BEFORE THE DEPARTMENT OF AGRICULTURE

OF THE STATE OF MONTANA

 

In the matter of the amendment of ARM 4.12.1427, 4.12.1428, and 4.12.1429, relating to produce

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NOTICE OF PUBLIC HEARING ON PROPOSED AMENDMENT

 

TO:  All Concerned Persons

 

            1.  On November 23, 2009, at 1:00 p.m., the Montana Department of Agriculture will hold a public hearing in Room 225 of the Scott Hart Building, 303 N. Roberts at Helena, Montana, to consider the proposed amendment of the above-stated rules.

 

            2.  The Department of Agriculture will make reasonable accommodations for persons with disabilities who wish to participate in this rulemaking process and need an alternative accessible format of this notice.  If you require an accommodation, contact the Department of Agriculture no later than 5:00 p.m. on November 12, 2009, to advise us of the nature of the accommodation that you need.  Please contact Cort Jensen at the Montana Department of Agriculture, 303 North Roberts, P.O. Box 200201, Helena, MT 59620-0201; phone: (406) 444-3144; fax: (406) 444-5409; or e-mail: [email protected].

 

3.  The rules as proposed to be amended provide as follows, stricken matter interlined, new matter underlined:

 

4.12.1427  SHIPPING POINT INSPECTION FEES  (1)  Regular shipping point inspection fees are as follows:

(a)  All produce - 7.5¢ 9.5 cents per unit.

(b)  Inspection tags - 20 cents per tag.

(2)  Minimum fee per requested inspection trip - $20 per trip Cost Recovery:  Regular inspection fees are established in an amount reasonably necessary to cover the cost of providing the services and administration of the inspection program.  Cost recovery charges may be necessary when the regular inspection fee is not applicable or adequate to cover the cost of the service provided.

(a)  Cost Recovery charges may apply to all inspections involving:

(i)  shipping point inspections of seed potatoes when the volume of work is less than 500 cwt per hour;

(ii)  shipping point inspections of cherries, apples, and all other produce;

(iii)  receiving inspections of any produce.

(b)  Cost Recovery fees will include the produce inspection fee of 9.5 cents per unit and may include the hourly charge of the time required to conduct the inspection, the time required to prepare for the inspection, the time to complete any reports related to the inspection, and any time required for travel to and from the inspection.

(i)  The hourly rate will be set by the department on an annual basis to ensure that all anticipated costs are recovered.  In establishing the hourly rate, the department will consider the hourly wage of inspector(s) and program staff, benefits, administrative costs, and costs related to the department's cooperative agreement with USDA.

(c)  Cost Recovery fees will include per diem and mileage per ARM Title 2, chapter 4.

(3)  Inspection tags - 20¢ per tag. USDA Good Agricultural Practices (GAP) and Good Handling Practices (GHP) Audit Fee:  GAP and GHP Audits will be on a first come, first served basis as auditing staff is available.  GAP and GHP Audit fees will be applied when an applicant requests a mock audit or an audit review of practices based on the voluntary FDA Standards for Minimizing Microbial Contamination to Fresh Fruits and Vegetables or other audit-based standards as requested by the industry.  The cost of such services will include:

(a)  an hourly charge of the time required to conduct the inspection, the time required to prepare for the inspection, the time to complete any reports related to the inspection, and any time required for travel to and from the inspection.

(i)  the hourly rate will be set by the department on an annual basis to ensure that all anticipated costs are recovered.  In establishing the hourly rate, the department will consider the hourly wage of inspector(s) and program staff, benefits, administrative costs, and costs related to the department's cooperative agreement with USDA.

(b)  per diem and mileage per ARM Title 2, chapter 4.

(4)  Fees may be charged as follows for services other than the inspection and issuance of a grade inspection certificate:

(a)  hourly charge - $20 per hour; and

(b)  per diem and mileage per ARM Title 2, chapter 4 Minimum fee per inspection - $50.00.

(5)  All fees are due within 30 days after billing.  The department may assess a collection fee of 10 18% annual percentage rate of any amount past due, after providing written notice of the past due status, with or a minimum charge of $10.  The department may require past due payment of fees prior to providing inspection services.

 

AUTH:  80-3-303, MCA

IMP:  80-3-315, MCA

 

REASON:  The Shipping Point Inspection program does not receive general fund money and must be self supporting through fees assessed for services.  Inspection fees are required by statute to be commensurate with the cost of providing the inspection.  FY 09 expenditures exceeded revenue by nearly $40,000, including $12,000 of indirect charges that were not charged to the program.  The proposed changes in the shipping point inspection fees primarily affect seed potato inspections.  Based on the number of seed potatoes shipped in 2009 (2,669,652 cwt), a 2-cent fee increase would generate approximately $53,400 in revenue to cover operating costs, wages, and indirect charges.  Any revenue collected that exceed expenses will be deposited in the special revenue account established by 80-3-304, MCA.

The regular inspection fee is meant to cover inspection expenses when the inspection involves routine amount of travel, time, and volume of product.  The proposed inspection rate and the old hourly rate do not cover program costs for inspections that require more than the ordinary amount of time and travel, or when the volume of inspected product is less than ordinary.  The Cost Recovery language, and the resulting hourly rate, and the minimum inspection fee, are to be used to recover costs when the regular inspection fee is not adequate to pay inspectional expenses.

The department has recently begun conducting Good Agricultural Practices/Good Handling Practices (GAP/GHP) Verification Audits under a federal Cooperative Agreement with USDA.  The department currently has no fee structure to charge for such inspections.  The proposed language will allow the department to charge and recover inspectional costs for GAP/GHP Verification Audits.

Language for the assessment of the 10% collection fee did not state if the collection fee was to be assessed as a one time fee, or if it was to be assessed monthly.  This language will clarify that the collection fee is assessed at 18% (1.5% per month on any outstanding monthly balance).

 

Financial Impact:  The fee increase from 7.5 cents to 9.5 cents per hundred weight (cwt) shipped is a 26.7% increase.  However, the financial impact is considerably different for small producers as compared to large producers.  The small producer who ships 10,000 cwt will have a financial impact of $200.00 and a large producer who ships 100,000 cwt will have a financial impact of $2,000.00.  The financial impact on the average size producer would be approximately $1,160.00.

Department internal reviews have indicated the Cost Recovery rate for FY 2010 will be established at $45.00 per hour for GAP/GHP Verification Audits and produce inspections.  The increased hourly rate, based on a 4-hour inspection, would increase the cost to facilities requesting inspection services by $100.00.  The increased revenue to the department would be $1000.00 per year based on ten inspections requiring the Cost Recovery program.

 

4.12.1428  ASSESSMENT FEES ON ALL PRODUCE  (1)  The assessment fee on all produce except produce grown in Montana and inspected at shipping point shall be 6¢ cents per each produce unit.

 

AUTH:  80-3-303, MCA

IMP:  80-3-314, MCA

 

REASON:  Changed to be consistent with rest of produce rules.

 

4.12.1429  PRODUCTS DESIGNATED AS PRODUCE--PRODUCE UNIT QUANTIFIED  (1)  The following fruits, vegetables, and natural products are designated as produce.  This list is not all inclusive.  Any product commonly recognized as a fruit or vegetable shall also be considered to be produce for assessment purposes but does not include those perishable fruits and vegetables which have been manufactured into articles of food of a different kind or character.  The effects of the following operations shall not be considered as changing a commodity into a food of a different kind or character:  water, steam, or oil blanching, battering, coating, chopping, color adding, curing, cutting, dicing, drying for the removal of surface moisture; fumigating, gassing, heating for insect control, ripening and coloring; removal of seed, pits, stems, calyx, husk, pods, rind, skin, peel, et cetera; polishing, pre-cooling, refrigerating, shredding, slicing, trimming, washing with or without chemicals; waxing, adding of sugar or other sweetening agents; adding ascorbic acid or other agents to retard oxidation; mixing of several kinds of sliced, chopped, or diced fruit or vegetables for packaging in any type of containers; or comparable methods of preparation.

(2)  The following quantities shall be used as the standard produce unit for the produce listed below.  Containers of approximately the same quantity may be considered a produce unit for each container.

 

 

 

PRODUCE	REPORTING UNIT		PRODUCE	REPORTING UNIT
Apples	40 lbs.		Lemons	35 lbs.
Apricots	28 lbs.		Lettuce
Asian pears	20 lbs.		Head	24 count
Asparagus	30 lbs.		Butter	24 count
Artichokes	15 lbs.		Endive	24 count
Avocados	60-70 count		Escarole	24 count
Bananas	40 lbs.		Green Leaf	24 count
Beans, green	28 lbs.		Red Leaf	24 count
Beets	24 bunches		Romaine	24 count
Blackberries	12--½ pint baskets		Limes	35 lbs.
Boysenberries	12--½ pint baskets		Mangos	12 lbs.
Blueberries	12--1-pint baskets		Mushrooms	10 lbs.
Broccoli	25 lbs.		Mustard greens	24 count
Broccoflower	25 lbs.		Nectarines	20 lbs.
Bok choy	12 count		Okra	10 lbs.
Brussel Sprouts	25 lbs.		Onions, dry	50 lbs.
Cabbage	50 lbs.		Onions, green	48 bunches
Cantaloupes	35 lbs.		Oranges	37 lbs.
Carrots	50 lbs.		Papayas	12 lbs.
Cauliflower	28 lbs.		Parsley	60 bunches
Celery	45 lbs.		Parsnips	25 lbs.
Cherries	20 lbs.		Peaches	20 lbs.
Chicory	10 lbs.		Pears	35 lbs.
Cilantro	12 lbs.		Peas, green/sweet	12 lbs.
Coconuts	25 lbs.		Peppers	28 lbs.
Collard greens	24 count		Pineapple	35 lbs.
Corn	60 ears		Plums	24 lbs.
Cranberries	25 lbs.		Potatoes	100 lbs.
Cucumbers	30 lbs.		Prunes	24 lbs.
Currants	12--½ pint baskets		Pumpkins	100 lbs.
Eggplant	25 lbs.		Radishes	48 bunches
Endive	24 count		Raspberries	12--½ pint baskets
Garlic	10 lbs.		Rhubarb	20 lbs.
Ginger root	10 lbs.		Rutabagas	25 lbs.
Grapefruit	35 lbs.		Shallots	10 lbs.
Grapes	20 lbs.		Spinach	24 count
Honeydew melons	20 lbs.		Sprouts	12 count
Horseradish roots	10 lbs.		Squash
Jicama	20 lbs.		Summer type	20 lbs.
Kale greens	24 count		Winter type	50 lbs.
Kiwifruit	10 lbs.		Star fruit	15 lbs.
Leeks	24 count		Strawberries	12--1-pint baskets
Sweet potatoes	40 lbs.		Turnips	25 lbs.
Tangelos	35 lbs.		Watermelons	100 lbs.
Tangerines	35 lbs.		Yams	40 lbs.
Tomatoes	28 lbs.		Miscellaneous	50 lbs.

 

AUTH:  80-3-303, MCA

IMP:  80-3-302, MCA

 

Reason:  Fruits and vegetables are sold in ready to eat consumer packs and have undergone some processing at the manufacturer.  This designation will align state definitions with definitions used in the Federal Perishable Agricultural Commodities Act (PACA) to describe fruits and vegetables as they are currently being sold, and will clarify when an assessment fee is due on what products.

Formatting change to make produce reporting units more user friendly.

 

4.  Concerned persons may submit their data, views, or arguments concerning the proposed action either orally or in writing at the hearing.  Written data, views, or arguments may be submitted to: Cort Jensen at the Montana Department of Agriculture, 303 North Roberts, P.O. Box 200201, Helena, MT 59620-0201; telephone (406) 444-3144; fax (406) 444-5409; or e-mail [email protected].  Any comments must be received no later than 5:00 p.m., November 26, 2009.

 

5.  Cort Jensen, Department of Agriculture, has been designated to preside over and conduct this hearing.

 

            6.  The Department of Agriculture maintains a list of interested persons who wish to receive notices of rulemaking actions proposed by this agency.  Persons who wish to have their name added to the list shall make a written request which includes the name, e-mail, and mailing address of the person and specifies for which program the person wishes to receive notices.  Notices will be sent by e-mail unless a mailing preference is noted in the request.  Such written request may be mailed or delivered to Montana Department of Agriculture, 303 North Roberts, P.O. Box 200201, Helena, MT 59620-0201; fax: (406) 444-5409; or e-mail: [email protected] or may be made by completing a request form at any rules hearing held by the Department of Agriculture.

 

7.  An electronic copy of this Notice of Proposed Amendment is available through the department's web site at www.agr.mt.gov, under the Administrative Rules section.  The department strives to make the electronic copy of the Notice conform to the official version of the Notice, as printed in the Montana Administrative Register, but advises all concerned persons that in the event of a discrepancy between the official printed text of the Notice and the electronic version of the Notice, only the official printed text will be considered.  In addition, although the department strives to keep its web site accessible at all times, concerned persons should be aware that the web site may be unavailable during some periods, due to system maintenance or technical problems.

 

            8.  The bill sponsor contact requirements of 2-4-302, MCA, do not apply.

 

 

DEPARTMENT OF AGRICULTURE

 

 

 

 

/s/ Ron de Yong                                                  /s/ Cort Jensen                                       

Ron de Yong, Director                                        Cort Jensen, Rule Reviewer

 

Certified to the Secretary of State, October 19, 2009.

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