[Federal Register Volume 89, Number 119 (Thursday, June 20, 2024)]
[Proposed Rules]
[Pages 51850-51853]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-13371]


 ========================================================================
 Proposed Rules
                                                 Federal Register
 ________________________________________________________________________
 
 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
 
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 

  Federal Register / Vol. 89, No. 119 / Thursday, June 20, 2024 / 
Proposed Rules  

[[Page 51850]]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 51

RIN 0581-AE32
[Doc. No. AMS-SC-23-0009]


Section 8e Import Inspection Fee Structure

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

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SUMMARY: The Agricultural Marketing Service (AMS) of the Department of 
Agriculture (USDA) proposes to revise the regulations governing the 
inspection and certification for fresh fruits, vegetables, and other 
products by amending certain fees charged for Section 8e import 
inspections from a per-carlot basis to a per-pound basis, reducing the 
fee for each additional sublot by 50 percent, and establishing a new 
fee calculation for lots less than a carlot. These revisions are 
necessary to recover, as nearly as practicable, the costs of performing 
inspection services on imported commodities in accordance with the 
Agricultural Marketing Agreement Act of 1937.

DATES: Comments must be submitted on or before August 19, 2024.

ADDRESSES: Interested persons are invited to submit comments to the 
Standardization Branch, Specialty Crops Inspection Division, Specialty 
Crops Program, Agricultural Marketing Service, U.S. Department of 
Agriculture, National Training and Development Center; 100 Riverside 
Parkway, Suite 101; Fredericksburg, Virginia 22406; fax: (540) 361-
1199, or via the internet at: https://www.regulations.gov. Comments 
should reference the date and page numbers of this issue of the Federal 
Register. All comments submitted in response to this proposed rule will 
become a part of the public record and be made available to the public, 
including any personal information provided, at https://www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: Brian E. Griffin at the address above, 
or at phone (202) 748-2155; fax (540) 361-1199; or email 
[email protected].

SUPPLEMENTARY INFORMATION: This document would amend regulations at 7 
CFR part 51 issued under the Agricultural Marketing Act of 1946 (7 
U.S.C. 1621-1627), as amended.

Executive Orders 12866, 13563, and 14094

    The USDA is issuing this proposed rule in conformance with 
Executive Orders 12866, 13563, and 14094. Executive Orders 12866 and 
13563 direct agencies to assess all costs and benefits of available 
regulatory alternatives and, if regulation is necessary, to select 
regulatory approaches that maximize net benefits (including potential 
economic, environmental, public health and safety effects, distributive 
impacts, and equity). Executive Order 13563 emphasizes the importance 
of quantifying both costs and benefits, reducing costs, harmonizing 
rules, and promoting flexibility. Executive Order 14094 reaffirms, 
supplements, and updates Executive Order 12866 and further directs 
agencies to solicit and consider input from a wide range of affected 
and interested parties through a variety of means. This rule does not 
meet the criteria of a ``significant regulatory action'' under 
Executive Order 12866, as supplemented by Executive Order 13563 and 
updated by Executive Order 14094. Therefore, the Office of Management 
and Budget (OMB) has not reviewed this rule under those orders.

Executive Order 13175

    This proposed rule has been reviewed under Executive Order 13175--
Consultation and Coordination with Indian Tribal Governments, which 
requires agencies to consider whether their rulemaking actions would 
have Tribal implications.
    AMS has determined that this proposed rule is unlikely to have 
substantial direct effects on one or more Indian Tribes, on the 
relationship between the Federal Government and Indian Tribes, or on 
the distribution of power and responsibilities between the Federal 
Government and Indian Tribes.

Executive Order 12988

    This proposed rule has been reviewed under Executive Order 12988, 
Civil Justice Reform. This proposed action is not intended to have 
retroactive effect. There are no administrative procedures that must be 
exhausted prior to any judicial challenge to the provisions of this 
rule.

Background

    AMS is proposing to charge for certain Section 8e import 
inspections on a per-pound basis and make additional revisions to the 
fee structure of the Specialty Crop Inspection Division (Division). 
Accordingly, under this proposed rule, the fees for Section 8e import 
inspections for lots qualifying as a full carlot (or a whole lot) or 
for lots less than a full carlot would no longer be calculated on a 
per-carlot basis. Instead, those fees would be calculated on a per-
pound rate basis. The proposed per-pound rate would be calculated by 
dividing the current inspection fee for a full carlot by the average 
weight by pound of a full carlot (40,000 pounds) (for example: the 
current inspection fee for a full carlot ($242) divided by 40,000 would 
result in a per-pound rate of $0.00605). The Division proposes to use 
40,000 lbs. as the appropriate measurement for calculating the per-
pound rate. AMS notes that 40,000 lbs. is generally recognized as the 
standard weight of the measurement used in USDA-AMS inspection 
practices when identifying a full carlot.
    Additionally, AMS proposes to have two separate sublot fees: one 
for Section 8e sublots and one for non-Section 8e sublots. The term 
sublot is commonly used to describe additional lots of the same 
product. During an inspection, a sublot is generated when the product 
differs markedly, and such differences are associated with quality and/
or condition, certain brands, varieties, sizes, or container markings. 
For an example, under this proposed rule, the fee for a Section 8e 
sublot would be reduced by 50 percent, from the current $110 per sublot 
fee (the FY 2024 rate) to $55 per sublot. All non-8e inspection fees 
would remain unchanged by this proposed rule. The proposed per-pound 
rate for a full carlot or for lots less than a full carlot, and the 8e 
sublot fee, would be subject to the annual updated Specialty Crops 
Program's inspections fee schedule.

[[Page 51851]]

    Under this proposed rule, for all Section 8e import inspections, 
AMS would apply the current lot separation and sampling rates at 7 CFR 
51.2(d)(1-3). To calculate inspection fees for a full carlot, AMS would 
multiply the current per-pound rate, using the proposed calculation as 
noted above, by the total weight of the full carlot, plus any 
applicable sublot fees. To calculate the inspection fee for lots less 
than a carlot, AMS would multiply the current per-pound rate, using the 
proposed per-pound rate calculation as noted above, by the total weight 
of the lot, with a minimum charge equivalent to 2-hours computed at the 
current established hourly rate, whichever is greater, plus any sublot 
fee(s) as applicable.
    Currently, fees for all terminal market inspections, including 
Section 8e import inspections, are charged on a carlot basis (7 CFR 
51.37). The current single carlot fee structure charges per conveyance 
and does not account for sampling and inspection time required for 
today's larger conveyances transporting larger volumes. The proposed 
per-pound fee structure will better ensure full recovery of inspection 
cost by AMS while mitigating the financial impact on applicants of 
additional sublot fees.
    As shown in Table 1, applicants importing typical 40,000-pound 
loads comprising one lot will see no change in inspection fees under 
this proposed rule. Table 2 shows that larger size loads, which 
typically require increased sampling and inspection, will see a 
proportional increase in fees under this proposed rule. However, loads 
currently subject to additional sublot fees will see a significant 
decrease in fees per sublot under this proposed rule. The proposed fee 
calculation change will more accurately assess fees on inspected 
volume, better aligning the Division's ability to ensure cost recovery 
while significantly reducing additional sublot fees charged to 
applicants. The following comparison of the Section 8e fee structure is 
based on FY 2024 fees. Any increase or decrease to Section 8e fees 
would be included in the annual fee structure package in subsequent 
years.
    Columns 1 and 2 of Table 1 compare the currently scheduled FY 2024 
fee structure to the proposed new fee structure for a standard 40,000-
pound lot. As shown in row 1, column 1, the currently scheduled FY 2024 
fee structure for one lot is $242. Row 1, column 2 shows that under the 
proposed new fee structure, the fee for one lot would be unchanged at 
$242 but would be expressed at the per pound rate of $0.00605 
(multiplied by 40,000 pounds).
    Column 1 (rows 2 through 5) shows that without the proposed new fee 
structure, the inspection fee for each additional 40,000-pound 
increases by $110. Column 2 shows that with the proposed new fee, the 
incremental cost per additional lot would be cut in half to $55. Column 
3 shows the cost savings for additional lots.

  Table 1--SCI Sec. 8e Inspection Fees for Standard 40,000 Pound Lot: Comparison of FY 2024 Fee to Proposed New
                                  Fee, Showing Reduced Cost for Additional Lots
----------------------------------------------------------------------------------------------------------------
                                                                                             Reduced cost to
            Number of lots                 FY 2024 fee \1\        Proposed new fee \2\      importer applicant
----------------------------------------------------------------------------------------------------------------
                                                 (1)                      (2)                      (3)
----------------------------------------------------------------------------------------------------------------
1....................................  $242...................  $242...................  $0.
2....................................  $352...................  $297...................  $55.
3....................................  $462...................  $352...................  $110.
4....................................  $572...................  $407...................  $165.
5....................................  $682...................  $462...................  $220.
Each additional sublot...............  Plus $110..............  Plus $55...............  $55 savings per
                                                                                          additional sublot.
----------------------------------------------------------------------------------------------------------------
\1\ If the proposal in this rule does not go into effect, the FY 2024 inspection fee would be $242 for one
  40,000-pound lot plus $110 for each additional lot. For FY 2023, the cost was $225 for the first 40,000-pound
  lot and $103 for each additional lot.
\2\ The proposed fee for one standard lot under this rule would be $242, unchanged from the FY 2024 fee, but
  would be expressed as the per-pound equivalent of $0.00605. ($242 inspection cost per 40,000-pound lot divided
  by 40,000 pounds equals $0.00605 per pound). Each additional lot would cost an additional $55, a 50% reduction
  from the FY 2024 incremental cost of $110 that would be in place without this rule change.

    Table 2 shows the proposed new fee structure for alternative lot 
sizes. Row 2 shows again that the 40,000-pound lot fee would be 
unchanged at $242. Row 3 shows that for a 50,000-pound lot, the $302.50 
inspection fee would be determined by multiplying the proposed per-
pound rate ($0.00605) by 50,000 pounds. Row 1 shows that for any lot 
weighing less than 40,000 pounds, the applicable fee would be a 2-hour 
minimum charge at the currently established FY 2024 hourly inspection 
rate of $116 ($116 times 2 equals $232).

Table 2--SCI Sec. 8e Inspection Fees for Alternative Lot Sizes, Proposed
                        Inspection Rate per Pound
------------------------------------------------------------------------
                   Alternative lot                       Inspection fee
                        sizes         Pounds per lot    per lot \1\ \2\
------------------------------------------------------------------------
(1)............  Less than full                 (\1\)  $232.00 minimum.
                  (standard) lot.
(2)............  Standard Lot......            40,000  $242.00.
(3)............  Lot 25% larger                50,000  $302.50.
                  than standard.
------------------------------------------------------------------------
\1\ For lots less than a standard lot, the fees are computed by
  multiplying pounds per lot by rate per pound ($0.00605) with a minimum
  charge equivalent to 2-hours applied at the current established FY
  2024 hourly inspection rate of $116.
\2\ Inspection fee per lot for standard lot or larger [(2) and (3)] are
  computed by multiplying pounds per lot by rate per pound ($0.00605).

    Prior to developing proposed revisions to the Section 8e fee 
structure, AMS engaged in discussions with State partners including 
Association of Fruit and Vegetable Inspection and Standardization 
Agencies (AFVISA) members and the Texas Cooperative Inspection Program 
(TCIP), as well as industry stakeholders. The outcome of

[[Page 51852]]

these discussions was a positive perception of the fee changes as 
proposed.
    A 60-day comment period is provided for interested persons to 
submit comments on this proposed rule. A 60-day comment period is 
deemed appropriate because any change in fee calculations, if adopted, 
should be in place as soon as possible to move the program towards an 
adequate reserve and financial stability.

Initial Regulatory Flexibility Analysis

    Pursuant to the requirement set forth in the Regulatory Flexibility 
Act (RFA), AMS has considered the economic impact of this action on 
small entities. Accordingly, AMS provides this initial regulatory 
flexibility analysis. The purpose of the RFA is to fit regulatory 
actions to the scale of businesses subject to such actions in order 
that small businesses will not be unduly or disproportionately 
burdened.
    The proposed action described herein is being taken for several 
reasons, including that additional user fee revenues are needed to 
cover the costs of (1) providing current program operations and 
services; (2) improving the timeliness in which inspection services are 
provided; and (3) improving the work environment. AMS regularly reviews 
its user-fee financed programs to determine if the fees are adequate.
    This proposed rule would revise the regulations governing the 
inspection and certification for fresh fruits, vegetables, and other 
products by increasing certain fees charged for Section 8e import 
inspections on a per-pound basis. These revisions are necessary to 
recover, as nearly as practicable, the costs of performing inspection 
services on imported commodities in accordance with the Agricultural 
Marketing Agreement Act of 1937.
    Since the inspection fees to be charged under the proposed new rate 
structure are proportional to size of lots, smaller businesses 
(importers) would not be unduly or disproportionately burdened. This 
proposed new fee structure, for imports subject to Section 8e grading 
requirements, balances cost increases (for lots larger than 40,000 
pounds) with cost decreases for additional sublots. The fee for a 
standard 40,000-pound lot would remain unchanged.
    Tables 3 and 4 show the estimated impacts on the nine Section 8e 
commodities affected by this proposed rule, using data from USDA's 
Compliance Enforcement Management System (CEMS) database, which lists 
the weight of each lot inspected over the three-year period FY 2021 
through FY 2023. Table 3 puts the number of inspections into two 
categories: Column (1) shows the number of lots that weighed 40,000 
pounds or less, and column (2) shows the number of lots that weighed 
more than 40,000 pounds. Column (3) presents the sum of columns (1) and 
(2). The last row of column (3) shows that the total number of 
inspections for the three-year period was 611,475.

  Table 3--SCI Sec. 8e Commodities Imported: Number of Inspections, Categorized by Size of Lot Inspected, Using
                           40,000-Pound Standard Lot Size Threshold, FY2021-FY2023 \1\
----------------------------------------------------------------------------------------------------------------
                                     <=40,000 lbs.   >40,000 lbs.       Total      Pct of total     Cumulative
                                        per lot         per lot      inspections    inspections       percent
----------------------------------------------------------------------------------------------------------------
                                          (1)             (2)            (3)            (4)             (5)
----------------------------------------------------------------------------------------------------------------
AVOCADOS..........................         395,812          64,139       459,951            75.2            75.2
ONIONS............................          17,026          51,918        68,944            11.3            86.5
GRAPES............................          35,434           5,445        40,879             6.7            93.2
ORANGES...........................           9,955           8,219        18,174             3.0            96.2
KIWIFRUIT.........................           8,208           7,358        15,566             2.5            98.7
TOMATOES..........................           3,925              33         3,958             0.6            99.3
GRAPEFRUIT........................           2,314           1,051         3,365             0.6           99.90
FILBERTS..........................             240             109           349             0.1           99.95
POTATOES..........................             193              96           289            0.05           100.0
                                   -----------------------------------------------------------------------------
    9 commodities.................         473,107         138,368       611,475  ..............  ..............
----------------------------------------------------------------------------------------------------------------
\1\ Source: Compliance Enforcement Management System (CEMS) database, Market Development Division, Specialty
  Crops Program, Agricultural Marketing Service, USDA.


 Table 4--SCI Sec. 8e Commodities Imported: Percent of Inspections, Categorized by Size of Lot Inspected, Using
                             40,000-Pound Standard Lot Size Threshold, FY2021-FY2023
----------------------------------------------------------------------------------------------------------------
                                                                 <=40,000 lbs. per lot     >40,000 lbs. per lot
                                                                          (%)                      (%)
----------------------------------------------------------------------------------------------------------------
AVOCADOS.....................................................                        86                       14
ONIONS.......................................................                        25                       75
GRAPES.......................................................                        87                       13
ORANGES......................................................                        55                       45
KIWIFRUIT....................................................                        53                       47
TOMATOES.....................................................                        99                        1
GRAPEFRUIT...................................................                        69                       31
FILBERTS.....................................................                        69                       31
POTATOES.....................................................                        67                       33
                                                              --------------------------------------------------
    9 commodities............................................                        77                       23
----------------------------------------------------------------------------------------------------------------

    Table 4 shows that for all nine commodities combined, 77 percent of 
the inspections would have had equal or lower fees charged if the new 
fee structure had been in place. Twenty-three percent of the lots would 
have

[[Page 51853]]

been subject to higher fees. Looking at individual years (not shown), 
the percentage of inspections representing lots weighing 40,000 pounds 
or less for FY 2021, FY 2022 and FY 2023 was 73, 75, and 80 percent, 
respectively. Therefore, for a large majority of annual inspections, 
the cost per individual inspection would have been the same or lower 
than with the fee system currently in place.
    The impacts of the proposed revised fee structure vary 
significantly by commodity. Table 4 shows that for six of the nine 
commodities, at least two thirds of the lots inspected would have had 
equal or lower fees (i.e., lots weighing 40,000 pounds or less--
avocadoes, grapes, tomatoes, grapefruit, filberts, potatoes) under the 
proposed fee structure. One commodity, onions, would have had the 
opposite result, with 25 percent of lots seeing lower fees, and 75 
percent higher. This variation would be offset by the onion industry's 
prevalence of additional sublots in inspections. See Table 1--SCI 8e 
Inspection Fees for Standard 40,000 Pound Lot: Comparison of FY 2024 
Fee to Proposed New Fee, Showing Reduced Cost for Additional Lots. For 
oranges and kiwifruit, the results were about even; slightly more than 
50 percent of the lots weighed equal to or less than 40,000 pounds and, 
therefore, would have been subject to lower fees.
    This analysis assumes that each lot is sampled and inspected 
independently. This may overstate the extent of higher fees because 
under the proposed new fee structure the cost declines for each 
additional sublot, as shown in Table 1. To the extent that the lots for 
which fees were charged in the CEMS database are actually sublots 
associated with an inspected lot from a particular importer, the value 
in Table 4, column (2) (i.e., for lots more than 40,000 pounds) 
overstates the percentage of lots that would have been subject to a 
higher fee.
    It is also important to note that certain commodities represented 
larger proportions of the lots inspected, as shown in columns (4) and 
(5) of Table 3. Just over 75 percent of the inspected lots were for 
avocadoes. Adding the next four commodities in terms of the magnitude 
of total inspections (onions, grapes, oranges, and kiwifruit) raises 
the cumulative percentage up to nearly 99 percent. Four commodities 
(tomatoes, grapefruit, filbert, and potatoes) represented about 1.3 
percent of the total number of lots inspected.
    This analysis shows that the fee impacts vary by commodity, with 
smaller fees per inspected lot expected for eight of the nine 
commodities, suggesting that for a large majority of annual inspections 
the cost per individual inspection would be the same or lower than with 
the fee system that would otherwise be in place in FY 2024 and future 
years.

List of Subjects in 7 CFR Part 51

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

    For reasons set forth in the preamble, the Agricultural Marketing 
Service proposes to amend 7 CFR part 51 as follows:

PART 51--FRESH FRUITS, VEGETABLES, AND OTHER PRODUCTS (INSPECTION, 
CERTIFICATION, AND STANDARDS)

0
1. The authority citation for part 51 continues to read as follows:

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

0
2. Revise Sec.  51.37 to read as follows:


Sec.  51.37  Charges for fees, rates, and expenses.

    For each carlot of product inspected, a fee or rate determined in 
accordance with Sec. Sec.  51.38, 51.39, and 51.40, and expenses 
determined in accordance with Sec.  51.41, shall be paid by the 
applicant.
0
3. Redesignate Sec. Sec.  51.39 through 51.62 as Sec. Sec.  51.40 
through 51.63, respectively.
0
4. Add new Sec.  51.39 to read as follows:


Sec.  51.39  Charges for fees and rates for 8e import inspection.

    (a) 8e import inspection fees charged on a per-pound basis--(1) 
Establishing the per-pound inspection rate. To compute the per-pound 
inspection rate, divide the current per-lot inspection fee for a full 
carlot (whole lot) by 40,000 (the generally accepted weight by pound of 
a full carlot).
    (2) Applying the per-pound rate. The per-pound inspection rate 
shall be applied to the following lot sizes as follows:
    (i) For a full carlot, multiply the per-pound rate by the total 
weight of the full carlot plus any applicable fees for additional lots 
of the same product as described in paragraph (b) of this section.
    (ii) For lots less than a full carlot, multiply the per-pound rate 
by the total weight of the lot with a minimum fee equivalent to a 2-
hour charge computed at the current established hourly rate, whichever 
is greater, plus any applicable fees for additional lots of the same 
product as described in paragraph (b) of this section.
    (b) 8e import inspection fees charged on additional lots of the 
same product. To compute the inspection fee for additional lots of the 
same product, multiply each additional lot by one-half of the current 
non-8e additional lot of the same product inspection fee.

Erin Morris.
Associate Administrator, Agricultural Marketing Service.
[FR Doc. 2024-13371 Filed 6-18-24; 8:45 am]
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