[Federal Register Volume 62, Number 242 (Wednesday, December 17, 1997)]
[Proposed Rules]
[Pages 66033-66036]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-32813]


========================================================================
Proposed Rules
                                                Federal Register
________________________________________________________________________

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

========================================================================


Federal Register / Vol. 62, No. 242 / Wednesday, December 17, 1997 / 
Proposed Rules

[[Page 66033]]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 51

[Docket Number FV-97-302]
RIN 0581-AB51


Fees for Destination Market Inspections of Fresh Fruits, 
Vegetables and Other Products

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

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

SUMMARY: This proposed rule would revise the regulations governing the 
inspection and certification for fresh fruits, vegetables and other 
products by increasing by approximately 10 percent the fees charged for 
the inspection of these products at destination markets. These 
revisions are necessary in order to recover, as nearly as practicable, 
the costs of performing inspection services at destination markets 
under the Agricultural Marketing Act of 1946. The fees charged to 
persons required to have inspections on imported commodities in 
accordance with the Agricultural Marketing Agreement Act of 1937 and 
for imported peanuts under the Agricultural Act of 1949 would also be 
affected. This rule would also revise the regulations with regard to 
the disposition of inspection certificates to require that one copy of 
the certificate be delivered or mailed to the shipper of the inspected 
product.

DATES: Comments must be postmarked or courier dated on or before 
February 17, 1998.

ADDRESSES: Interested persons are invited to submit written comments 
concerning this proposal. Comments must be sent to the Program Support 
Section, Fresh Products Branch, Fruit and Vegetable Programs, 
Agricultural Marketing Service, U.S. Department of Agriculture, P.O. 
Box 96456, Room 2049 South Building, Washington, D.C. 20090-6456. 
Comments should make reference to the date and page number of this 
issue of the Federal Register and will be made available for public 
inspection in the above office during regular business hours.

FOR FURTHER INFORMATION CONTACT: Rob Huttenlocker at the above address 
or call (202) 720-0297.

SUPPLEMENTARY INFORMATION:

Executive Order 12866 and Regulatory Flexibility Act

    This rule has been reviewed by the Office of Management and Budget 
and has been determined not significant for purposes of Executive Order 
12866.
    Also, pursuant to the requirements set forth in the Regulatory 
Flexibility Act (RFA), the Agricultural Marketing Service (AMS) has 
considered the economic impact of this action on small entities.
    AMS regularly reviews its user-fee financed programs to determine 
if the fees are adequate. The existing fee schedule will not generate 
sufficient revenues to cover program costs while maintaining an 
adequate reserve balance (four months of costs) as called for by Agency 
policy (AMS Directive 408.1). Current revenue projections for 
destination market inspection work during FY 97 are $12.0 million with 
costs projected at $11.9 million and an end-of-year reserve of $3.0 
million. However, the Fresh Products Branch's (FPB) trust fund balance 
for this program will be approximately $1.0 million under the four-
month level of approximately $4.0 million. Further, FPB's costs of 
operating the destination market program are expected to increase to 
approximately $12.9 million during FY 98 and to approximately $13.2 
million in FY 99. These cost increases will result from both 
inflationary increases with regard to current FPB operations and 
services and the need to improve or expand current services.
    Employee salaries and benefits are major program costs that account 
for approximately 80 percent of FPB's total operating budget. A general 
and locality salary increase for Federal employees, ranging from 2.30 
to 4.66 percent depending on locality, effective January 1997, 
significantly increased program costs. Another general and locality 
salary increase is expected to become effective in January 1998. In 
addition, inflation also impacts upon FPB's non-salary costs. These 
increases will increase FPB's costs of operating this program by 
approximately $300,000 per year.
    Additional revenues are also needed to enable FPB to cover the 
costs of improving program integrity by mailing copies of all 
destination market certificates to the shippers of the products 
inspected. FPB estimates that it will cost $200,000 per year for the 
postage, envelopes and additional staff time to send the approximately 
275,000 inspection certificates it issues annually. Additional revenues 
are also necessary in order that FPB may cover the costs of securing 
the additional staff ($200,000) needed to increase the timeliness of 
service delivery in several destination markets which are currently in 
need of additional staffing (e.g., Dallas, Texas). Finally, FPB needs 
an additional $200,000 per year for three to four years to cover the 
costs of securing the equipment (e.g., digital imaging cameras and 
computers, inspector notebook computers and Agency-mandated information 
systems upgrades) needed to expand FPB's services and to make existing 
services more efficient in the future.
    This proposed fee increase should result in an estimated $1.2 
million in additional revenues per year (only $600,000 during FY 98 
since any fee increase would be effective on April 1, 1998) and should 
enable FPB to cover its costs while maintaining current program 
reserves (at a level below that provided for by Agency policy).
    The purpose of the RFA is to fit regulatory actions to the scale of 
businesses subject to such actions in order that small businesses will 
not be unduly or disproportionately burdened. The action described 
herein is being considered 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 
program integrity by mailing copies of all destination market 
certificates to the shippers of the products inspected (the basis for 
the proposed change in regulation with regard to the disposition of 
inspection certificates to include that one copy be delivered or mailed 
to the shipper of the inspected product); (3) improving the timeliness 
with which inspection services are provided; and (4) acquiring 
technological advancements (e.g., digital imaging cameras and 
computers, inspector notebook

[[Page 66034]]

computers and Agency-mandated information systems upgrades) aimed at 
expanding FPB's services and making them more efficient in the future. 
The objective of this proposed rule is to increase user fee revenue 
generated under the destination market program by approximately $1.2 
million or approximately 10 percent per year. This action is authorized 
under the Agricultural Marketing Act (AMA) of 1946 (see 7 U.S.C. 
1622(h)) which states that the Secretary of Agriculture may assess and 
collect ``such fees as will be reasonable and as nearly as may be to 
cover the costs of services rendered * * *''
    There are more than 2,000 users of FPB's destination market grading 
services (including applicants who must meet import requirements \1\--
inspections which amount to under 2.5 percent of all lot inspections 
performed). A small portion of these users are small entities under the 
criteria established by the Small Business Administration (13 CFR 
121.601). There will be no additional reporting, recordkeeping, or 
other compliance requirements imposed upon small entities as a result 
of this proposed rule. FPB has not identified any other Federal rules 
which may duplicate, overlap or conflict with this proposed rule.
---------------------------------------------------------------------------

    \1\ Section 8e of the Agricultural Marketing Agreement Act of 
1937, as amended (7 U.S.C. 601-674), requires that whenever the 
Secretary of Agriculture issues grade, size, quality or maturity 
regulations under domestic marketing orders for certain commodities, 
the same or comparable regulations on imports of those commodities 
must be issued. Import regulations apply only during those periods 
when domestic marketing order regulations are in effect.
    Currently, there are 15 commodities subject to 8e import 
regulations: avocados, dates (other than dates for processing), 
filberts, grapefruit, kiwifruit, limes, olives (other than Spanish-
style green olives), onions, oranges, Irish potatoes, prunes, 
raisins, table grapes, tomatoes and walnuts. A current listing of 
the regulated commodities can be found under 7 CFR Parts 944, 980 
and 999. Section 999.600 establishes minimum quality, 
identification, certification and safeguard requirements for foreign 
produced farmers stock, shelled and cleaned in-shell peanuts 
presented for importation into the United States. Import 
requirements applicable to peanuts may be found under subparagraph 
(f)(2) of section 108B of the Agricultural Act of 1949 (7 U.S.C. 
1445c-3), as amended November 28, 1990, and August 10, 1993, and 
section 155 of the Federal Agriculture Improvement and Reform Act of 
1996 (7 U.S.C. 7271).
---------------------------------------------------------------------------

    Inasmuch as the destination market grading services are voluntary 
(except when required for imported commodities), and since the fees 
charged to users of these services vary with usage, the impact on all 
businesses, including small entities, is very similar. Further, even 
though fees will be raised, the increase is small (approximately ten 
percent) and should not significantly affect these entities. Finally, 
except for those persons who are required to obtain inspections, most 
of these businesses are typically under no obligation to use these 
inspection services, and, therefore, any decision on their part to 
discontinue the use of the services should not prevent them from 
marketing their products.

Executive Order 12988

    This rule has been reviewed under Executive Order 12988, Civil 
Justice Reform. This action is not intended to have retroactive effect. 
This rule will not preempt any State or local laws, regulations or 
policies, unless they present an irreconcilable conflict with this 
rule. There are no administrative procedures which must be exhausted 
prior to any judicial challenge to the provisions of this rule.

Proposed Action

    The AMA authorizes official inspection, grading and certification, 
on a user-fee basis, of fresh fruits, vegetables and other products 
such as raw nuts, Christmas trees and flowers. The AMA provides that 
reasonable fees be collected from the users of the services to cover, 
as nearly as practicable, the costs of the services rendered. This 
proposed rule will amend the schedule for fees and charges for 
inspection services rendered to the fresh fruit and vegetable industry 
to reflect the costs necessary to operate the program.
    AMS regularly reviews its user-fee programs to determine if the 
fees are adequate. While FPB continues to search for opportunities to 
reduce its costs, the existing fee schedule will not generate 
sufficient revenues to cover program costs while maintaining an 
adequate reserve balance (four months of costs) as called for by Agency 
policy (AMS Directive 408.1). Current revenue projections for 
destination market inspection work during FY 97 are $12.0 million with 
costs projected at $11.9 million and an end-of-year reserve of $3.0 
million. However, FPB's trust fund balance for this program will be 
approximately $1.0 million under the four-month level of approximately 
$4.0 million. Further, FPB's costs of operating the destination market 
program are expected to increase to approximately $12.9 million during 
FY 98 and to approximately $13.2 million in FY 99. These cost increases 
(which are outlined below) will result from both inflationary increases 
with regard to current FPB operations and services and the need to 
improve or expand current services.
    Employee salaries and benefits are major program costs that account 
for approximately 80 percent of FPB's total operating budget. A general 
and locality salary increase for Federal employees, ranging from 2.30 
to 4.66 percent depending on locality, effective January 1997, 
significantly increased program costs. Another general and locality 
salary increase is expected to become effective in January 1998. In 
addition, inflation also impacts upon FPB's non-salary costs. These 
increases will increase FPB's costs of operating this program by 
approximately $300,000 per year.
    Additional revenues are also needed to enable FPB to cover the 
costs of improving program integrity by mailing copies of all 
destination market certificates to the shippers of the products 
inspected. This is an essential step in FPB's ongoing effort to improve 
the integrity of the inspection process. This action will assist in 
preventing industry participants from using falsified inspection 
certificates to alter the terms of sales between shippers and 
receivers. In accordance with this effort, the regulations with regard 
to the disposition of inspection certificates in 7 CFR 51.21 are 
proposed to be revised to require that one copy of the certificate be 
provided to the shipper of the inspected product. FPB estimates that it 
will cost $200,000 per year for the postage, envelopes and additional 
staff time to send the approximately 275,000 inspection certificates it 
issues annually.
    Additional revenues are also necessary in order that FPB may cover 
the costs of securing the additional staff ($200,000) needed to 
increase the timeliness of service delivery in several destination 
markets which are currently in need of additional staffing (e.g., 
Dallas, Texas). This action responds to industry feedback to FPB's FY 
1996 Customer Service Survey which emphasized the importance of 
timeliness far more than cost containment.
    Finally, FPB needs an additional $200,000 per year for three to 
four years to cover the costs of securing the equipment (e.g., digital 
imaging cameras and computers, inspector notebook computers and Agency-
mandated information systems upgrades) needed to expand FPB's services 
and to make existing services more efficient in the future.
    This proposed fee increase should result in an estimated $1.2 
million in additional revenues per year (only $600,000 during FY 98 
since any fee

[[Page 66035]]

increase would be effective on April 1, 1998) and should enable FPB to 
cover its costs while maintaining current program reserves. In order to 
reach a four month reserve, further increases in fees will be likely in 
future years.
    Based on the aforementioned analysis of this program's increasing 
costs, AMS proposes to increase the fees for destination market 
inspection services. The following table compares current fees and 
charges with proposed fees and charges for fresh fruit and vegetable 
inspection as found in 7 CFR 51.38. Unless otherwise provided for by 
regulation or written agreement between the applicant and the 
Administrator, the charges in the schedule of fees as found in 
Sec. 51.38 are:

----------------------------------------------------------------------------------------------------------------
                    Service                                   Current                         Proposed          
----------------------------------------------------------------------------------------------------------------
Quality and condition inspections of one to                                                                     
 four products each in quantities of 51 or more                                                                 
 packages and unloaded from the same land or                                                                    
 air conveyance:                                                                                                
    Over a half carlot equivalent of each        $78..............................  $86.                        
     product.                                                                                                   
    Half carlot equivalent or less of each       65...............................  72.                         
     product.                                                                                                   
    For each additional lot of the same product  13...............................  14.                         
Condition only inspections of one to four                                                                       
 products each in quantities of 51 or more                                                                      
 packages and unloaded from the same land or                                                                    
 air conveyance:                                                                                                
    Over a half carlot equivalent of each        65...............................  72.                         
     product.                                                                                                   
    Half carlot equivalent or less of each       60...............................  66.                         
     product.                                                                                                   
    For each additional lot of the same product  13...............................  14.                         
Quality and condition and condition only                                                                        
 inspections of five or more products each in                                                                   
 quantities of 51 or more packages and unloaded                                                                 
 from the same land or air conveyance:                                                                          
    For the first five products................  277..............................  305.                        
    For each additional product................  39...............................  43.                         
    For each additional lot of any of the same   13...............................  14.                         
     product.                                                                                                   
Quality and condition and condition only                                                                        
 inspections of products each in quantities of                                                                  
 50 or less packages unloaded from the same                                                                     
 land or air conveyance:                                                                                        
    For each product...........................  39...............................  43.                         
    For each additional lot of any of the same   13...............................  14.                         
     product.                                                                                                   
Dock-side inspections of an individual product                                                                  
 unloaded directly from the same ship:                                                                          
    For each package weighing less than 15       1 cent...........................  1.1 cents.                  
     pounds.                                                                                                    
    For each package weighing 15 to 29 pounds..  2 cents..........................  2.2 cents.                  
    For each package weighing 30 or more pounds  3 cents..........................  3.3 cents.                  
    For each additional lot of any of the same   13...............................  14.                         
     product.                                                                                                   
    Minimum charge per individual product......  78...............................  86.                         
Inspections performed for other purposes         39 per hour......................  43 per hour.                
 (except for contract work) during the grader's                                                                 
 regularly scheduled work week.                                                                                 
Overtime or holiday premium rate (per hour       19.50 per hour...................  21.50 per hour.             
 additional) for all inspections performed                                                                      
 outside the grader's regularly scheduled work                                                                  
 week.                                                                                                          
----------------------------------------------------------------------------------------------------------------

List of Subjects in 7 CFR Part 51

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

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

PART 51--[AMENDED]

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

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

    2. Section 51.21 is revised to read as follows:


Sec. 51.21  Disposition of inspection certificates.

    The original certificate, and not to exceed four copies (if 
requested by applicant prior to issuance), shall be delivered or mailed 
promptly to the applicant or to a person designated by him. One copy 
shall be delivered or mailed to the shipper of the inspected product. 
One copy shall be filed in the office of the inspector when the 
inspection is made by a Federal Government employee, otherwise, it 
shall be filed in the appropriate office of the cooperating Federal-
State Inspection Agency. Unless otherwise directed by the 
Administrator, two copies of each official certificate issued on 
products received in destination markets shall be forwarded to the 
Administrator to be kept on file in Washington and no copies of 
official certificates issued at shipping point need be so forwarded. In 
the case of any product covered by a marketing agreement and/or order 
effective pursuant to the Agricultural Marketing Agreement Act of 1937, 
as amended (7 U.S.C. 601 et seq.), at least one copy of each 
certificate covering the inspection of such product shall, on request, 
be delivered to the administrative agency established thereunder, 
subject to such terms and conditions as the Administrator may 
prescribe. Copies may be furnished to other interested parties as 
outlined in Sec. 51.41.
    3. Section 51.38 is revised to read as follows:


Sec. 51.38  Basis for fees and rates.

    (a) When performing inspections of product unloaded directly from 
land or air transportation, the charges shall be determined on the 
following basis:
    (1) For products in quantities of 51 or more packages:
    (i) Quality and condition inspection of 1 to 4 products unloaded 
from the same conveyance:
    (A) $86 for over a half carlot equivalent of an individual product.
    (B) $72 for a half carlot equivalent or less of an individual 
product.
    (C) $14 for each additional lot of the same product.
    (ii) Condition only inspection of 1 to 4 products unloaded from the 
same conveyance:
    (A) $72 for over a half carlot equivalent of an individual product.
    (B) $66 for a half carlot equivalent or less of an individual 
product.
    (C) $14 for each additional lot of the same product.
    (iii) Quality and condition inspection and/or condition only 
inspection of 5 or more products unloaded from the same conveyance:
    (A) $305 for the first 5 products.
    (B) $43 for each additional product.
    (C) $14 for each additional lot of any of the same product.

[[Page 66036]]

    (2) For quality and condition inspection and/or condition only 
inspection of products in quantities of 50 or less packages unloaded 
from the same conveyance:
    (i) $43 for each individual product.
    (ii) $14 for each additional lot of any of the same product.
    (b) When performing inspections of palletized products unloaded 
directly from sea transportation or when palletized product is first 
offered for inspection before being transported from the dock-side 
facility, charges shall be determined on the following basis:
    (1) For each package inspected according to the following rates:
    (i) 1.1 cent per package weighing less than 15 pounds;
    (ii) 2.2 cents per package weighing 15 to 29 pounds; and,
    (iii) 3.3 cents per package weighing 30 or more pounds.
    (2) $14 for each additional lot of any of the same product.
    (3) A minimum charge of $86 for each product inspected.
    (c) When performing inspections of products from sea containers 
unloaded directly from sea transportation or when palletized products 
unloaded directly from sea transportation are not offered for 
inspection at dockside, the carlot fees in Sec. 51.38(a) shall apply.
    (d) When performing inspections for Government agencies, or for 
purposes other than those prescribed in the preceding paragraphs, 
including weight-only and freezing-only inspections, fees for 
inspection shall be based on the time consumed by the grader in 
connection with such inspections, computed at a rate of $43 an hour: 
Provided, That:
    (1) Charges for time shall be rounded to the nearest half hour;
    (2) The minimum fee shall be two hours for weight-only inspections, 
and one-half hour for other inspections; and
    (3) When weight certification is provided in addition to quality 
and/or condition inspection, a one-hour charge shall be added to the 
carlot fee.
    (4) When inspections are performed to certify product compliance 
for Defense Personnel Support Centers, the daily or weekly charge shall 
be determined by multiplying the total hours consumed to conduct 
inspections by the hourly rate. The daily or weekly charge shall be 
prorated among applicants by multiplying the daily or weekly charge by 
the percentage of product passed and/or failed for each applicant 
during that day or week. Waiting time and overtime charges shall be 
charged directly to the applicant responsible for their incurrence.
    (e) When performing inspections at the request of the applicant 
during periods which are outside the grader's regularly scheduled work 
week, a charge for overtime or holiday work shall be made at the rate 
of $21.50 per hour or portion thereof in addition to the carlot 
equivalent fee, package charge, or hourly charge specified in this 
subpart. Overtime or holiday charges for time shall be rounded to the 
nearest half hour.
    (f) When an inspection is delayed because product is not available 
or readily accessible, a charge for waiting time shall be made at the 
prevailing hourly rate in addition to the carlot equivalent fee, 
package charge, or hourly charge specified in this subpart. Waiting 
time shall be rounded to the nearest half hour.

    Dated: December 11, 1997
Robert C. Keeney,
Deputy Administrator, Fruit and Vegetable Programs.
[FR Doc. 97-32813 Filed 12-16-97; 8:45 am]
BILLING CODE 3410-02-P