[Federal Register: December 28, 2005 (Volume 70, Number 248)]
[Rules and Regulations]
[Page 76671-76674]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr28de05-1]
========================================================================
Rules and Regulations
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains regulatory documents
having general applicability and legal effect, most of which are keyed
to and codified in the Code of Federal Regulations, which is published
under 50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by the Superintendent of Documents.
Prices of new books are listed in the first FEDERAL REGISTER issue of each
week.
========================================================================
[[Page 76671]]
DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 51
[Docket Number FV-04-310]
RIN 0581-AC46
Revision of Fees for the Fresh Fruit and Vegetable Terminal
Market Inspection Services
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: This rule revises the regulations governing the inspection and
certification for fresh fruits, vegetables and other products by
increasing by approximately 15 percent certain 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 (AMA of 1946). The fees charged to
persons required to have inspection on imported commodities are in
accordance with the Agricultural Marketing Agreement Act of 1937 and
for imported peanuts under section 1308 of the Farm Security and Rural
Investigation Act of 2002.
DATES: Effective January 27, 2006.
FOR FURTHER INFORMATION CONTACT: Rita Bibbs-Booth, Program Support
Section, Fresh Products Branch, Fruit and Vegetable Programs, USDA,
1400 Independence Ave., SW., Room 0640-S, Washington, DC 20250-0295, or
call (202) 720-0391.
SUPPLEMENTARY INFORMATION:
Executive Order 12866 and Regulatory Flexibility Act
This rule has been determined to be ``non-significant'' for the
purposes of Executive Order 12866, and therefore, has not been reviewed
by the Office of Management and Budget.
Also, pursuant to the requirement set forth in the Regulatory
Flexibility Act (RFA), AMS has considered the economic impact of this
action on small entities. Accordingly, AMS proposed this initial
regulatory flexibility analysis.
The purpose of the RFA is to fit regulatory actions to the scale of
businesses subject to such actions in order that small businesses will
not be unduly or disproportionately burdened. The action described
herein is being taken for several reasons, including that additional
user fee revenues are needed to cover the costs 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. The Fresh Products Branch (FPB) has and will
continue to seek out cost saving opportunities and implement
appropriate changes to reduce its costs. Such actions can provide
alternatives to fee increases. However, even with these efforts, FPB's
existing fee schedule will not generate sufficient revenue to cover
program costs while maintaining the Agency mandated reserve balance.
Current revenue projections for FPB's destination market inspection
work during FY 2005 are $14.6 million with costs projected at $20.9
million and an end-of-year reserve balance of $17.6 million. However,
this reserve balance is due to appropriated funding received in October
2001, and for infrastructure, workplace, and technological
improvements. FPB's costs of operating the destination market program
are expected to increase to approximately $22.4 million during FY 2006
and $23.1 million during FY 2007. The current fee structure with the
infusion of the appropriated funding is expected to fund the terminal
market inspection program until FY 2008, when FPB will fall below the
Agency's mandated four-month reserve level.
This fee increase should result in an estimated $1.4 million in
additional revenues per year (effective in FY 2006). This will not
cover all of FPB's costs. FPB will need to continue to increase fees in
order to cover the program's operating cost and maintain the required
reserve balance. FPB believes that increasing fees incrementally is
appropriate at this time. Additional fee increases beyond FY 2006 will
be needed to sustain the program in the future.
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 3.71
to 4.87 percent depending on locality, effective January 2005, has
significantly increased program costs. In addition, general and
locality salary increases for Federal employees ranging from 3.90% to
4.92% depending on locality, effective from January 2004, also
significantly increased program costs. These salary adjustments have
increased FPB's costs by over $700,000 per year. Increases in health
and life insurance premiums, along with workers compensation will also
increase program costs. In addition, inflation also impacts FPB's non-
salary costs. These factors have increased FPB's costs of operating
this program by over $600,000 per year.
Additional funds of approximately $155,000 are necessary in order
for FPB to continue to cover the costs associated with additional staff
and to maintain office space and equipment. Additional revenues are
also necessary to improve the work environment by providing training
and purchasing needed equipment. In addition, FPB began, in 2001,
developing (with appropriated funds) the Fresh Electronic Inspection
Reporting/Resource System (FEIRS) to replace its manual paper and pen
inspection reporting process. FEIRS was implemented in 2004. This
system has been put in place to enhance and streamline FPB's fruit and
vegetable inspection process, however, additional revenue is required
to maintain FEIRS.
This rule should increase user fee revenue generated under the
destination market program by approximately 15 percent. This action is
authorized under the Agricultural Marketing Act of 1946 (AMA of 1946)
(See 7 U.S.C. 1622(h)), which provides that the Secretary of
Agriculture may assess and collect ``such fees as will be reasonable
and as nearly as may be to cover the costs of services rendered * * *''
There are more than 2,000 users of FPB's
[[Page 76672]]
destination market grading services (including applicants who must meet
import requirements \1\--inspections which amount to under 2.5 percent
of all lot inspections performed). A small portion of these users are
small entities under the criteria established by the Small Business
Administration (13 CFR 121.201). There would be no additional
reporting, recordkeeping, or other compliance requirements imposed upon
small entities as a result of this rule. In compliance with the
Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35), the information
collection and recordkeeping requirements in part 51 have been approved
previously by OMB and assigned OMB No. 0581-0125. FPB has not
identified any other Federal rules which may duplicate, overlap or
conflict with this 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 during those periods when
domestic marketing order regulations are in effect. Section 1308 of
the Farm Security and Rural Investment Act of 2002 (Pub. L. 107-
171), 7 U.S.C. 7958, required USDA among other things to develop new
peanut quality and handling standards for imported peanuts marketed
in the United States.
Currently, there are 14 commodities subject to 8e import
regulations: Avocados, dates (other than dates for processing),
filberts, grapefruit, kiwifruit, olives (other than Spanish-style
green olives), onions, oranges, potatoes, prunes, raisins, table
grapes, tomatoes and walnuts. A current listing of the regulated
commodities can be found under 7 CFR parts 944, 980, 996, and 999.
---------------------------------------------------------------------------
The destination market grading services are voluntary (except when
required for imported commodities) and the fees charged to users of
these services vary with usage. However, the impact on all businesses,
including small entities, is very similar. Further, even though fees
will be raised, the increase is not excessive 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.
Action
The AMA of 1946 authorizes official inspection, grading, and
certification, on a user-fee basis, of fresh fruits, vegetables and
other products such as raw nuts, Christmas trees and flowers. The AMA
of 1946 provides that reasonable fees be collected from the users of
the services to cover, as nearly as practicable, the cost of the
services rendered. This rule would amend the schedule for fees and
charges for inspection services rendered to the fresh fruit and
vegetable industry to reflect the costs necessary to operate the
program.
The Agricultural Marketing Service (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 the Agency mandated reserve balance. Current
revenue projections for destination market inspection work during FY-05
are $14.6 million, with costs projected at $20.9 million and an end-of-
year reserve of $17.6 million. However, this reserve balance is due to
appropriated funding received from Congress in October of 2001. These
funds were established to build up the terminal market inspection
reserve fund and for infrastructure improvements including development
and maintenance of the inspector training center, workplace and
technological improvements, including digital imaging and automation of
the inspection process. However, by FY-08, without increasing fees,
FPB's trust fund balance for this program will be below the agency
mandated four months of operating reserve (approximately $4.6 million)
deemed necessary to provide an adequate reserve balance in light of
increasing program costs. Further, FPB's costs of operating the
destination market program are expected to increase to approximately
$22.4 million in FY-06 and to approximately $23.1 million during FY-07.
These cost increases (which are outlined below) will result from
inflationary increases with regard to current FPB operations and
services (primarily salaries and benefits), increased inspection
demands, and the acquisition and maintenance of computer technology
(i.e., FEIRS).
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 3.71
to 4.87 percent depending on locality, effective January 2005, has
significantly increased program costs. In addition, general and
locality salary increases for Federal employees ranging from 3.90% to
4.92% depending on locality, effective from January 2004, also
significantly increased program costs. These salary adjustments have
increased FPB's costs by over $700,000 per year. Increases in health
and life insurance premiums, along with workers compensation, will also
increase program costs. In addition, inflation also impacts FPB's non-
salary costs. These factors have increased FPB's costs of operating
this program by over $600,000 per year.
Additional revenues (approximately $155,000) are necessary in order
for FPB to continue to cover the costs associated with additional staff
and to maintain office space and equipment. Additional revenues are
also necessary to continue to improve the work environment by providing
training and purchasing needed equipment. In addition, FPB began, in
2001, developing (with appropriate funds) an automated system known as
FEIRS, to replace its manual paper and pen inspection reporting
process. Approximately $10,000 in additional revenue per month will be
needed to maintain the system. This system has been put in place to
enhance FPB's fruit and vegetable inspection processes.
Based on the aforementioned analysis of this program's increasing
costs, AMS proposed to increase the fees for destination market
inspection services. The following table compares current fees and
charges with the proposed fees and charges for fresh fruit and
vegetable inspections as found in 7 CFR 51.38. Unless otherwise
provided for by regulation or written agreement between the applicant
and the Administrator, the charge in the schedule of fees as found in
Sec. 51.38 are:
[[Page 76673]]
----------------------------------------------------------------------------------------------------------------
Service Current Proposed
----------------------------------------------------------------------------------------------------------------
Quality and condition inspections of products each
in quantities of 51 or more packages and unloaded
from the same land or air conveyance:
--Over a half carlot equivalent of each product. $99.00...................... $114.00
--Half carlot equivalent or less of each product 83.00....................... 95.00
--For each additional lot of the same product... 45.00....................... 52.00
Condition only inspections of products each in
quantities of 51 or more packages and unloaded from
the same land or air conveyance:
--Over a half carlot equivalent of each product. 83.00....................... 95.00
--Half carlot equivalent or less of each product 76.00....................... 87.00
--For each additional lot of the same product... 45.00....................... 52.00
Quality and condition and condition only inspections
of products each in quantities of 50 or less
packages unloaded from the same land or air
conveyance:
--For each product.............................. 45.00....................... 52.00
--For each additional lot of any of the same 45.00....................... 52.00
product.
Lots in excess of carlot equivalents will be charged
proportionally by the quarter carlot
Dock side inspections of an individual product
unloaded directly from the same ship:
--For each package weighing less than 30 pounds. 2.5 cents................... 2.9 cents
--For each package weighing 30 or more pounds... 3.8 cents................... 4.4 cents
--Minimum charge per individual product......... 99.00....................... 114.00
--Minimum charge for each additional lot of the 45.00....................... 52.00
same product.
Hourly rate for inspections performed for other
purposes during the grader's regularly scheduled
work week:
--Hourly rate for other work performed during 49.00....................... 56.00
the grader's regularly scheduled work week will
be charged at a reasonable rate.
Audit based services: ............................ 75.00
Overtime or holiday premium rate (per hour 25.00....................... 29.00
additional) for all inspections performed
outside the grader's regularly scheduled work
week.
Hourly rate for inspections performed under 40 49.00....................... 56.00
hour contracts during the grader's regularly
scheduled work week.
Rate for billable mileage, per mile............. 1.00........................ 1.00
----------------------------------------------------------------------------------------------------------------
A notice of proposed rulemaking was published in the Federal
Register on August 25, 2005 (70 FR 49882). FPB received three comments
during this period.
The first comment was received from Western Growers in support of
the proposed rule to increase fees by approximately 15 percent for the
inspection of products at destination markets. In addition, Western
Growers urged the department to utilize an efficient business model to
help infuse and enhance the program. Western Growers recognized that
cost saving opportunities had been sought and asked that efforts
continue to achieve an efficient business model and generate sufficient
savings.
The second comment was received from the United Fresh Fruit &
Vegetable Association (United) in support of the fee increase. However,
United also requested that other funding options be explored before
additional fee increases are considered in subsequent years.
The final comments were received from the North American Perishable
Agricultural Receivers (NAPAR). NAPAR expressed concern regarding the
fee increase, stating that a 15 percent increase seems excessive
compared to inspection fees in Canada. It is difficult to compare the
USDA fee structure with the Canadian fee structure since both
operationally and logistically, the programs are different. NAPAR also
commented on the validity of fees charged on multi-lot inspections. We
reviewed the charges assessed in the example given and noted that the
fee was calculated correctly. NAPAR also commented on the Fresh
Electronic Inspection Reporting/Resource System (FEIRS). First,
identifying early functionally concerns. Second, noting FEIRS
improvements and third, recommending that funds from any increase in
fees be used for continued FEIRS development. Appropriate funding for
the FEIRS program has been included in the user fee calculations. NAPAR
also requested a two week extension to allow their members an
opportunity to file comments, which was granted on October 20, 2005,
and ended on November 4, 2005. No additional comments from NAPAR
members were received during the extension period.
However, during the extended period for comments, two additional
comments were received. A comment from Frahm Fresh Produce, Inc., urged
that fees not be increased. The State of Washington Potato Committee
expressed understanding for the need to increase fees and cited their
anticipation of greater efficiencies. In addition, we received a
comment concerning FEIRS noting that the program was appreciated at
terminal markets and encouraged implementation at shipping point.
However, the State of Washington Potato Committee does not support an
increase in fees to maintain FEIRS. Finally, the comment stated that
the Washington potato industry is feeling funding pressure and has no
choice but to opt-out of the inspection process. We do note that there
has been a decline in shipping point inspections.
Each of the five comments received was carefully considered.
Nevertheless, FPB's current fees are not adequate and an increase in
fees is necessary. At the same time, FPB has and continues to realize
cost savings to the terminal market program by re-assessing hours of
service and staffing, improved management of overtime charged and
travel and supply purchases.
List of Subjects in 7 CFR Part 51
Agricultural commodities, Food grades and standards, Fruits, Nuts,
Reporting and record keeping requirements, Trees, Vegetables.
0
For reasons set forth in the preamble, 7 CFR part 51 is amended as
follows:
PART 51--[AMENDED]
0
1. The authority citation for 7 CFR part 51 continues to read as
follows:
Authority: 7 U.S.C. 1621-1627.
0
2. Section 51.38 is revised to read as follows:
Sec. 51.38 Basis for fees and rates.
(a) When performing inspections of product unloaded directly from
land or air transportation, the charges shall be determined on the
following basis:
[[Page 76674]]
(1) Quality and condition inspections of products in quantities of
51 or more packages and unloaded from the same air or land conveyance:
(i) $114 for over a half carlot equivalent of an individual
product;
(ii) $95 for a half carlot equivalent or less of an individual
product;
(iii) $52 for each additional lot of the same product.
(2) Condition only inspections of products each in quantities of 51
or more packages and unloaded from the same land or air conveyance:
(i) $95 for over a half carlot equivalent of an individual product;
(ii) $87 for a half carlot equivalent or less of an individual
product;
(iii) $52 for each additional lot of the same product.
(3) For quality and condition inspections and condition only
inspections of products in quantities of 50 or less packages unloaded
from the same conveyance:
(i) $52 for each individual product:
(ii) $52 for each additional lot of any of the same product. Lots
in excess of carlot equivalents will be charged proportionally by the
quarter carlot.
(b) When performing inspections of palletized products unloaded
directly from sea transportation or when palletized product is first
offered for inspection before being transported from the dock-side
facility, charges shall be determined on the following basis:
(1) Dock side inspections of an individual product unloaded
directly from the same ship:
(i) 2.9 cents per package weighing less than 30 pounds;
(ii) 4.4 cents per package weighing 30 or more pounds;
(iii) Minimum charge of $114 per individual product;
(iv) Minimum charge of $52 for each additional lot of the same
product.
(2) [Reserved]
(c) When performing inspections of products from sea containers
unloaded directly from sea transportation or when palletized products
unloaded directly from sea transportation are not offered for
inspection at dock-side, the carlot fees in (a) of this section shall
apply.
(d) When performing inspections for Government agencies, or for
purposes other than those prescribed in paragraphs (a) through (c) of
this section, including weight-only and freezing-only inspections, fees
for inspections shall be based on the time consumed by the grader in
connection with such inspections, computed at a rate of $56 per hour:
Provided, that:
(1) Charges for time shall be rounded to the nearest half hour;
(2) The minimum fee shall be two hours for weight-only inspections,
and one-half hour for other inspections;
(3) When weight certification is provided in addition to quality
and/or condition inspections, 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 $29.00 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: November 16, 2005.
Lloyd C. Day,
Administrator, Agricultural Marketing Service.
[FR Doc. 05-24338 Filed 12-27-05; 8:45 am]
BILLING CODE 3410-02-P