[Federal Register Volume 63, Number 61 (Tuesday, March 31, 1998)]
[Rules and Regulations]
[Pages 15274-15278]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-8391]
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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: Final rule.
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SUMMARY: This rule revises 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 are also affected. This rule
also revises 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.
EFFECTIVE DATE: April 6, 1998.
FOR FURTHER INFORMATION CONTACT: Rob Huttenlocker, Fresh Products
Branch, Fruit and Vegetable Programs, Agricultural Marketing Service,
U.S. Department of Agriculture, PO Box 96456, Room 2049 South Building,
Washington, DC 20090-6456, (202) 720-0297.
SUPPLEMENTARY INFORMATION:
Executive Order 12866 and Regulatory Flexibility Act
This rule has been reviewed by the Office of Management and Budget
(OMB) 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 Fresh Products Branch (FPB) of the Fruit
and Vegetable Programs, AMS, 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, 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
will result from both inflationary increases with regard to current FPB
operations
[[Page 15275]]
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 ranging from 2.44 to 6.52 percent became 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 fee increase should result in an estimated $1.2 million in
additional revenues per year (only $600,000 during FY 98 since the fee
increase will be effective on April 6, 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 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 program
integrity by mailing copies of all destination market certificates to
the shippers of the products inspected (the basis for the 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
computers and Agency-mandated information systems upgrades) aimed at
expanding FPB's services and making them more efficient in the future.
This rule should 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 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.
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\1\ Section 8e of the Agricultural Marketing Agreement Act of
1937, as amended (7 U.S.C. 601-674), requires that whenever the
Secretary of Agriculture issues grade, size, quality or maturity
regulations under domestic marketing orders for certain commodities,
the same or comparable regulations on imports of those commodities
must be issued. Import regulations apply during those periods when
domestic marketing order regulations are in effect.
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).
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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.
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 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.
[[Page 15276]]
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 ranging from 2.44 to 6.52 percent became 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 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 fee increase should result in an estimated $1.2 million in
additional revenues per year (only $600,000 during FY 98 since the fee
increase will be effective on April 6, 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 is hereby increasing the fees for destination market
inspection services. The following table compares current fees and
charges with the revised 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:
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Service Current Revised
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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 $78................................ $86.
each product.
--Half carlot equivalent or less $65................................ $72.
of each product.
--For each additional lot of the $13................................ $14.
same product.
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 S65................................ $72.
each product.
--Half carlot equivalent or less $60................................ $66.
of each product.
--For each additional lot of the $13................................ $14.
same product.
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 $13................................ $14.
of the same 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 $13................................ $14.
of the same product.
Dock-side inspections of an individual
product unloaded directly from the
same ship:
--For each package weighing less 1 cent............................. 1.1 cents.
than 15 pounds.
--For each package weighing 15 to 2 cents............................ 2.2 cents.
29 pounds.
--For each package weighing 30 or 3 cents............................ 3.3 cents.
more pounds.
--For each additional lot of any $13................................ $14.
of the same product.
--Minimum charge per individual $78................................ $86.
product.
Inspections performed for other $39 per hour....................... $43 per hour.
purposes during the grader's
regularly scheduled work week.
Overtime or holiday premium rate (per $19.50 per hour.................... 21.50 per hour.
hour additional) for all inspections
performed outside the grader's
regularly scheduled work week.
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A notice of proposed rulemaking was published in the Federal
Register (62 FR 66033) on December 17, 1997, with a 60-day comment
period. The comment period closed on February 17, 1998. Interested
persons were invited to participate in this rulemaking by submitting
written comments on the proposal to AMS. One comment in opposition to
the fee increase was received.
[[Page 15277]]
The comment was received from a law firm representing an
association (of producers) which exports products into the U.S. The
comment opposed the increase in fees for inspections of fresh fruits
and vegetables at destination markets. The commentor went on to
reiterate its long-standing opposition to mandatory marketing orders
based upon general economic principles such as their promotion of anti-
competitive practices in restraint of trade and because different
inspection criteria are applied to foreign product than are applied to
domestic product at comparable points in the distribution chain,
thereby violating principles of free trade. Lastly, the commentor went
on to conclude that the mandatory inspections and their costs would
further enhance unfair trade practices. The comment argued that the
increased fees would have a disproportionate impact on commodities such
as table grapes and kiwifruit subject to section 8e requirements
because foreign shippers cannot elect to discontinue the use of
inspections, unlike domestic shippers.
The Agency disagrees with the positions taken in the comment and
the conclusions reached therein. 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. The
regulations governing the section 8e program, including requirements
for inspections and the fees charged in connection therewith, are
consistent with the provisions of its authorizing statute and other
applicable law.
Further, the tremendous growth in demand for fruits and vegetables
in the U.S. market strongly supports the need to provide consumers with
consistent, quality products. Quality standards are in the best
interest of both U.S. producers and those who export products to the
U.S. market.
Under the marketing order program, fruit and vegetable producers
agree in a referendum vote to authorize minimum quality requirements on
their products. Domestic shippers subject to marketing order minimum
quality requirements must, in fact, have their product inspected and
certified, under the supervision of the Agency, meeting the applicable
requirements. Under section 8e, comparable quality requirements are
simply extended to imported fruits and vegetables.
For most imported commodities subject to minimum quality
requirements, U.S. total and per capita consumption has increased
significantly. The association's exporter members generally ship
products into the U.S. which are produced during a growing season that
is different from that of the U.S. Thus, in large measure, such
production is complimentary to U.S. production and not subject to
mandatory requirements. By making quality product available to U.S.
consumers on a consistent basis, the agricultural sectors in both
countries benefit.
Accordingly, in light of the continuing need to maintain the AMS
grading program on a financially sound basis, the Agency has decided to
proceed with the fee increase as set forth in the proposal.
Pursuant to 5 U.S.C. 553, it is found and determined that good
cause exists for not postponing the effective date of this action until
30 days after publication in the Federal Register because: (1) The
fiscal year 1998 reserve balance of the program's trust fund is
projected to be approximately $1 million under the desired level
necessary to ensure the program's fiscal viability; (2) the fee changed
adopted herein should be implemented as soon as possible to begin
replenishing the operating reserve and bring revenue in line with
costs; and (3) the first available billing cycle begins April 6, 1998.
Accordingly, the effective date is April 6, 1998.
List of Subjects in 7 CFR Part 51
Agricultural commodities, Food grades and standards, Fruits, Nuts,
Reporting and recordkeeping requirements, Trees, Vegetables.
For reasons set forth in the preamble, 7 CFR part 51 is 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.
(a) 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.
(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.
[[Page 15278]]
(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: March 25, 1998.
Sharon Bomer Lauritsen,
Acting Deputy Administrator, Fruit and Vegetable Programs.
[FR Doc. 98-8391 Filed 3-30-98; 8:45 am]
BILLING CODE 3410-02-P
