simplify the sampling procedures and maintain the statistical 
validity of the inspection results. With the current sampling plans, 
the sample size can range from 3 to over 72 sample units and often 
involves destruction of the product and packaging. Having a uniform 
sample size of six would reduce the time needed to select samples in 
most cases and minimize the destruction and loss of product due to 
sampling. Determining lot compliance would also be easier, since the 
assessment of the lowest performing sample unit would apply to the 
entire lot with an acceptance number of zero. This would mean the lot 
must have zero non-conforming sample units to be accepted. In other 
words, if one sample unit does not meet the inspection requirements, 
the entire lot is rendered non-conforming. Removing the specific 
sampling procedures and sampling plans from the regulatory text in this 
part and placing them in the SIP Manual aligns with the Agency's goal 
of being more adaptable to changes in industry practice and applying 
new techniques as they become available. It would also allow SIP to 
keep up to date with the Codex Alimentarius (CODEX) and other 
internationally agreed upon standards as they are improved and updated 
without requiring new regulatory action. When finished product 
inspection is required, a SIP inspector would follow the Sampling 
Procedures and Sampling Plans set forth in the SIP Manual, part 4, 
chapters 12 and 19.
    The following requirements related to lot identification and 
sampling are unchanged in the rulemaking updates proposed here (Sec.  
260.60-61; proposed Sec.  260.28-29): all product must be readily 
identifiable and accessible for sufficient sampling; officially drawn 
samples shall be marked by the Agency representative so they can be 
properly identified for inspection; a certificate of sampling shall be 
prepared and signed

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by the inspector or licensed sampler; any lot not readily identifiable 
shall be marked by the Agency representative in a manner prescribed by 
the Agency; and any samples that require shipment to an Inspection 
Office shall be shipped in a manner to avoid, if possible, any material 
change in the quality or condition of the fish or fishery product or 
other marine ingredient. All costs associated with furnishing samples 
for inspection and shipments shall be at the expense of the applicant.
    NMFS proposes to remove from regulatory text the single and 
multiple sampling plans and procedures for determining lot compliance, 
currently found in Sec.  260.61, and adopt internationally recognized 
standards and specifications for sampling practices, sample sizes, and 
lot compliance determinations. These standards and specifications would 
continue to be housed and detailed in the SIP Manual, part 4, chapter 
12 and 19 for lot inspections and in part 5, chapter 5 for grading 
standards rather than in regulatory text. One comment received on the 
ANPR suggested that NMFS consult with the National Institute for 
Standards and Technology (NIST) to ensure that any modified sampling 
plans align with their procedures and provide uniformity between 
states' and SIP's inspection results regarding net weight compliance. 
The commenter also suggested that NMFS use information from the 
research of the CODEX Committee on Methods of Analysis and Sampling 
(CCMAS) as a benchmark to align SIP's sample size and lot compliance 
procedures with other globally accepted methods. NMFS works closely 
with NIST, agrees with the goal of alignment with other globally 
accepted procedures, and seeks additional comment specifically on 
modifications to sampling plans, sample sizes, and lot compliance 
determination, as found in the SIP Manual, part 4, chapter 19.

3. Modernize Use of Inspection and Certification Marks

    The section on marks and official statements (Sec.  260.86; 
proposed Sec.  260.35) would be updated to reflect the changes 
associated with the development of Approved Establishments and their 
associated marks and statements. Products may bear a mark showing they 
were processed in an approved facility and/or a mark showing that they 
meet applicable SIP-approved specifications or inspections as 
prescribed in part 3, chapter 16, and part 4, chapter 10, of the SIP 
Manual. The ``USDC Lot Inspected Shield'' would be removed, as it is 
antiquated and no longer in use. Proposed Sec.  260.36 would be added 
to clearly identify the terms for revocation of approval to use 
inspection marks and statements. The outdated mention of any marks 
referencing the U.S. Department of the Interior would be removed.
    One public comment suggested using a special mark to identify 
product sourced sustainably, such as aquaculture grown in a safe and 
sustainable manner, stating that certification standards reflecting 
more sustainable practices would be recognized by consumers and help 
influence industry guidelines to reflect more sustainable practices. 
NMFS fully supports sustainability in all aspects of fisheries, but the 
Agricultural Marketing Act of 1946 only authorizes NMFS to certify the 
quality, quantity, and condition of products. Sustainability claims are 
out of the scope and authority of SIP at this time. One commenter 
suggested that NMFS survey current program users to see what value SIP 
marks still have, if any, given the numerous third-party program 
available today, and then develop and implement a new communication 
effort to improve the understanding among consumers of what the marks 
actually signify. SIP marks continue to be sought-after by industry 
participants, and the agency publicizes the value of SIP-inspected 
products as resources permit.
    Another commenter added that the value of existing labeling would 
be increased if it was simplified and made clearer to consumers and 
included an assessment of the facility(ies) involved. While NMFS 
appreciates the suggestions for making SIP marks more effective and 
recognizable to the consumer, we believe the Approved Establishment 
marks and statements already convey such an assessment. In order to 
qualify to bear these marks, a facility must comply with all the 
requirements spelled out in the SIP Manual, part 3, regarding approved 
establishments and maintain a level of compliance assessed through 
regular auditing.

4. Extension of Services to Product Forms Beyond Those for Human 
Consumption

    The proposed rule expands the scope of service to include certain 
foods for animal consumption such as fishmeal, fish bone meal, fish for 
bait and some types of pet food for cats and dogs, but it does not 
include products such as food for aquarium fish. This proposed 
expansion also covers other products of marine origin, such as seaweed, 
kelp, algae, fish-based fertilizers, and other fishery by-products 
whether or not intended for human consumption. The expansion of SIP to 
non-consumer and other marine products is an expansion of opportunity 
and markets and helps to facilitate trade for U.S. businesses. By 
including non-human-consumption fish and fishery products and other 
marine ingredients to the program, U.S. businesses are better able to 
compete with industry members from other countries in providing these 
valuable resources to the worldwide marketplace. Some countries, such 
as China and the Republic of Korea, already require both physical 
product inspection and participation in SIP in order to export fish and 
fishery products to those countries, including items such as fish meal 
and fishery by-products. At the request of industry, SIP has been 
providing these services for several years, so there is little to no 
cost increase to the Agency or industry to include these products 
through this proposed rule. Specifically, adding inspection and 
certification services for non-food, by-products, and other marine 
ingredients in the revised SIP regulations would enable SIP to provide 
services to businesses trading in marine products that traditionally 
the FDA and the U.S. Department of Agriculture (USDA) Food Safety and 
Inspection Service (FSIS) do not provide. While NMFS does propose to 
expand inspection and certification services to include fish food for 
aquaculture operations, the Agency does not propose to expand services 
to pet foods, such as fish food for aquarium fish, or to ornamental/
brood stock/research animals, as these products fall under the 
regulatory authority of the USDA Animal and Plant Health Inspection 
Service (APHIS).
    The fish oil market is growing at 5.8 percent annually and is 
expected to reach $3.34 billion by 2030 (Reports and Data, February 
2023). To facilitate trade with foreign nations, U.S. suppliers must 
effectively identify the sourcing history of their products, which 
could be satisfied if NMFS continued and expanded its support for the 
trade and certification of fishery by-products, including fish oils. 
Multiple commenters supported and encouraged the efforts of SIP to 
provide certification services for inedible fishery products, including 
aquatic fish food, the latter of which the Agency lacks the authority 
to inspect.

5. Modernize U.S. Grade Standards

    In the ANPR (84 FR 55130, October 15, 2019), NMFS also requested 
comment on the modernization of the U.S. Grade Standards found in 50 
CFR part 261. Comments from industry

[[Page 31695]]

members generally support the maintenance of U.S. Grade Standards in 
the SIP Manual, currently in part 5, and encourage the development of 
simplified grading documentation and harmonizing of the grading 
standards across regions, stakeholders, and products. Based on comments 
received and NMFS' internal review, the Agency has decided not to 
update the U.S. Grade Standards as part of this proposed rulemaking but 
may address changes to 50 CFR part 261 in future rulemaking. Currently, 
NMFS intends to reduce the existing grade standards down to seven or 
eight consolidated U.S. Standards for fishery products and to adopt a 
uniform sample size of six with zero non-conformities for lot 
acceptance. This means that for all lot sizes, six sample units would 
be selected for inspection, and each sample unit must meet the 
regulatory or quality criteria for the lot to be accepted.
    The changes proposed to ``Basis of inspection, grade, and 
compliance assessment'' currently at Sec.  260.21 (proposed Sec.  
260.10) would enable SIP to perform finished product inspections based 
on specifications and procedures found in the SIP Manual, parts 4 and 
5, and compliance would be determined according to the inspection and 
assessment procedures outlined in the SIP Manual in parts 4 and 5.
    General public comments on the ANPR also included a request for 
NMFS to continue its outreach to program participants, including 
hosting webinars and public meetings where industry could provide more 
input on the efforts to modernize the SIP. NMFS encourages and actively 
seeks public comment on all of the modernization efforts proposed here. 
Any public meetings and/or webinars will be posted on our website and 
announced through the current communication channels to all program 
participants and interested industry members. See table 1 below for 
details of all the proposed section number and title changes.

                                    Table 1--Proposed Re-ordering of Part 260
                                     PART 260--INSPECTION AND CERTIFICATION
  Current Subpart A--Inspection and Certification of Establishments and Fishery Products for Human Consumption
     Proposed Subpart A--Inspection and Certification of Establishments, Fishery Products, and Other Marine
                                                   Ingredients
----------------------------------------------------------------------------------------------------------------
     Current section              Current section title             Proposed section      Proposed section title
----------------------------------------------------------------------------------------------------------------
260.1...................  Administration of regulations.        260.1..................  Administration of
                                                                                          regulations.
----------------------------------------------------------------------------------------------------------------
                    Definitions 260.6-260.7  Definitions 260.2-260.3
----------------------------------------------------------------------------------------------------------------
260.6...................  Terms defined.                        260.2..................  Terms defined.
260.7...................  Designation of official               260.3..................  Designation and use of
                           certificates, memoranda, marks,                                official certificates,
                           other identifications, and devices                             memoranda, marks,
                           for purposes of the Agricultural                               other identifications,
                           Marketing Act.                                                 and devices for
                                                                                          purposes of the
                                                                                          Agricultural Marketing
                                                                                          Act.
----------------------------------------------------------------------------------------------------------------
               Inspection Service 260.12-Inspection Service 260.4-260.18
----------------------------------------------------------------------------------------------------------------
260.12..................  Where inspection service is offered.  260.4..................  Where inspection
                                                                                          service is offered.
260.13..................  Who may obtain inspection service.    260.5..................  Who may obtain
                                                                                          inspection service.
260.14..................  How to make application.              260.6..................  Application for
                                                                                          inspection service.
260.15..................  Information required in connection    .......................  Deleted.
                           with application.
260.16..................  Filing of application                 .......................  Deleted.
260.17..................  Record of filing time.                .......................  Deleted.
260.18..................  When application may be rejected.     260.7..................  Rejection of
                                                                                          application for
                                                                                          inspection service.
260.19..................  When application may be withdrawn.    260.8..................  Withdrawal of an
                                                                                          application for
                                                                                          inspection service.
260.20..................  Disposition of inspected sample.      260.9..................  Disposition of
                                                                                          inspected samples.
260.21..................  Basis of inspection and grade or      260.10.................  Basis of inspection
                           compliance determination.                                      grade and compliance
                                                                                          assessment.
260.22..................  Order of inspection service.          260.11.................  Order of inspection
                                                                                          service.
260.23..................  Postponing inspection service         .......................  Deleted.
260.24..................  Financial interest of inspector.      260.12.................  Financial interest of
                                                                                          inspector.
260.25..................  Forms of certificates.                260.13.................  Official forms for
                                                                                          inspection services.
260.26..................  Issuance of certificates.             260.14.................  Issuance of
                                                                                          certificates.
260.27..................  Issuance of corrected certificates.   260.15.................  Issuance of corrected
                                                                                          certificates.
260.28..................  Issuance of an inspection report in   260.16.................  Issuance of an
                           lieu of an inspection certificate.                             inspection report in
                                                                                          lieu of an inspection
                                                                                          certificate.
260.29..................  Disposition of inspection             260.17.................  Retention and provision
                           certificates.                                                  of inspection
                                                                                          certificates.
260.30..................  Report of inspection results prior    260.18.................  Report of inspection
                           to issuance of formal report.                                  results prior to
                                                                                          issuance of formal
                                                                                          report.
----------------------------------------------------------------------------------------------------------------
                Appeal Inspection 260.36-26Appeal Service 260.19-260.23
----------------------------------------------------------------------------------------------------------------
260.36..................  When appeal inspection may be         260.19.................  Requesting an appeal.
                           requested.
260.37..................  Where to file for an appeal           .......................  Deleted.
                           inspection and information
                           required.
260.38..................  When an application for an appeal     260.20.................  Withdrawing an appeal
                           inspection may be withdrawn.                                   application.
260.39..................  When appeal inspection may be         260.21.................  Declining an appeal
                           refused.                                                       application.
260.40..................  Who shall perform appeal inspection.  260.22.................  Appeal inspector
                                                                                          selection protocol.
260.41..................  Appeal inspection certificate.        260.23.................  Appeal documentation.
----------------------------------------------------------------------------------------------------------------
      Licensing of Samplers and Licensing of Inspectors and Samplers 260.24-260.27
----------------------------------------------------------------------------------------------------------------
260.47..................  Who may become licensed sampler.      260.25.................  Licensed sampler.
260.48..................  Application to become a licensed      .......................  Deleted.
                           sampler.
260.49..................  Inspectors.                           260.24.................  Inspectors.
260.50..................  Suspension or revocation of license   260.26.................  Suspension or
                           of licensed sampler or licensed                                revocation of licensed
                           inspector.                                                     inspector or licensed
                                                                                          sampler.
260.51..................  Surrender of license.                 260.27.................  Surrender of license.
----------------------------------------------------------------------------------------------------------------

[[Page 31696]]

 
                    Sampling 260.57-260.63    Sampling 260.28-260.29
----------------------------------------------------------------------------------------------------------------
260.57..................  How samples are drawn by inspectors   .......................  Deleted.
                           or licensed samplers.
260.58..................  Accessibility for sampling.           .......................  Deleted.
260.59..................  How officially drawn samples are to   .......................  Deleted.
                           be identified.
260.60..................  How samples are to be shipped.        260.29.................  Shipment of samples.
260.61..................  Sampling plans and procedures for     260.28.................  Sampling plans and
                           determining lot compliance.                                    procedures.
260.62..................  Issuance of certificate of sampling.  .......................  Deleted.
260.63..................  Identification of lots sampled.       .......................  Deleted.
----------------------------------------------------------------------------------------------------------------
                Fees and Charges 260.69-260.8Fees and Charges 260.30
----------------------------------------------------------------------------------------------------------------
260.69..................  Payment fees and charges.             260.30.................  Inspection fees,
                                                                                          payment guarantees,
                                                                                          charges and payments.
260.70..................  Schedule of fees.                     .......................  Deleted.
260.71..................  [Reserved]                            .......................  Deleted.
260.72..................  Fees for inspection service           .......................  Deleted.
                           performed under cooperative
                           agreement.
260.73..................  Disposition of fees for inspections   .......................  Deleted.
                           made under cooperative agreement.
260.74..................  Fee for appeal inspection.            .......................  Deleted.
260.76..................  [Reserved]                            .......................  Deleted.
260.77..................  Fees for score sheets.                .......................  Deleted.
260.78..................  Fees for additional copies of         .......................  Deleted.
                           inspection certificates.
260.79..................  Travel and other expenses.            .......................  Deleted.
260.80..................  Charges for inspection service on a   .......................  Deleted.
                           contract basis.
260.81..................  Readjustment and increase in hourly   .......................  Deleted.
                           rates of fees.
----------------------------------------------------------------------------------------------------------------
                  Miscellaneous 260.84-260.Miscellaneous 260.34-260.39
----------------------------------------------------------------------------------------------------------------
260.84..................  Policies and procedures.              260.34.................  Policies and
                                                                                          procedures.
260.86..................  Approved identification.              260.35.................  Approved marks,
                                                                                          shields, stamps and
                                                                                          official statements.
                          ....................................  260.36.................  Revocation of approval
                                                                                          to use inspection
                                                                                          marks and statements.
260.88..................  Political activity.                   .......................  Deleted.
260.90..................  Compliance with other laws.           260.37.................  Compliance with other
                                                                                          laws.
260.91..................  Identification.                       260.38.................  Identification.
260.93..................  Debarment and suspension.             260.39.................  Debarment and
                                                                                          suspension.
----------------------------------------------------------------------------------------------------------------
      Requirements for Plants Operating UndeRequirements for Approved
         Inspection on a Contract Basis 26 Establishments 260.31-260.33
----------------------------------------------------------------------------------------------------------------
260.96..................  Application for fishery products      260.31.................  Application for SIP
                           inspection service on a contract                               Approved
                           basis at official establishments.                              Establishment.
260.97..................  Conditions for providing fishery      260.32.................  Requirements for the
                           products inspection service at                                 provision of
                           official establishments.                                       inspection services
                                                                                          for Approved
                                                                                          Establishments.
260.98..................  Premises.                             .......................  Deleted.
260.99..................  Buildings and structures.             .......................  Deleted.
260.100.................  Facilities.                           .......................  Deleted.
260.101.................  Lavatory accommodations.              .......................  Deleted.
260.102.................  Equipment.                            .......................  Deleted.
260.103.................  Operations and operating procedures   260.33.................  Compliance with
                           shall be in accordance with an                                 statutory and
                           effective sanitation program.                                  regulatory
                                                                                          requirements.
260.104.................  Personnel                             .......................  Deleted.
----------------------------------------------------------------------------------------------------------------
                 Labeling Requirements 260.200       Deleted
----------------------------------------------------------------------------------------------------------------
260.200-260.201.........  [Reserved]                            .......................  Deleted.
----------------------------------------------------------------------------------------------------------------

Classification

    This proposed rule is published under the authority of the 
Agricultural Marketing Act of 1946, as amended (7 U.S.C. 1621 et seq.). 
The NMFS Assistant Administrator has determined that this proposed 
action is consistent with the provisions of this and other applicable 
laws, subject to further consideration after public comment.

Executive Order 12866

    This proposed rule has been determined to be not significant for 
the purposes of Executive Order 12866.

Regulatory Flexibility Act

    The Chief Counsel for Regulation of the Department of Commerce 
certified to the Chief Counsel for Advocacy of the Small Business 
Administration (SBA) that this proposed rule, if adopted, would not 
have a significant economic impact on a substantial number of small 
entities. A description of the factual basis for this determination 
follows.
    The regulatory action being considered is described in the preamble 
of this proposed rule and includes updates, deletions, and additions to 
the regulations currently found at 50 CFR part 260. The proposed action 
reflects the significant changes and updates SIP

[[Page 31697]]

has already made to simplify its administrative, inspection, and 
certification procedures, which will result in increased uniformity of 
inspection results and efficiencies associated with inspection effort, 
while retaining the reliability and validity of inspection results, 
detailed in the above sections. Many of the changes proposed here are 
not actual changes to the way SIP currently operates, but merely a 
removal of outdated regulatory text, so the regulations both more 
accurately reflect current Program and industry practices and remain 
adaptable to potential future changes in technologies and product 
requirements.
    Even though SIP operates as a fee-for-service program, it must 
adhere to the regulatory authority of the FDA under which all seafood 
processors in the United States operate, regardless of their status or 
participation in SIP. The proposed rule clarifies the authority SIP has 
to provide services for fishery products, regardless of intended end-
use, and allows SIP the flexibility to keep its policies and 
operational procedures current with both industry practices and 
international standards by housing the day-to-day operational details 
in the online SIP Manual versus in regulatory text.
    The entities affected by this rulemaking include all seafood 
harvesters, processors, brokers, importers, exporters, storage 
facilities, and other entities who utilize the fee-based services 
provided by the SIP. This group includes both businesses that choose to 
contract with the Agency for certain services and those who wish to 
export seafood products that require certification that only SIP can 
provide. SIP services both domestic and foreign businesses. Per the 
RFA's definition of small business and regulations issued by the SBA, 
impacts on ``a business entity organized for profit, with a place of 
business located in the United States, and which operates primarily 
with the United States or which makes a significant contribution to the 
U.S. economy though payment of taxes or use of American products, 
material or labor'' will be analyzed below.
    Small entities include ``small businesses,'' ``small 
organizations,'' and ``small governmental jurisdictions.'' The SBA has 
established size standards for all major industry sectors using the 
North American Industry Classification System (NAICS). Size thresholds 
can be based on either a company's number of employees or its sales, 
depending on SBA's criteria for that industry. On December 29, 2015, 
NMFS issued a final rule establishing a small business size standard of 
$11 million in annual gross receipts for all businesses primarily 
engaged in the commercial fishing industry (NAICS 11411) for RFA 
compliance purposes only (80 FR 81194). The $11 million standard became 
effective on July 1, 2016, and is to be used in place of the U.S. NAICS 
114111, 114112, and 114119 sectors of the U.S. commercial fishing 
industry in all NMFS rules subject to the RFA after July 1, 2016. Id. 
at 81194.
    Based on the list of SIP businesses requesting services in 2021, 64 
NAICS industries were identified. This analysis applies those SBA/NMFS 
small business definitions to the 64 6-digit NAICS industries. For the 
purposes of this analysis, it is assumed that the choice to participate 
in SIP is not correlated with business size, and thus the estimated 
number of small entities is the fraction of that NAICS industry that is 
considered small multiplied by the number of entities in that industry 
participating in SIP. The total number of entities that are small for 
NAICS with employment-based small entity definitions is calculated 
using the 2021 Statistics of U.S. Businesses (SUSB) by detailed 
employment size (U.S. Census Bureau 2023). In some cases, the small 
business threshold is somewhere in the middle of a SUSB bracket, in 
which case an adjustment is necessary. Assuming that firms are 
uniformly distributed within an employment size bracket, the number of 
small firms from the sub-divided bracket is estimated based on the 
proportion of the bracket below the threshold. For example, if the 
small business threshold is 125 employees and SUSB reports 40 
businesses in the 100-149 employee bracket, it is assumed that 20 of 
the businesses are small because half of the bracket is below the 125-
employee threshold. However, if the small business threshold is in the 
top bracket (e.g. a threshold of 750 employees with a top bracket of 
500+ employees), then a conservative estimate is made that all the 
affected entities are small. The percentage of businesses that are 
small for NAICS with revenue-based small business definitions is 
calculated using the 2017 SUSB by revenue,\1\ with revenues inflated to 
2022 dollars using the Consumer Price Index Inflator. The same 
proportional rules are applied here when the threshold lies somewhere 
in the data bracket.
---------------------------------------------------------------------------

    \1\ The 2019 and 2021 SUSB updates do not include data by 
revenue, so this is the most recent available.
---------------------------------------------------------------------------

    A complete list of the NAICS codes, NAICS descriptions, the 
corresponding SBA size standard thresholds, total entities and the 
number of entities determined to be small entities affected by this 
rule is provided in table 2.

                        Table 2--NAICS Codes, Small Business Thresholds and Entity Totals
----------------------------------------------------------------------------------------------------------------
                                                               Small business     Total entities     Estimated
            NAICS Code                NAICS description          threshold           by NAICS     small entities
----------------------------------------------------------------------------------------------------------------
11411.............................  Commercial Fishing     11 million...........              18              18
                                     Industry.
112511............................  Finfish Farming and    3.75 million.........               4               4
                                     Fish Hatcheries.
112519............................  Other Aquaculture....  3.75 million.........               2               2
311119............................  Other Animal Food      650 employees........               4               4
                                     Manufacturing.
311412............................  Frozen Specialty Food  1250 employees.......               5               5
                                     Manufacturing.
311423............................  Dry and Dehydrated     750 employees........               2               2
                                     Food Manufacturing.
311615............................  Poultry Processing...  1250 employees.......               3               3
311710............................  Seafood Product and    750 employees........              80              78
                                     Preparation and
                                     Packaging.
311942............................  Spice and Extract      650 employees........               1               1
                                     Manufacturing.
311999............................  All Other              700 employees........               5               5
                                     Miscellaneous Food
                                     Manufacturing.
325311............................  Nitrogenous            1050 employees.......               1               1
                                     Fertilizer
                                     Manufacturing.
325411............................  Medicinal and          1000 employees.......               3               3
                                     Botanical
                                     Manufacturing.
325412............................  Pharmaceutical         1300 employees.......               4               4
                                     Preparation
                                     Manufacturing.
325414............................  Biological Product     1250 employees.......               1               1
                                     (except Diagnostic)
                                     Manufacturing.
325612............................  Polish and Other       900 employees........               1               1
                                     Sanitation Good
                                     Manufacturing.

[[Page 31698]]

 
325998............................  All Other              650 employees........               2               2
                                     Miscellaneous
                                     Chemical Product and
                                     Preparation
                                     Manufacturing.
333241............................  Food Product           500 employees........               1               1
                                     Machinery
                                     Manufacturing.
333998............................  All Other              700 employees........               3               3
                                     Miscellaneous
                                     General Purpose
                                     Machinery
                                     Manufacturing.
423450............................  Medical, Dental, and   200 employees........               1               1
                                     Hospital Equipment
                                     and Supplies
                                     Merchant Wholesalers.
423740............................  Refrigeration          125 employees........               1               1
                                     Equipment and
                                     Supplies Merchant
                                     Wholesalers.
424210............................  Drugs and Druggists'   250 employees........               3               3
                                     Sundries Merchant
                                     Wholesalers.
424410............................  General Line Grocery   250 employees........              18              17
                                     Merchant Wholesalers.
424420............................  Packaged Frozen Food   200 employees........              15              14
                                     Merchant Wholesalers.
424440............................  Poultry and Poultry    150 employees........               4               4
                                     Product Merchant
                                     Wholesalers.
424460............................  Fish and Seafood       100 employees........             233             228
                                     Merchant Wholesalers.
424470............................  Meat and Meat Product  150 employees........              10              10
                                     Merchant Wholesalers.
424480............................  Fresh Fruit and        100 employees........               2               2
                                     Vegetable Merchant
                                     Wholesalers.
424490............................  Other Grocery and      250 employees........              16              16
                                     Related Products
                                     Merchant Wholesalers.
424910............................  Farm Supplies          200 employees........               1               1
                                     Merchant Wholesalers.
424990............................  Other miscellaneous    100 employees........              15              15
                                     nondurable goods
                                     merchant wholesalers.
445110............................  Supermarkets and       40 million...........               3               3
                                     Other Grocery
                                     (except Convenience)
                                     Stores Retailers.
445210............................  Meat Markets           500 employees........               2               2
                                     Retailers.
445250............................  Fish and Seafood       9 million............              11              11
                                     Markets Retailers.
445298............................  All Other Specialty    10 million...........               4               4
                                     Food Retailers.
456110............................  Pharmacies and Drug    37.5 million.........               1               1
                                     Stores Retailers.
456191............................  Food Health            22.5 million.........               5               5
                                     Supplement Stores
                                     Retailers.
459110............................  Sporting Goods Stores  26.5 million.........               1               1
                                     Retailers.
459910............................  Pet and Pet Supplies   32 million...........               2               2
                                     Stores Retailers.
455219............................  All Other General      40 million...........               2               2
                                     Merchandise Stores
                                     Retailers.
483111............................  Deep Sea Freight       1050 employees.......               1               1
                                     Transportation.
483113............................  Coastal and Great      800 employees........               1               1
                                     Lakes Freight
                                     Transportation.
484110............................  General Freight        34 million...........               1               1
                                     Trucking, Local.
488210............................  Support Activities     34 million...........               1               1
                                     for Rail
                                     Transportation.
488320............................  Marine Cargo Handling  47 million...........               1               1
488510............................  Freight                20 million...........              29              27
                                     Transportation
                                     Arrangement.
488999............................  All Other Support      25 million...........               2               2
                                     Activities for
                                     Transportation.
493110............................  General Warehousing    34 million...........               7               5
                                     and Storage.
493120............................  Refrigerated           36.5 million.........               5               5
                                     Warehousing and
                                     Storage.
523160............................  Commodity Contracts    47 million...........               1               1
                                     Dealing
                                     Intermediation.
523910............................  Miscellaneous          47 million...........               1               1
                                     Intermediation.
523991............................  Trust, Fiduciary, and  47 million...........               1               1
                                     Custody Activities.
541611............................  Administrative         24.5 million.........               3               3
                                     Management and
                                     General Management
                                     Consulting Services.
541890............................  Other Services         19 million...........               1               1
                                     Related to
                                     Advertising.
541990............................  All Other              19.5 million.........               1               1
                                     Professional,
                                     Scientific, and
                                     Technical Services.
561110............................  Office Administrative  12.5 million.........               3               3
                                     Services.
561499............................  All Other Business     21.5 million.........               5               5
                                     Support Services.
561510............................  Travel Agencies......  25 million...........               2               2
561910............................  Packaging and          19.5 million.........               1               1
                                     Labeling Service.
561990............................  All Other Support      16.5 million.........               1               1
                                     Services.
721199............................  All Other Traveler     9 million............               1               1
                                     Accommodation.
721214............................  Recreational and       9 million............               1               1
                                     Vacation Camps
                                     (except Campgrounds).
722511............................  Full-Service           11.5 million.........              15              15
                                     Restaurants.
813319............................  Other Social Advocacy  18 million...........               1               1
                                     Organizations.
                                    Non-classifiable       n/a..................               1               1
                                     Establishments.
                                    TOTAL................  .....................             577             553
----------------------------------------------------------------------------------------------------------------
Source: U.S. Small Business Administration Table of Small Business Size Standards (Effective date January 1,
  2022). Available at: https://www.sba.gov/document/support--table-size-standards.

    Based on the information above, NMFS expects approximately 553 
small entities ranging across 64 NAICS sectors would be directly 
affected by this rule upon implementation. As more entities participate 
in the services, including those expanded services proposed in the 
rule, the number of entities is likely to increase marginally over 
time.
    This proposed action would not establish any new reporting,

[[Page 31699]]

recordkeeping, or other compliance requirements for small entities. The 
proposed rule would add or amend definitions, clarify the authority SIP 
has to provide services for fishery products (regardless of intended 
end-use), and allow SIP the flexibility to keep its policies and 
operational procedures current with both industry practices and 
international standards by housing the day-to-day operational details 
in the online SIP Manual versus in regulatory text. The actions 
proposed would not change the way SIP currently operates but merely 
remove outdated regulatory text so the regulations both more accurately 
reflect current industry practices and remain adaptable to potential 
changes in technologies and product requirements. Thus, no small 
business or local government would be required to undertake any 
additional reporting, recordkeeping, or other affirmative actions in 
order to comply with the proposed rule. No duplicative, overlapping, or 
conflicting federal rules have been identified.
    Using the 2021 SUSB by detailed employment size (U.S. Census Bureau 
2023) and 2017 SUSB by revenue, most of the entities affected represent 
less than one percent of the total number of firms in their NAICS 
sector. Those industries in NAICS code sectors that had five or fewer 
entities participating in the SIP programs were assumed to be well 
below one percent of the total number of firms in the sector since 
sectors generally contain many hundreds of entities.
    Only two NAICS sectors exceeded one percent, Seafood Product 
Preparation and Packaging (311710) with 13.6 percent and Fish and 
Seafood Merchant Wholesalers (424460) with 11.2 percent. The affected 
small entities do not represent a large portion of their sectors, but 
the total number of affected small entities (78 and 228, respectively) 
could be considered a substantial number.
    NMFS anticipates some small entities affected by the rule would 
likely incur some compliance cost associated with familiarizing 
themselves with the relocated text in the online manual. The SIP Manual 
was moved online over a decade ago, allowing for updates and 
corrections to be made in real time. The online version is routinely 
updated and available to inspection staff, program participants, and 
the general public at all times, and in any location with internet 
access. Based on existing participants' knowledge and current use of 
the online manual, NMFS anticipates small entities will likely incur 2 
burden hours associated with rule, definition, and online manual 
familiarization associated with changes proposed in the rule. Table 3 
provides the most common services and the occupation title most 
associated with those requesting services. Wage rates for Office Clerks 
(General) and Food Service Managers are from the U.S. Bureau of Labor 
Statistics' (BLS) Employer Costs for Employee Compensation (ECEC) 
historical data for May 2022 (BLS 2022a). The estimate and cost per 
firm is provided in table 4. The affected small businesses subject to 
the rule are likely to incur 2 burden hours at an average cost of 
$59.54 per firm, for a total of $32,925.62.

            Table 3--Summary of Estimated Burden Hours and Cost for Users Requesting Common Services
----------------------------------------------------------------------------------------------------------------
                                                                                    Mean hourly
                                           Type of user (e.g.,    Average burden   wage rate \1\   Total annual
            Common services                occupational title)        (hour)       (for type of     wage burden
                                                                                       user)           costs
----------------------------------------------------------------------------------------------------------------
Sec.   260.15 (prop. Sec.   260.6)      Office Clerks, General              2.00          $19.78          $39.56
 Application for Inspection Services.    (43-9061).
Sec.   260.36 (prop. Sec.   260.19)     Food Service Managers               2.00           32.27           64.54
 Application for appeal.                 (11-9051).
Sec.   260.96 (prop. Sec.   260.31)     Food Service Managers               2.00           32.27           64.54
 Contract Completion.                    (11-9051).
Sec.   260.97(c)(12), (13), and (15)    Food Service Managers               2.00           32.27           64.54
 (prop. Sec.   260.32) Label and         (11-9051).
 Specification Submission.
HACCP Participants....................  Food Service Managers               2.00           32.27           64.54
                                         (11-9051).
                                       -------------------------------------------------------------------------
    Average per Firm..................                            ..............           29.77           59.54
----------------------------------------------------------------------------------------------------------------
\1\ Source: BLS 2022.


                                 Table 4--Summary of Compliance Cost by Activity
----------------------------------------------------------------------------------------------------------------
                                                  Average burden                   Average cost
            Activity                 Number of       per firm      Total burden      per firm       Total cost
                                  affected firms      (hours)         (hours)         (2022$)         (2022$)
----------------------------------------------------------------------------------------------------------------
Rule Familiarization............             553             0.5           276.5          $14.89       $8,231.41
Definition Familiarization......             553             0.5           276.5           14.89        8,231.41
SIP Online Manual                            553               1             553           29.77       16,462.81
 Familiarization................
                                 -------------------------------------------------------------------------------
    Total Cost for all            ..............  ..............  ..............           59.55       32,925.62
     activities.................
----------------------------------------------------------------------------------------------------------------

    While NMFS does not have firm level information on profit, an 
annual cost of $59.55 can reasonably be assumed to be well below 1 
percent of total profit for the affected entities. For the 553 small 
entities subject to the rule, 100 percent are expected to have cost 
impacts of less than 1 percent of their annual revenues. Therefore, 
NMFS does not expect the cost associated with the proposed rule to 
represent a significant impact to small entities.
    NMFS believes the actions contained in this rule would not create a 
competitive disadvantage for small entities vis-a-vis large entities. 
The proposed rule, if finalized, would help ensure that all entities 
regardless of size get equitable and consistent treatment, regardless 
of their level of participation in the SIP. A person requesting one lot 
inspection has the same access to information and available services, 
as well as the equal right to an appeal inspection, as a company with 
multiple facilities and vessels.

[[Page 31700]]

    While unable to quantify cost savings, NMFS assumes the overall 
impact of the rule to be neutral to marginally positive on 
profitability for all entities, is not expected to significantly reduce 
profits for a substantial number of small entities, and does not create 
a significant competitive disadvantage to small entities. While it is 
debatable if the number of affected small entities may qualify as 
``substantial,'' the economic impact of this rule is very small. 
Therefore, NMFS does not expect the proposed rule, if finalized, to 
have a significant economic impact on a substantial number of small 
entities. An initial regulatory flexibility analysis is not required, 
and none has been prepared.

National Environmental Policy Act

    Under NOAA Administrative Order (NAO 216-6A), the promulgation of 
regulations that are administrative, financial, legal, technical or 
procedural in nature are categorically excluded from the requirement to 
prepare an Environmental Assessment. These proposed regulations to 
update 50 CFR part 260 are procedural and administrative in nature, in 
that they merely reflect the actual operations of the SIP today. 
Neither fishing activity nor trade in seafood products are further 
restricted relative to any existing laws or regulations, either foreign 
or domestic. Given the procedural and administrative nature of this 
rulemaking, an Environmental Assessment was not prepared.

Paperwork Reduction Act

    This proposed rule does not contain a change to a collection of 
information requirement for purposes of the Paperwork Reduction Act of 
1995. The existing collection of information requirements would 
continue to apply under the following OMB Control Number: 0648-0266, 
Seafood Inspection and Certification Requirements.

List of Subjects in 50 CFR Part 260

    Inspection, Inspection Services, Certification, Approved 
Establishment, Sampling, Imports, Exports, Fish and Fisheries Products, 
Marine Ingredients, Grade Standards, Marks.

    Dated: April 18, 2024.
Samuel D. Rauch III,
Deputy Assistant Administrator for Regulatory Programs, National Marine 
Fisheries Service.

    For the reasons set out in the preamble, NOAA proposes to revise 
part 260 of title 50 of the Code of Federal Regulations to read as 
follows:

PART 260--INSPECTION AND CERTIFICATION

Subpart A--Inspection and Certification of Establishments, Fishery 
Products, and Other Marine Ingredients
Sec.
260.1 Administration of regulations.

Definitions

260.2 Terms defined.
260.3 Designation and use of official certificates, memoranda, 
marks, other identifications, and devices for purposes of the 
Agricultural Marketing Act.

Inspection Service

260.4 Where inspection service is offered.
260.5 Who may obtain inspection service.
260.6 Application for inspection service.
260.7 Rejection of application for inspection service.
260.8 Withdrawal of an application for inspection service.
260.9 Disposition of inspected samples.
260.10 Basis of inspection, grade and compliance assessment.
260.11 Order of inspection service.
260.12 Financial interest of inspector.
260.13 Official forms for inspection services.
260.14 Issuance of certificates.
260.15 Issuance of corrected certificates.
260.16 Issuance of an inspection report in lieu of an inspection 
certificate.
260.17 Retention and provision of inspection certificates.
260.18 Report of inspection results prior to issuance of formal 
report.

Appeal Service

260.19 Requesting an appeal.
260.20 Withdrawing an appeal application.
260.21 Declining an appeal application.
260.22 Appeal inspector selection protocol.
260.23 Appeal documentation.

Licensing of Inspectors and Samplers

260.24 Inspectors.
260.25 Licensed sampler.
260.26 Suspension or revocation of licensed inspector or licensed 
sampler.
260.27 Surrender of license.

Sampling

260.28 Sampling plans and procedures.
260.29 Shipment of samples.

Fees and Charges

260.30 Inspection fees, payment guarantees, charges and payments.

Requirements for Approved Establishments

260.31 Application for SIP Approved Establishment.
260.32 Requirements for the provision of Inspection Services for 
Approved Establishments.
260.33 Compliance with statutory and regulatory requirements.

Miscellaneous

260.34 Policies and procedures.
260.35 Approved marks, shields, stamps and official statements.
260.36 Revocation of approval to use inspection marks and 
statements.
260.37 Compliance with other laws.
260.38 Identification.
260.39 Debarment and suspension.

    Authority:  Sec. 6, 70 Stat. 1122, 16 U.S.C. 742e; secs. 203, 
205, 60 Stat. 1087, 1090 as amended; 7 U.S.C. 1622, 1624; 
Reorganization Plan No. 4 of 1970 (84 Stat. 2090).

Subpart A--Inspection and Certification of Establishments, Fishery 
Products, and Other Marine Ingredients


Sec.  260.1   Administration of regulations.

    The Secretary of the Department of Commerce is charged by the 
Agricultural Marketing Act of 1946 with the administration of the 
regulations in this part, except that they may delegate any or all of 
such functions to any officer or employee of the National Marine 
Fisheries Service (the Agency) of the Department at their discretion.

Definitions


Sec.  260.2   Terms defined.

    Words in the regulations in this part in the singular form shall be 
deemed to import the plural and vice versa, as the case may demand. For 
the purposes of the regulations in this part, unless the context 
otherwise requires, the following terms shall have the following 
meanings:
    Acceptance number means the number in a sampling plan that 
indicates the maximum number of nonconformities permitted in a sample 
of a lot that meets a specific requirement.
    Act means the applicable provisions of the Agricultural Marketing 
Act of 1946 (60 Stat. 1087 et seq., as amended; 7 U.S.C. 1621 et seq.) 
or any other act of Congress conferring like authority.
    Administrator means the Administrator of NOAA (Under Secretary of 
Commerce for Oceans and Atmosphere) or a designee.
    Agency means the National Marine Fisheries Service, National 
Oceanic and Atmospheric Administration, Department of Commerce.
    Applicant means any interested party who requests inspection 
service under the regulations in this part.
    Approved Establishment means an establishment which has been 
approved by the Agency pursuant to this Part and the NMFS Fishery 
Products Inspection Manual (SIP Manual) and utilizes inspection service 
on a contract basis.
    Certificate of loading means an official certificate or document 
that makes a statement relative to check-loading of a fish or fishery 
product or other marine ingredient subsequent to inspection thereof 
issued pursuant to the regulations in this part.

[[Page 31701]]

    Certificate of sampling means an official certificate or document 
that makes a statement pursuant to the regulations in this part 
identifying officially drawn samples and may include a description of 
the condition of containers and the condition under which the fish or 
fishery product or other marine ingredient is stored.
    Class means a grade or rank of quality.
    Condition means the degree of soundness of the product that may 
affect its merchantability and includes but is not limited to those 
factors that are subject to change due to age, improper preparation and 
processing, improper packaging, improper storage, or improper handling.
    Cross-Licensed Inspector means a qualified person employed and 
licensed by the agency to perform specified inspection services under a 
joint Federal-State inspection service arrangement.
    Department means the U.S. Department of Commerce.
    Director means the Assistant Administrator for Fisheries, NOAA, or 
a designee.
    Establishment means the premises, buildings, structures, 
facilities, and equipment (including machines, utensils, fixtures and 
transit vehicles) used with respect to the receipt, processing and 
transport of fish and fishery products and other marine ingredients.
    Fish means a fresh or saltwater finfish, crustaceans, other forms 
of aquatic animal life (including, but not limited to, alligator, frog, 
aquatic turtle, jellyfish, sea cucumber, and sea urchin and the roe of 
such animals) other than birds or mammals, and including all mollusks, 
where such animal life is intended for human or animal consumption or 
for other non-food uses.
    Fishery product means any human food product in which fish is a 
characterizing ingredient.
    Inspection certificate means a statement, either written or 
printed, issued pursuant to the regulations in this part, setting forth 
the quality and condition of the product, or any part thereof, in 
addition to appropriate descriptive information relative to a fish, 
fishery product, or other marine ingredient, and the container thereof. 
It may also include a description of the conditions under which the 
product is stored.
    Inspection service means:
    (1) The performance of sampling pursuant to the regulations in this 
part;
    (2) The determination pursuant to the regulations and requirements 
in this part:
    (i) Assessing compliance with statutory and regulatory requirements 
pertaining to the interstate commerce of fish and fishery products or 
other marine ingredients for human or animal food;
    (ii) Identifying the essential characteristics such as style, type, 
size, or identity of any fish or fishery product or other marine 
ingredient; or
    (iii) Assessing the class, quality, and condition of any fish or 
fishery product or other marine ingredient, including the condition of 
the container thereof by the examination of appropriate samples;
    (3) The issuance of any certificates of sampling, inspection 
certificates, or certificates of loading of a fish or fishery product 
or other marine ingredient, or any report relative to any of the 
foregoing; or
    (4) The performance by an inspector of any related services, such 
as:
    (i) Observing the preparation of the product from its raw state 
through each step in the entire process;
    (ii) Observing the conditions under which the product is being 
harvested, prepared, handled, stored, processed, packed, preserved, 
transported, or held;
    (iii) Observing the sanitation conditions as a prerequisite to the 
inspection of the processed product, either on a contract basis or 
periodic basis;
    (iv) Check-loading the inspected processed product in connection 
with the marketing of the product; or
    (v) Conducting any other type of service of a consultative or 
advisory nature related herewith as outlined in the NMFS Fishery 
Products Inspection Manual.
    Inspector means any employee of the Department authorized by the 
Secretary or any other person licensed by the Secretary to investigate, 
sample, inspect, and certify in accordance with the regulations in this 
part to any interested party the class, quality and condition of 
processed products covered in this part and to perform related duties 
in connection with the inspection service.
    Interested party means any person who has a financial interest in 
the fish or fishery product or other marine ingredient involved.
    Licensed sampler means any person who is authorized by the 
Secretary to draw samples of fish and fishery products or other marine 
ingredients for inspection service, to confirm the identification and 
condition of containers in a lot, and may, when authorized by the 
Secretary, perform other related services under the act and the 
regulations in this part.
    Lot means a defined quantity of product accumulated under 
conditions considered uniform for sampling purposes.
    (1) For processors who manufacture fish and fishery products or 
other marine ingredients, a lot is a production unit as defined by 
mutual agreement between the processor and SIP, consisting of fish or 
fishery products or other marine ingredients of the same type, style, 
form and size, which have been marked or labeled as such and produced 
under conditions as nearly uniform as possible, during a single 8 hour 
shift (or as defined and approved) on an individual processing line.
    (2) For establishments that receive fish or fishery products or 
other marine ingredients and perform no additional processing, such as 
distribution warehouses and foodservice distributors, a lot is defined 
by mutual agreement between the establishment and SIP and must consist 
of fish or fishery products or other marine ingredients located in a 
discrete grouping that consists of fish or fishery products or other 
marine ingredients of the same type, style and size and are marked or 
labeled as such. Except that: Fish or fishery products or other marine 
ingredients located in separate groups that differ from each other as 
to grade or other factors may be deemed as separate lots in some cases, 
for example:
    (i) Fish or fishery products or other marine ingredients located in 
the same group bearing an identification mark different from other 
containers in that group may be deemed as separate lots;
    (ii) Containers of fish or fishery products or other marine 
ingredients in a group bearing an identification mark different from 
other containers in that group, if determined to be of lower grade or 
deficient in other factors, may be deemed as separate lots; or
    (iii) If the applicant requests more than one inspection 
certificate covering different portions of a lot, the quantity of the 
product covered by each certificate shall be deemed a separate lot.
    Marine ingredient means any product of marine origin, whether or 
not intended for human consumption, including, but not limited to, 
fishmeal, fish oil, fish-based fertilizer, seaweed, kelp, and algae.
    NMFS Fishery Products Inspection Manual (SIP Manual) means the 
online handbook, housed at https://www.fisheries.noaa.gov/national/seafood-commerce-certification/seafood-inspection-manual, that provides 
procedures of how services shall be scheduled, planned, conducted, and 
documented and describes services that conform to global activities 
that harmonize inspection protocols.

[[Page 31702]]

    Officially drawn sample means any sample that has been selected 
from a particular lot by an inspector, licensed sampler, or by any 
other person authorized by the Secretary pursuant to the regulations in 
this part.
    Person means any individual, partnership, association, business 
trust, corporation, any organized group of persons (whether 
incorporated or not); the United States (including, but not limited to, 
any corporate agencies thereof) any State, county, or municipal 
government; any common carrier; and any authorized agent of any of the 
foregoing.
    Processing means, with respect to fish and fishery products and 
other marine ingredients, activities that an establishment engages in 
including handling, storing, preparing, heading, eviscerating, 
shucking, freezing, changing into different market forms, 
manufacturing, preserving, packing, labeling, dockside unloading, or 
holding. Product means any fish or fishery product or other marine 
ingredient, whether or not destined for human consumption, presented to 
NMFS for inspection and/or certification service.
    Quality means the inherent properties of any processed product that 
determine the relative degree of excellence of such product, includes 
the effects of preparation and processing, and may or may not include 
the effects of packing media or added ingredients.
    Rejection number means the smallest number of nonconformities, 
defectives (or defects) in the sample or samples under consideration 
that will require rejection of the lot.
    Sample means the number of sample units drawn from a lot for 
purposes of inspection to reach a decision regarding acceptance of the 
lot and for purposes of quality to reach a conclusion regarding 
conformity of the lot.
    Sample unit means a ``unit of product'', a primary container and 
its contents that makes up the sample that is inspected to determine 
whether it complies with regulatory criteria and that is quality 
assessed to determine whether it conforms to quality criteria.
    Sampling means the process of selecting sample units that comprise 
the sample for the purpose of inspection and quality assessment under 
the regulations of this part.
    Seafood Inspection Program (SIP) means the program within the U.S. 
Department of Commerce, National Oceanic and Atmospheric 
Administration, which offers inspection and grading services for 
seafood and other marine products as well as audit and consultative 
services to domestic and international processors, importers, and 
international competent food safety authorities.
    Secretary means the Secretary of the Department of Commerce or any 
other officer or employee of the Department authorized to exercise the 
powers and to perform the duties of the Secretary with respect to the 
matters covered by the regulations in this part.
    Shipping container means an individual container designed for 
shipping a number of packages or cans ordinarily packed in a container 
for shipping or designed for packing unpackaged fish or fishery 
products or other marine ingredients for shipping.
    Unofficially drawn sample means any sample that has been selected 
by any person other than an inspector or licensed sampler.
    Wholesome means the minimum basis of acceptability for human food 
purposes of any fish or fishery product or other marine ingredient as 
defined in section 402 of the Federal Food, Drug, and Cosmetic Act, as 
amended.


Sec.  260.3   Designation and use of official certificates, memoranda, 
marks, other identifications, and devices for purposes of the 
Agricultural Marketing Act.

    Section 203(h) of the Agricultural Marketing Act of 1946 provides 
criminal penalties for various specified offenses relating to the 
misuse of official certificates, memoranda, marks or other 
identifications and devices for making such marks or identifications, 
issued or authorized under section 203 of said Act, and certain 
misrepresentations concerning the inspection or grading of agricultural 
products under said section. For the purposes of said section and the 
provisions in this part, the terms listed below shall have the 
respective meanings specified:
    Official certificate means any form of written, printed or 
electronic certification, including those defined in Sec.  260.2, used 
under this part to document and/or certify the compliance of fish or 
fishery products and other marine ingredients to applicable 
specifications with respect to inspection compliance and conformity to 
class, grade, quality, size, quantity, or condition requirements.
    Official device means a mechanically or manually operated tool, 
appliance or other means approved by the Agency to apply an official 
mark or other identification to any product or the packaging material 
thereof that is approved by the Director, including, but not limited 
to, a stamping appliance, branding device, stencil, or printed label.
    Official identification means any designation of class, grade, 
quality, size, quantity, condition, or attribute specified by this part 
or any symbol, stamp, label, seal, or official statement indicating 
that the product has been inspected or graded using specifications 
deemed appropriate by SIP or otherwise evaluated for any buyer 
specified attribute.
    Official insignia means a grade mark, inspection mark, combined 
inspection and grade mark, shield, stamp, other emblem, and/or official 
statement approved by the Secretary, authorized by the Agency, and used 
in accordance with the NMFS Fishery Products Inspection Manual (SIP 
Manual).
    Official document means a record of findings made by an authorized 
person having performed any inspection, certification, grading, audit 
or any other service pursuant to this part.

Inspection Service


Sec.  260.4   Where inspection service is offered.

    Inspection services may be furnished where an inspector, cross-
licensed inspector, or licensed sampler is available and when the 
establishment's facilities and conditions are appropriate for the 
conduct of such service. This location can include, but is not limited 
to, SIP regional and field offices, warehouses, processing facilities, 
docks, and vessels, as detailed in the SIP Manual.


Sec.  260.5   Who may obtain inspection service.

    Any person engaged in the processing, shipping or receiving of fish 
and fishery products or other marine ingredients in interstate commerce 
may apply for inspection service.


Sec.  260.6   Application for inspection service.

    Prospective service participants must submit an application for 
inspection service per the Application for Inspection Services 
procedures in the SIP Manual. To be considered for approval, 
applications for inspection service must be complete and conform to all 
SIP inspection service requirements as specified in the SIP Manual.


Sec.  260.7   Rejection of application for inspection service.

    Applicants will be notified if an Application for Inspection 
Service is rejected. Inspection Service applications may be rejected 
when: (a) the application is incomplete or in contravention of 
regulations and/or policy; (b) there is a noncompliance with NOAA 
financial policy, such as

[[Page 31703]]

nonpayment for previous inspection services rendered; (c) the fish or 
fishery product or other marine ingredient is not properly identified; 
or (d) it appears that the performance of the inspection service would 
not be in the best interests of the Government.


Sec.  260.8   Withdrawal of an application for inspection service.

    The applicant may withdraw an Application for Inspection Service at 
any time before the inspection is performed, provided that the 
applicant shall pay for all costs and expenses which have been incurred 
by the inspection service in connection with such application.


Sec.  260.9   Disposition of inspected samples.

    Any product sample that has been used for inspection may be 
returned to the applicant, at its request and expense; otherwise it 
shall be destroyed or, when appropriate, diverted to a charitable 
institution.


Sec.  260.10   Basis of inspection, grade and compliance assessment.

    (a) Finished product inspection and certification services shall be 
performed on the basis of the specifications deemed appropriate by SIP.
    (b) Unless otherwise approved by SIP, compliance with the 
appropriate specifications shall be determined by evaluating the 
product, or sample, in accordance with the product inspection and 
quality assessment procedures outlined in the SIP Manual. Provided, 
That:
    (1) Such sample complies with the applicable standards of quality 
promulgated under the Federal Food, Drug, and Cosmetic Act;
    (2) Such sample complies with the product description;
    (3) Such sample meets the indicated grade with respect to factors 
of quality which are not rated by score points; and
    (4) The number of sample units classed as deviants does not exceed 
the applicable acceptance number indicated in the sampling plans 
approved and used. A ``deviant,'' as used in this paragraph, means a 
sample unit that falls below the indicated grade or specification 
parameter.


Sec.  260.11   Order of inspection service.

    Inspection services shall be performed, insofar as practicable, in 
the order in which Application for Inspection Service is made, except 
that precedence is given first to the United States (including, but not 
limited to, any instrumentality or agency thereof); second, to an 
inspection contract holder; and third, to an interested party without 
an inspection contract.


Sec.  260.12   Financial interest of inspector.

    No inspector shall inspect any product in which s/he has a direct 
or indirect financial interest.


Sec.  260.13   Official forms for inspection services.

    Inspection certificates, memoranda, reports and other documents 
associated with inspection services shall only be issued on forms 
approved by the Agency.


Sec.  260.14   Issuance of certificates.

    Inspection Certificates and Certificates of Loading may be issued 
by an inspector authorized by the Agency to affix their signature to a 
certificate that has been prepared in accordance with the documented 
evidence in connection with the inspection service provided.


Sec.  260.15   Issuance of corrected certificates.

    When an issued inspection certificate contains errors or otherwise 
requires revision, the inspector who issued the original document or 
another employee of the Agency may issue a corrected inspection 
certificate. The corrected certificate will supersede the original 
document, which will become null and void after the issuance of the 
corrected certificate.


Sec.  260.16   Issuance of an inspection report in lieu of an 
inspection certificate.

    A written report in lieu of an inspection certificate may be issued 
by an inspector when such action appears to be more suitable than an 
inspection certificate.


Sec.  260.17   Retention and provision of inspection certificates.

    Inspection certificate copies or other documents issued under the 
regulations in this part shall be retained by the Agency in accordance 
with Agency record retention policies. The original certificate 
(electronic or other) or copy is provided to the inspection service 
requester, and copies may be provided to other interested parties as 
identified by the Agency.


Sec.  260.18   Report of inspection results prior to issuance of formal 
report. Upon request by any interested party and approval by the 
Agency, the interim inspection findings may be provided.

Appeal Service


Sec.  260.19   Requesting an appeal.

    (a) An application for an appeal may be made by any interested 
party who has cause to disagree with the results of a product 
inspection or audit finding. An official appeal inspection of a product 
inspection may only be performed when the lot of fish or fishery 
products or other marine ingredients can be positively identified by 
the inspection service as the lot from which officially drawn samples 
were previously inspected.
    (b) Such application shall be made in adherence with the SIP Manual 
and shall be made within 30 days following the day on which the 
previous result was communicated, except that upon approval by SIP the 
time may be extended.


Sec.  260.20   Withdrawing an appeal application.

    An application for appeal may be withdrawn by the applicant at any 
time before the appeal service is performed, provided that the 
applicant shall pay for all costs and expenses which have been incurred 
by the inspection service in connection with such application.


Sec.  260.21   Declining an appeal application.

    A request for an appeal may be declined when:
    (a) The reasons for the appeal are frivolous or not substantial;
    (b) The quality or condition of the product has undergone a 
material change since the inspection covering the product on which an 
appeal inspection is requested;
    (c) The lot relative to which an appeal inspection is requested is 
not, or cannot be made, accessible for the selection of officially 
drawn samples;
    (d) The lot relative to which an appeal inspection is requested 
cannot be positively identified by the inspector as the lot from which 
officially drawn samples were previously inspected; or
    (e) There is noncompliance with the regulations in this part. The 
applicant shall be notified promptly if a request for appeal is 
declined, as outlined in the SIP Manual.


Sec.  260.22   Appeal inspector selection protocol.

    (a) An inspector who did not perform the original product 
inspection shall be assigned to perform the appeal service; provided 
that the inspector who made the original product inspection on which an 
appeal is requested may be authorized to draw the samples when another 
inspector or licensed sampler is not available in the area where the 
product is located.
    (b) Whenever practical, the appeal service shall be conducted 
jointly by two inspectors.


Sec.  260.23   Appeal documentation.

    (a) After an appeal service has been completed, the results will be 
recorded on an appropriate document, as outlined in the SIP Manual. Any 
appeal

[[Page 31704]]

document shall supersede the certificate or report previously issued 
for the product or establishment involved.
    (b) The superseded document shall become null and void upon the 
issuance of the appeal document and shall no longer represent the 
quality or condition of the product, system, or establishment described 
therein.
    (c) If the original document and all copies have not been returned 
to the inspector(s) performing the appeal service, the appeal document 
shall be issued to the person(s) the inspector(s) considers necessary 
to prevent misuse of the superseded document.
    (d) All provisions in this regulation concerning the use, issuance 
and disposition of inspection certificates shall apply to appeal 
inspection certificates, except that electronic copies of the appeal 
inspection certificates shall be furnished to all interested parties 
who received the superseded certificate.

Licensing of Inspectors and Samplers


Sec.  260.24   Inspectors.

    (a) Federal Government employees licensed or authorized as 
inspectors will perform inspections.
    (b) In addition, qualified persons may be employed and licensed 
(Cross-Licensee) by the Agency to perform specified inspection services 
under a joint Federal-State inspection service arrangement.
    (c) An Inspector or Cross-Licensee shall perform their duties 
pursuant to the regulations in this part as directed by the Director.


Sec.  260.25   Licensed sampler.

    (a) Any person deemed to have the necessary qualifications may be 
approved as a licensed sampler.
    (b) Licensed samplers are authorized to draw samples, to confirm 
the identity of the lot, and assess the condition of containers in the 
lot.
    (c) Licensed samplers are not authorized to inspect fish or fishery 
products or other marine ingredients.


Sec.  260.26   Suspension or revocation of licensed inspector or 
licensed sampler.

    In adherence to Federal and Agency requirements, the Agency may 
suspend or revoke the license of a licensed inspector or licensed 
sampler when deemed necessary, as outlined in the SIP Manual.


Sec.  260.27   Surrender of license.

    Upon suspension, revocation and/or termination of the services of a 
licensed inspector and/or licensed sampler, or in the case of an 
expired license, the licensee shall surrender their license to the 
Agency.

Sampling


Sec.  260.28   Sampling plans and procedures.

    (a) When finished product inspections of fish and fishery products 
and other marine ingredients are performed, the Sampling Plans and 
Sampling Procedures set forth in the SIP Manual will be followed.
    (b) Defined lots of product must be accessible, allowing thorough 
and proper sampling in accordance with the regulations of this part. 
Failure to make lots accessible for proper sampling shall be sufficient 
cause for postponing or canceling inspection service.
    (c) Lots must be readily identifiable; if lots to be sampled are 
not suitably identified, the inspector or licensed sampler will mark 
the lot in a manner prescribed by the agency in the regulations and in 
the SIP Manual.
    (d) Samples shall be furnished for inspection at no cost to the 
Agency.
    (e) A certificate of sampling shall be prepared and signed by the 
inspector or licensed sampler.
    (f) Officially drawn samples shall be marked by the Agency 
representative so such samples can be properly identified for 
inspection.


Sec.  260.29   Shipment of samples.

    Samples that require shipment to an Inspection Office shall be 
shipped in a manner to avoid, if possible, any material change in the 
quality or condition of the product. Costs associated with shipments 
shall be at the expense of the applicant.

Fees and Charges


Sec.  260.30   Inspection fees, payment guarantees, charges and 
payments.

    (a) A schedule of fees, charges, payment guarantees and payments 
for inspection services shall be made in accordance with the applicable 
provisions of the regulations in this part and the Financial Policy 
provided in the SIP Manual.
    (b) The Schedule of Fees to be charged and collected for any 
inspection service performed under the regulations of this part will be 
determined annually, or as required, and published as a Notice in the 
Federal Register.
    (c) Fees for inspection under a cooperative agreement with any 
State or person shall be transferred and collected in accordance with 
the terms of such agreement. Such portion of the fees collected under a 
cooperative agreement as may be due the United States shall be remitted 
in accordance with this section and the Financial Policy as provided in 
the SIP Manual.
    (d) Charges may be made to cover the cost of travel and other 
expenses incurred in connection with the performance of any inspection 
service, including appeal inspections, as provided in the SIP Manual.
    (e) Inspection services may be made on a contract basis or via a 
memorandum of understanding with other Federal and State entities 
pursuant to the Agricultural Marketing Act of 1946, provided the Agency 
is reimbursed for the full cost of such service.
    (f) For each calendar year, SIP will calculate the rate for 
services, per hour per program employee, using the following formulas:
    (1) Regular rate. The total SIP inspection program personnel direct 
pay divided by direct hours, which is then multiplied by the next 
year's percentage of cost of living increase, plus the benefits rate, 
plus the operating rate, plus the allowance for bad debt rate. If 
applicable, travel expenses may also be added to the cost of providing 
the service. The regular rate shall be the contract rate.
    (2) Overtime rate. The total SIP inspection program personnel 
direct pay divided by direct hours, which is then multiplied by the 
next year's percentage of cost of living increase and then multiplied 
by 1.5 plus the benefits rate, plus the operating rate, plus an 
allowance for bad debt. If applicable, travel expenses may also be 
added to the cost of providing the service.
    (3) Holiday rate. The total SIP inspection program personnel direct 
pay divided by direct hours which is then multiplied by the next year's 
percentage of cost of living increase and then multiplied by 2, plus 
benefits rate, plus the operating rate, plus an allowance for bad debt. 
If applicable, travel expenses may also be added to the cost of 
providing the service.
    (g) For each calendar year, based on previous fiscal year/
historical actual costs, SIP will calculate the benefits, operating, 
and allowance for bad debt components of the regular, overtime and 
holiday rates as follows:
    (1) Benefits rate. The total SIP inspection program direct benefits 
costs divided by the total hours (regular, overtime, and holiday) 
worked, which is then multiplied by the next calendar year's percentage 
cost of living increase. Some examples of direct benefits are health 
insurance, retirement, life insurance, and Thrift Savings Plan (TSP) 
retirement basic and matching contributions.
    (2) Operating rate. The total SIP inspection program operating 
costs divided by total hours (regular, overtime, and holiday) worked, 
which is

[[Page 31705]]

then multiplied by the percentage of inflation.
    (3) Allowance for bad debt rate. Total allowance for bad debt 
divided by total hours (regular, overtime, and holiday) worked.
    (h) The calendar year cost of living expenses and percentage of 
inflation factors used in the formulas in this section are based on the 
most recent Office of Management and Budget's Presidential Economic 
Assumptions.
    (1) When an inspection is delayed because product is not available 
or readily accessible, a charge for waiting time shall be determined 
using the formulas in this section.

Requirements for Approved Establishments


Sec.  260.31   Application for SIP Approved Establishment.

    Any person desiring to process and pack fish and fishery products 
and other marine ingredients as an SIP Approved Establishment must 
receive approval of their written and implemented food management 
system per the application procedures which are detailed in the SIP 
Manual.


Sec.  260.32   Requirements for the provision of Inspection Services 
for Approved Establishments.

    All establishments must remain in good standing in order to receive 
services per this Part.
    (a) The determination as to the inspection effort required to 
adequately provide inspection service at any establishment will be made 
by NMFS. The person-hours required may vary at different establishments 
due to factors such as, but not limited to, size and complexity of 
operations, volume and variety of products produced, and adequacy of 
control systems and cooperation. The inspection effort requirement may 
be reevaluated when the contracting party or NMFS deems there is 
sufficient change in production, equipment and change of quality 
control input to warrant reevaluation. Inspectors will not be available 
to perform any of the employee or management duties; however, they will 
be available for consultation purposes. NMFS reserves the right to 
reassign inspectors as it deems necessary.
    (b) Assessment of an establishment's good standing will be made by 
the Agency through systems, process, and product auditing and 
inspection activities, which are further specified in the SIP manual.
    (c) The Agency shall not be held responsible:
    (1) For damages occurring through any act of commission or omission 
on the part of its inspectors when engaged in performing services; or
    (2) For production errors, such as processing temperatures, length 
of process, or misbranding of products; or
    (3) For failure to supply enough inspection effort during any 
period of service.
    (d) Approved Establishments shall:
    (1) Use, handle, process, store and distribute only raw materials 
and finished products that meet processing and sanitation statutory and 
regulatory requirements for food safety, wholesomeness and labeling;
    (2) Adequately code each primary container and master case of 
products sold or otherwise distributed from a manufacturing, 
processing, packing, or repackaging activity to enable lot 
identification to facilitate, where necessary, the segregation of 
specific food lots that may have become contaminated or otherwise unfit 
for their intended use;
    (3) Provide adequate office space in the designated establishment, 
if required by the Agency, and furnish suitable desks, office 
equipment, internet services access, laboratory facilities and 
equipment required to perform product verification and inspection, as 
prescribed by the Agency;
    (4) Furnish and provide laundry service for coats, trousers, 
smocks, and towels used by inspectors during performance of duty in 
establishments if required by the Agency; and
    (5) During all reasonable times, provide representatives of the 
Agency free and immediate access to the establishment under the 
applicant's control for the purpose of performing any and all 
inspection services.
    (e) Retention tags:
    (1) Any equipment such as, but not limited to, conveyors, tillers, 
sorters, choppers, and containers which fail to meet appropriate and 
adequate sanitation requirements will be identified by the inspector in 
an appropriate and conspicuous manner with the word ``RETAINED.'' 
Following such identification, the equipment shall not be used until 
the discrepancy has been resolved, the equipment re-inspected and 
approved by the inspector and the ``RETAINED'' identification removed 
by the inspector.
    (2) Lot(s) of processed products that may be considered to be 
mislabeled and/or unwholesome by reason of contaminants, or which may 
otherwise be in such condition as to require further evaluation or 
testing to determine that the product is properly labeled and/or 
wholesome, will be identified by the inspector in an appropriate and 
conspicuous manner with the word ``RETAINED.'' Such lot(s) of product 
shall be held for re-inspection or testing. Final disposition of the 
lot(s) shall be determined by NMFS and the removal of the ``RETAINED'' 
identification shall be performed by the inspector.
    (f) Termination of inspection services:
    (1) The fishery products inspection service, including the issuance 
of inspection reports, shall be rendered from the date of the 
commencement specified in the contract and continue until suspended or 
terminated:
    (i) by mutual consent;
    (ii) by either party giving the other party 60 days' written notice 
specifying the date of suspension or termination;
    (iii) by written notice by the Agency in the event the applicant 
does not meet financial obligations;
    (iv) by written notice by the Agency, terminating service in the 
event the applicant fails to meet statutory and/or regulatory 
requirements, or in the event the applicant fails to comply with any 
provisions of the regulations contained in this part;
    (v) by automatic termination in case of bankruptcy, closing out of 
business, or change in controlling ownership.
    (2) In case the contracting party wishes to terminate the fishery 
products inspection service under the terms of paragraph (f)(1)(i) or 
(ii) of this section:
    (i) the service must be continued until all unused containers, 
labels, and advertising material on hand or in possession of his 
supplier bearing official identification marks or reference to the 
fishery products inspection service have been used;
    (ii) all unused containers, labels, and advertising material 
bearing official identification marks or reference to the fishery 
products inspection service must be destroyed;
    (iii) official identification marks and all other reference to the 
fishery products inspection service on all unused containers, labels, 
advertising material must be obliterated; or
    (iv) assurance satisfactory to NMFS must be furnished that all 
unused containers, labels, and advertising material bearing official 
identification marks or reference to the fishery products inspection 
service will not be used in violation of any of the provisions of the 
regulations in the part.
    (3) In case the fishery products inspection service is terminated 
for cause by NMFS under the terms of paragraph (f)(1)(iii) or (iv) of 
this section, or in case of automatic termination under terms of 
paragraph (f)(1)(v) of this section, the contracting party must destroy 
all unused containers, labels, and advertising

[[Page 31706]]

material on hand bearing official identification marks or reference to 
the fishery products inspection service or must obliterate official 
identification marks and all reference to the fishery products 
inspection service on said containers, labels and advertising material. 
After termination of the fishery products inspection service, NMFS may, 
at such time or times as it may determine to be necessary, during 
regular business hours, enter the establishment(s) or other facilities 
in order to ascertain that the containers, labels, and advertising 
material have been altered or disposed of in the manner provided 
herein, to the satisfaction of NMFS.


Sec.  260.33   Compliance with statutory and regulatory requirements.

    Approved Establishments shall comply with all statutory and 
regulatory requirements and provisions pertaining to the production of 
fish and fishery products and other marine ingredients for human or 
animal consumption.

Miscellaneous


Sec.  260.34   Policies and procedures.

    The policies and procedures pertaining to the Agency's inspection 
services are contained within the SIP Manual.


Sec.  260.35   Approved marks, shields, stamps and official statements.

    As prescribed by the SIP Manual, Inspection Service participants 
meeting the requirements may request approval to utilize specified SIP 
Grade Marks, Shields, Stamps and Official Statements (collectively SIP 
Insignia).
    (a) Participants as Approved Establishments
    (1) Fish and Fishery products and other marine ingredients that are 
processed under Federal inspection to assure compliance with all 
applicable regulatory requirements through the SIP Approved 
Establishments Program may be eligible to bear an:
    (i) Approved Establishment inspection mark; and/or,
    (ii) Approved Establishment Official Statement.

Figure 1 to Paragraph (a)(1)(ii)--USDC Approved Establishment 
Inspection Mark
[GRAPHIC] [TIFF OMITTED] TP25AP24.123

    (2) Fish and Fishery products and other marine ingredients that are 
(1) processed under Federal inspection to ensure compliance with all 
applicable regulatory requirements through the SIP Approved 
Establishments Program and (2) certified by an inspector as meeting the 
requirements of the applicable Approved Specification additionally may 
be eligible to bear (as applicable):
    (i) Grade A shield;
    (ii) Processed Under Federal Inspection (PUFI) mark; and/or
    (iii) Other official statements and/or marks, as approved by SIP, 
e.g.

Figure 2 to Paragraph (a)(2)(i)--U.S. Grade A Shield
[GRAPHIC] [TIFF OMITTED] TP25AP24.124

Figure 3 to Paragraph (a)(2)(ii)--Processed Under Federal Inspection 
(PUFI) Mark
[GRAPHIC] [TIFF OMITTED] TP25AP24.125

    (3) Approved Establishments will not make deceptive, fraudulent, or 
unauthorized use in advertising, or otherwise, of the fishery products 
inspection service marks, the inspection certificates or reports 
issued, or the containers on which official identification marks are 
embossed or otherwise identified, in connection with the sale of any 
processed products;
    (b) Lot Inspection Marks
    (1) Fish and fishery products and other marine ingredients that 
have not been processed under Federal inspection may not be approved 
for the use of Grade or Inspection Marks. Such products may, however, 
be inspected on a Lot Inspection basis.
    (2) Master cases and inspection certificates for products that are 
(1) submitted for inspection through the lot inspection process 
identified in the SIP Manual and are (2) certified by an inspector as 
meeting the requirements of the applicable USDC Approved Specification 
corresponding with the shield, may bear one or more of the following:
    (i) USDC Accepted Per Specifications shield;
    (ii) Officially Sampled shield, e.g.

Figure 4 to Paragraph (b)(2)(i)--USDC Accepted Per Specifications 
Shield
[GRAPHIC] [TIFF OMITTED] TP25AP24.126

Figure 5 to Paragraph (b)(2)(ii)--Officially Sampled Shield
[GRAPHIC] [TIFF OMITTED] TP25AP24.127

Sec.  260.36   Revocation of approval to use inspection marks and 
statements.

    (a) Approval for use of SIP inspection marks, statements, and 
insignia will be rescinded when evidence indicates that processing 
conditions and/or product lots do not meet applicable regulatory, 
inspection and/or quality requirements per the SIP Manual.
    (b) Any affected lot(s) shall be retained and may not enter 
commerce unless the lot meets minimum regulatory requirements to enter 
commerce and the SIP insignia is removed.
    (c) The establishment or processor shall obtain written clearance 
from the Agency for the release of product lots that have been put on 
hold under this part.


Sec.  260.37   Compliance with other laws.

    None of the requirements in the regulations in this part shall 
excuse failure to comply with any Federal, State, county, or municipal 
laws applicable to the operation of food processing establishments and 
to processed food products.


Sec.  260.38   Identification.

    Each inspector and licensed sampler shall have a means of 
identification furnished by the Agency in his/her possession and, while 
on duty, present such identification upon request.


Sec.  260.39   Debarment and suspension.

    (a) Debarment. Any person may be debarred from using or benefiting 
from the inspection service provided under the regulations of this 
subchapter or under the terms of any inspection contract, and such 
debarment may apply to one or more processing establishments under 
their control, if such person engages in one or more of the following 
acts or activities:
    (1) Misrepresenting, misstating, or withholding any material or 
relevant facts or information in conjunction with any application or 
request for an

[[Page 31707]]

inspection contract, inspection service, inspection appeal, lot 
inspection, or other service provided for under the regulations of this 
subchapter.
    (2) Using on a fish or fishery or other marine ingredient product 
any label that displays any official identification, official device, 
or official mark, when the label is not currently approved for use by 
the Director or his/her delegate.
    (3) Using on a fish or fishery product or other marine ingredient 
any label that displays the words ``USDC Approved Establishment'' or 
``Processed Under Federal Inspection, U.S. Department of Commerce''; 
any official mark, official device, or official identification; or a 
facsimile of the foregoing, when such product has not been inspected 
under the regulations of this subchapter.
    (4) Making any statement or reference to the U.S. Grade of any 
product or any inspection service provided under the regulations of 
this subchapter on the label or in the advertising of any product when 
such product has not been inspected under the regulations of this 
subchapter.
    (5) Making, using, issuing or attempting to issue or use in 
conjunction with the sale, shipment, transfer or advertisement of a 
product any certificate of loading, certificate of sampling, inspection 
certificate, official device, official identification, official mark, 
official document, or score sheet which has not been issued, approved, 
or authorized for use with such product by an inspector.
    (6) Using any of the terms ``United States,'' ``Officially 
graded,'' ``Officially inspected,'' ``Government inspected,'' 
``Federally inspected,'' ``Officially sampled,'' ``Grade A Equivalent'' 
or words of similar import or meanings, or using any official device, 
official identification, or official mark on the label, on the shipping 
container, or in the advertising of any fish or fishery product or 
other marine ingredient, when such product has not been inspected under 
the regulations of this subchapter.
    (7) Using, attempting to use, altering or reproducing any 
certificate, certificate form, design, insignia, mark, shield, device, 
or figure which simulates in whole or in part any official mark, 
official device, official identification, certificate of loading, 
certificate of sampling, inspection certificate or other official 
certificate issued pursuant to the regulations of this subchapter.
    (8) Assaulting, harassing, interfering, obstructing or attempting 
to interfere with or obstruct any inspector or licensed sampler in the 
performance of their duties under the regulations of this subchapter.
    (9) Violating any one or more of the terms of any inspection 
contract or the provisions of the regulations of this subchapter.
    (10) Engaging in acts or activities which destroy or interfere with 
the purposes of the inspection program or which have the effect of 
undermining the integrity of the inspection program.
    (b) Temporary suspension.
    (1) Whenever the Director has reasonable cause to believe that any 
person has engaged in any act or activity described in paragraph
    (a) of this section and such act or activity, in the judgment of 
the Director, would cause serious and irreparable injury to the 
inspection program and services provided under the regulations of this 
subchapter, the Director may, without a hearing, temporarily suspend, 
either before or after the institution of a debarment hearing, the 
inspection service provided under the regulations of this subchapter or 
under any inspection contract for one or more processing establishments 
under the control of such person. Notice of suspension shall be served 
by registered or certified mail, return receipt requested, and the 
notice shall specifically state those acts or activities of such person 
that are the basis for the suspension. The suspension shall become 
effective 5 days after receipt of the notice.
    (2) Once a person has received a notice of a temporary suspension, 
a debarment hearing will be set for 30 days after the effective date of 
the suspension. Within 60 days after the completion of the debarment 
hearing, the Hearing Examiner shall determine, based upon evidence of 
record, whether the temporary suspension shall be continued or 
terminated. A temporary suspension shall be terminated by the Hearing 
Examiner if they determine that the acts or activities that were the 
bases for the suspension did not occur or will not cause serious and 
irreparable injury to the inspection program and services provided 
under the regulations of this subchapter. This determination of the 
Hearing Examiner on the continuation or termination of the temporary 
suspension shall be final, and there shall be no appeal of this 
determination. The initial decision by the Hearing Examiner on the 
debarment shall be made in accordance with paragraph (b)(l), Decisions, 
of this section.
    (3) After a debarment hearing has been instituted against any 
person by a suspension, such suspension will remain in effect until a 
final decision is rendered on the debarment in accordance with the 
regulations of this section or the temporary suspension is terminated 
by the Hearing Examiner.
    (4) When a debarment hearing has been instituted against any person 
not under suspension, the Director may, in accordance with the 
regulations of this paragraph (b), of this section, temporarily suspend 
such person, and the suspension will remain in effect until a final 
decision on the debarment is rendered in accordance with the 
regulations of this section or the temporary suspension is terminated 
by the Hearing Examiner.
    (c) Hearing Examiner. All hearings shall be held before a Hearing 
Examiner appointed by the Secretary or the Director.
    (d) Hearing. If one or more of the acts or activities described in 
paragraph
    (a) of this section have occurred, the Director may institute a 
hearing to determine the length of time during which the person shall 
be debarred and those processing establishments to which the debarment 
shall apply. No person may be debarred unless there is a hearing, as 
prescribed in this section, and it has been determined by the Hearing 
Examiner, based on evidence of record, that one or more of the 
activities described in paragraph
    (a) of this section have occurred. Any debarment or suspension must 
be instituted within 2 years of the time when such acts or activities 
described in paragraph (a) of this section have occurred.
    (e) Notice of hearing. The Director shall notify such person of the 
debarment hearing by registered or certified mail, return receipt 
requested. The notice shall set forth the time and place of the 
hearing, the specific acts or activities which are the basis for the 
debarment hearing, the time period of debarment being sought, and those 
processing establishments to which the debarment shall apply. Except 
for the debarment hearing provided for in paragraph (b) of this section 
the hearing will be set for a time not longer than 120 days after 
receipt of the notice of hearing.
    (f) Time and place of hearing. The hearing shall be held at a time 
and place fixed by the Director: Provided, however, the Hearing 
Examiner may, upon a proper showing of inconvenience, change the time 
and place of the hearing. Motions for change of time or place of the 
hearing must be mailed to or served upon the Hearing Examiner no later 
than 10 days before the hearing.
    (g) Right to counsel. In all proceedings under this section, all 
persons and the Department of Commerce shall have the right to be 
represented by counsel, in

[[Page 31708]]

accordance with the rules and regulations set forth in title 15, Code 
of Federal Regulations, Part 906.
    (h) Form, execution, and service of documents.
    (1) All papers to be filed under the regulations in this section 
shall be clear and legible; and shall be dated, signed in ink, contain 
the docket description and title of the proceeding, if any, and the 
address of the signatory. Documents filed shall be executed by:
    (i) The person or persons filing same;
    (ii) An authorized officer thereof if it be a corporation; or
    (iii) An attorney or other person having authority with respect 
thereto.
    (2) All documents, when filed, shall show that service has been 
made upon all parties to the proceeding. Such service shall be made by 
delivering one copy to each party in person or by mailing by first-
class mail, properly addressed with postage prepaid. When a party has 
appeared by attorney or other representative, service on such attorney 
or other representative will be deemed service upon the party. The date 
of service of document shall be the day when the matter served is 
deposited in the U.S. mail, shown by the postmark thereon, or is 
delivered in person, as the case may be.
    (3) A person is deemed to have appeared in a hearing by filing with 
the Director a written notice of their appearance or their authority to 
appear on behalf of one of the parties to the hearing.
    (4) The original of every document filed under this section and 
required to be served upon all parties to a proceeding shall be 
accompanied by a certificate of service signed by the party making 
service, stating that such service has been made upon each party to the 
proceeding. Certificates of service may be in substantially the 
following form:
    I hereby certify that I have this day served the foregoing document 
upon all parties of record in this proceeding by: (1) Mailing postage 
prepaid, (2) delivering in person, or (3) electronically delivering a 
copy to each party.


Dated at ____ this ____ day of ____, 20__
Signature--------------------------------------------------------------

    (i) Procedures and evidence.
    (1) All parties to a hearing shall be entitled to introduce all 
relevant evidence on the issues as stated in the notice for hearing or 
as determined by the Hearing Examiner at the outset of or during the 
hearing.
    (2) Technical rules of evidence shall not apply to hearings 
conducted pursuant to this section, but rules or principles designed to 
assure production of the most credible evidence available and to 
subject testimony to test by cross-examination shall be applied where 
reasonably necessary.
    (j) Duties of Hearing Examiner. The Hearing Examiner shall have the 
authority to:
    (1) Take depositions or cause depositions to be taken;
    (2) Regulate the course of the hearings;
    (3) Prescribe the order in which evidence shall be presented;
    (4) Dispose of procedural requests or similar matters;
    (5) Hear and initially rule upon all motions and petitions before 
them;
    (6) Administer oaths and affirmations;
    (7) Rule upon offers of proof and receive competent, relevant, 
material, reliable, and probative evidence;
    (8) Prevent the admission of irrelevant, immaterial, incompetent, 
unreliable, repetitious, or cumulative evidence;
    (9) Hear oral arguments if the Hearing Examiner determined such 
requirement is necessary;
    (10) Fix the time for filing briefs, motions, and other documents 
to be filed in connection with hearings;
    (11) Issue the initial decision and dispose of any other pertinent 
matters that normally and properly arise in the course of proceedings; 
and
    (12) Do all other things necessary for an orderly and impartial 
hearing.
    (k) The record.
    (1) The Director will designate an official reporter for all 
hearings. The official transcript of testimony taken, together with any 
exhibits and briefs filed therewith, shall be filed with the Director. 
Transcripts of testimony will be available in any proceeding under the 
regulations of this section at rates fixed by the contract between the 
United States of America and the reporter. If the reporter is an 
employee of the Department of Commerce, the Director will fix the rate.
    (2) The transcript of testimony and exhibits, together with all 
briefs, papers, and all rulings by the Hearing Examiner shall 
constitute the record. The initial decision will be predicated on the 
same record, as will the final decision.
    (l) Decisions.
    (1) The Hearing Examiner shall render the initial decision in all 
debarment proceedings before them. The same Hearing Examiner who 
presides at the hearing shall render the initial decision except when 
such Examiner becomes unavailable to the Department of Commerce. In 
such case, another Hearing Examiner will be designated by the Secretary 
or Director to render the initial decision. Briefs or other documents 
to be submitted after the hearing must be received not later than 20 
days after the hearing unless otherwise extended by the Hearing 
Examiner upon motion by a party. The initial decision shall be made 
within 60 days after the receipt of all briefs. If no appeal from the 
initial decision is served upon the Director within 10 days of the date 
of the initial decision, it will become the final decision on the 20th 
day following the date of the initial decision. If an appeal is 
received, the appeal will be transmitted to the Secretary who will 
render the final decision after considering the record and the appeal.
    (2) All initial and final decisions shall include a statement of 
findings and conclusions, as well as the reasons or bases therefore, 
upon the material issues presented. A copy of each decision shall be 
served on the parties to the proceeding and furnished to interested 
persons upon request.
    (3) It shall be the duty of the Hearing Examiner, and the Secretary 
where there is an appeal, to determine whether the person has engaged 
in one or more of the acts or activities described in paragraph (a) of 
this section, and, if there is a finding that the person has engaged in 
such acts or activities, the length of time the person shall be 
debarred and the processing establishments to which the debarment shall 
apply.

[FR Doc. 2024-08676 Filed 4-24-24; 8:45 am]
BILLING CODE 3510-22-P