[Federal Register Volume 60, Number 123 (Tuesday, June 27, 1995)]
[Rules and Regulations]
[Pages 33098-33100]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-15625]



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[[Page 33099]]

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 29

[Docket No. TB-95-08]


Tobacco Fees and Charges for Mandatory Inspection

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: The Tobacco Inspection Act requires the Secretary to fix and 
collect fees and charges for inspection and certification, the 
establishment of standards, and other services, including 
administrative and supervisory costs, at designated tobacco auction 
markets in all tobacco producing areas. The fees collected must, as 
nearly as possible, cover the Department's costs of performing these 
services and also maintain a reserve sufficient to cover at least 4 
months of operation. The present fee of $.0070 per pound has been in 
effect since July 11, 1991, and is no longer sufficient to recover the 
costs of operating this activity. This final rule increases the fee to 
$.0083 per pound to reflect increased program costs and replenish the 
operating reserve. This increase does not affect the fees for import, 
export, or permissive inspection.

EFFECTIVE DATE: June 27, 1995.

for further information contact: John P. Duncan III, Director, Tobacco 
Division, AMS, USDA, Room 502 Annex Building, P.O. Box 96456, 
Washington, DC 20090-6456, (202) 205-0567.

SUPPLEMENTARY INFORMATION: Notice was given (60 FR 25624-25625, Friday, 
May 12, 1995) that the Department proposed to amend the regulations 
governing the fee charged for mandatory inspection and certification of 
producer tobacco sold at designated auction markets throughout the 
tobacco producing areas. The proposed amendment would increase the fees 
and charges assessed by the Department for providing inspection and 
certification of tobacco at designated auction markets, establishment 
of standards, and other services. The new fee would cover the increased 
cost of operating the program, including administrative and supervisory 
cost, and replenish the operating reserve which has been drawn down for 
several years to cover the difference between revenue and obligations 
and is now below the required level of 4 months. Authority for these 
regulations is contained in the Tobacco Inspection Act (7 U.S.C. 511-
511q). Interested parties were given an opportunity to comment on the 
proposed rule.
    A total of 21 comments was received; 17 comments--the majority of 
which came from individual producers supported the increase; 2 comments 
from organizations representing producers opposed the increase, and 2 
comments--1 from an organization representing producers and 1 from an 
individual who expressed concern over increasing costs to producers and 
recommended the Department look for ways to operate more efficiently.
    The Department conducts a yearly review of the financial status of 
this program to determine whether the fee is sufficient. At the end of 
the 1994-95 marketing season, obligations are estimated at $12,969,000 
but revenues are expected to reach only $11,647,000 resulting in a loss 
of $1,322,000 and reducing the operating reserve to 3.8 months. At the 
current level of service and fee structure, obligations for the 1995-96 
marketing season are estimated at $13,754,000 with revenue of 
$12,155,000 for a loss of $1,599,000 and a further reduction in the 
operating reserve to 2.2 months. If the same level of service and fee 
structure continues for the 1996-97 season, the estimated loss would 
exceed $2,000,000 and the operating reserve would fall below 1 month.
    The major items affecting obligations are increases in salaries, 
benefits, travel cost and overall administrative costs in each year 
since 1991. Revenue depends on the amount of tobacco sold on the 
designated auction markets. Production quotas for flue-cured and burley 
were relatively stable for the 1992 and 1993 crops; fell sharply in 
1994 and were unchanged for burley for 1995 but increased 16 percent 
for flue-cured. However, the cost of providing the service has 
continued to rise.
    An analysis of available data indicated that a fee of $.0083 per 
pound effective for the 1995 crop would provide sufficient revenue to 
exceed obligations by $560,000 for the 1995-96 marketing season and 
bring the operating reserve up to 4 months.
    Information on program income and expenses was presented to the 
National Advisory Committee for Tobacco Inspection Services at a 
meeting on January 19, 1995, in Lexington, Kentucky, and again on April 
6, 1995, in Raleigh, North Carolina. The National Advisory Committee, 
consisting of 14 members representing tobacco producers, and appointed 
by the Secretary of Agriculture, was established by law in 1981 to 
advise the Secretary on the level of services needed and the fees 
necessary to cover those services. The Committee recommended that the 
level of services remain unchanged and that the fee be increased to 
$.0075 per pound.
    In considering the Committee's recommendation and the comments 
opposing the increase, the Department notes that while a fee of $.0075 
per pound will result in smaller losses for the 1995 and 1996 marketing 
years, the operating reserve will continue to fall and would be below 2 
months at the end of the 1996 season.
    In view of the comments received, and since neither the current fee 
of $.0070 or the recommended fee of $.0075 per pound will cover the 
cost of providing the requested service and provide an adequate 
reserve, the Department is implementing a fee of $.0083 per pound 
beginning with the 1995 marketing season.
    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.
    This rule has been reviewed under Executive Order 12778, 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.
    Additionally, in conformance with the provisions of the Regulatory 
Flexibility Act (5 U.S.C. 601 et seq.) full consideration has been 
given to the potential economic impact upon small business. Most of the 
firms which would be affected by the rule are small businesses. Small 
agricultural producers have been defined by the Small Business 
Administration (13 CFR 121.601) as those having gross annual receipts 
of less than $500,000, and small agricultural service firms are defined 
as those whose annual receipts are less than $5,000,000. The 
Administrator, Agricultural Marketing Service, has determined that this 
action would not have a significant economic impact on a substantial 
number of small entities. This rule would not substantially affect the 
normal movement of the commodity in the marketplace. Compliance with 
this rule would not impose substantial direct economic costs, 
recordkeeping, or personnel workload changes on small entities, and 
would not alter the market share or competitive positions of small 
entities relative to the large entities and would in no way affect 
normal [[Page 33100]] competition in the marketplace. Furthermore, the 
Department is required by law to fix and collect fees and charges to 
cover the Department's cost in operating the tobacco inspection 
program.
    In addition, good cause has been found to make this rule effective 
less than 30 days after publication because it is necessary that the 
new fee be effective at the beginning of the marketing season which 
begins in mid-July. Therefore, in order to treat all types of tobacco 
on an equal basis, this final rule is made effective upon publication 
in the Federal Register.

List of Subjects in 7 CFR Part 29

    Administrative practice and procedure, Advisory committees, 
Government publications, Imports, Pesticides and pests, Reporting and 
recordkeeping requirements, Tobacco.

    For the reasons set forth in the preamble, the regulations at 7 CFR 
part 29 are amended as follows:

Part 29--Tobacco Inspection

    1. The authority citation for part 29, subpart B continues to read 
as follows:

    Authority: 7 U.S.C. 511m and 511r.


Sec. 29.123  [Amended]

    2. In Sec. 29.123 paragraph (a) is amended by removing the words 
``$.0070 per pound'' and adding in its place ``$.0083 per pound.''

    Dated: June 21, 1995.
Lon Hatamiya,
Administrator.
[FR Doc. 95-15625 Filed 6-26-95; 8:45 am]
BILLING CODE 3410-02-P