[Federal Register Volume 61, Number 202 (Thursday, October 17, 1996)]
[Rules and Regulations]
[Pages 54082-54084]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-26653]


7 CFR Part 51

[Docket Number FV-95-306]

Fresh Fruits, Vegetables and Other Products (Inspection, 
Certification, and Standards)

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.


SUMMARY: This rule revises the regulations governing inspection and 
certification for fresh fruits, vegetables and other products by 
increasing 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.

EFFECTIVE DATE: November 10, 1996.

Robert J. Huttenlocker, Fresh Products Branch, Fruit and Vegetable 
Division, Agricultural Marketing Service, U.S. Department of 
Agriculture, PO Box 96456, Room 2049 South Building, Washington, DC 
20090-6456, (202) 720-0297.

SUPPLEMENTARY INFORMATION: This rule has been determined not 
significant for purposes of Executive Order 12866 and, therefore, has 
not been reviewed by the Office of Management and Budget.
    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.
    There are more than 2,000 users of Fresh Products Branch's 
destination market grading services. Some of these are small entities 
under the criteria established by the Small Business Administration (13 
CFR 121.601). This rule will raise the fees charged to businesses for 
voluntary inspection services for fresh fruits and vegetables. Even 
though fees will be raised, the increase is small (approximately five 
percent) and will not significantly affect these entities. These 
businesses are under no obligation to use these inspection services, 
and any decision on their part to discontinue the use of the services 
would not prevent them from marketing their products.
    The Agricultural Marketing Service (AMS), has certified that this 
action will not have a significant impact on a substantial number of 
small entities, as defined in the Regulatory Flexibility Act, (5 U.S.C. 
601). The final rule reflects certain fee increases needed to recover 
the costs of inspection services rendered in accordance with the 
Agricultural Marketing Act (AMA) of 1946.
    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.
    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 user of the program services to 
cover, as nearly as practicable, the costs of services rendered. This 
final rule will amend the schedule for fees and charges for inspection 
services rendered to the fresh fruit and vegetable industry to reflect 
the costs currently associated with the program.
    AMS regularly reviews these programs to determine if fees are 
adequate. Employee salaries and benefits are major program costs that 
account for approximately 86 percent of the total operating budget. A 
general and locality salary increase for Federal employees, ranging 
from 3.09 to 6.25 percent depending on locality, effective January 
1995, has materially affected program costs. Another general and 
locality salary increase, ranging from 2.39 to 2.87 percent depending 
upon locality (amounting to approximately $253,000), was effective 
January 1996. Further, since FY 94, the costs associated with the 
development of U.S. grade standards have been and will continue to be 
covered from user fee revenues (prior to this, these costs were funded 
by Federal appropriation). Standardization activities increase the cost 
of this program by approximately $100,000 per year.
    While a concerted effort to cut costs resulted in overhead savings 
of $350,000 in FY 95 over FY 94, the last

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fee increase of June 1994 did not result in the collection of enough 
additional revenue to cover all these increases and still maintain an 
adequate reserve balance (four months of costs) as called for by Agency 
policy (AMS Directive 407.1) and principles of prudent financial 
management. Projected FY 96 revenues for market inspection are $12.6 
mil with costs projected at $11.6 mil and a reserve of $3.1 mil. 
However, the Fresh Products Branch (FPB) trust fund reserve balance for 
the market program is approximately $900,000 under the desired level of 
$4 mil. Further action is necessary to meet rising costs and maintain 
adequate reserve balances. This action will assist in moving the FPB 
trust fund toward a more adequate level and will result in an estimated 
$600,000 in additional revenues per year.
    A notice of proposed rulemaking was published in the Federal 
Register (61 FR 24247) on May 14, 1996, with a 60 day comment period. 
The comment period closed July 15, 1996. Interested persons were 
invited to participate in this rulemaking by submitting written 
comments on the proposal to AMS. Two comments were received regarding 
this rulemaking.
    One comment was received by a State agency with which AMS has a 
cooperative agreement for providing official certification in that 
State. The comment was in favor of the increase and suggested that an 
additional increase may be appropriate for additional lots of the same 
product. While this option was considered, the proposed fee increases 
should be sufficient to meet the current financial needs of the 
program. Further, an effort was made to avoid increases which would be 
unnecessarily burdensome on the industry.
    The second comment was received from an industry association of 
receivers. They support the proposed increase, provided that ``* * * 
the Fresh Products Branch improve performance with respect to 
inspection process, issuing certificates, and reduce the period of time 
between the inspection request and the time that the inspection is 
performed.'' FPB has responded to industry's concerns relating to the 
timeliness and efficiency of inspections by developing and implementing 
analytical procedures for assessing workload at various market offices 
(i.e., inspection points). Information obtained during these analyses 
is being used to audit staffing levels at the markets to ensure that 
inspection workload is being effectively managed. The industry 
association also suggests ``* * * that a committee composed of 
government officials, terminal market receivers and other interested 
persons should be created to discuss these issues, in order to realize 
the highest return on the fees paid by the perishable industry for 
inspection services.'' FPB officials routinely interact with industry 
participants to discuss alternatives for improving inspection services. 
AMS officials frequently meet to discuss industry's recommendations and 
improvements are implemented where appropriate.
    In light of the continuing need to maintain this 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 the fiscal 
year 1996 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 and the effective date will correspond 
to the first available billing cycle.

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 


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

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

    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:
    (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) $78 for over a half carlot equivalent of an individual product.
    (B) $65 for a half carlot equivalent or less of an individual 
    (C) $13 for each additional lot of the same product.
    (ii) Condition only inspection of 1 to 4 products unloaded from the 
same conveyance:
    (A) $65 for over a half carlot equivalent of an individual product.
    (B) $60 for a half carlot equivalent or less of an individual 
    (C) $13 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) $277 for the first 5 products.
    (B) $39 for each additional product.
    (C) $13 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) $39 for each individual product.
    (ii) $13 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 cent per package weighing less than 15 pounds;
    (ii) 2 cents per package weighing 15 to 29 pounds; and,
    (iii) 3 cents per package weighing 30 or more pounds.
    (2) $13 for each additional lot of any of the same product.
    (3) A minimum charge of $78 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 car-lot 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 $39 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;
    (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

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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 
    (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 $19.50 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: October 10, 1996.
Robert C. Keeney,
Director, Fruit and Vegetable Division.
[FR Doc. 96-26653 Filed 10-16-96; 8:45 am]