[Federal Register Volume 64, Number 74 (Monday, April 19, 1999)]
[Rules and Regulations]
[Pages 19019-19022]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-9518]



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 Rules and Regulations
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  Federal Register / Vol. 64, No. 74 / Monday, April 19, 1999 / Rules 
and Regulations  

[[Page 19019]]


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DEPARTMENT OF AGRICULTURE

Grain Inspection, Packers and Stockyards Administration

7 CFR Part 801

RIN 0580-AA62


Official Testing Service for Corn Oil, Protein, and Starch

AGENCY: Grain Inspection, Packers and Stockyards Administration, USDA.

ACTION: Final rule.

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SUMMARY: The Grain Inspection, Packers and Stockyards Administration 
(GIPSA) is adopting, without change, the provisions of an interim rule 
extending the use of the currently approved near-infrared spectroscopy 
(NIRS) analyzers in its official inspection program to include testing 
of corn for oil, protein, and starch content as official criteria, and 
incorporating by reference the Corn Refiners Association Method A-20, 
Starch method, into the regulations. GIPSA is offering this service to 
meet a market demand for reliable official testing procedures created 
by anticipated increases in high-oil corn production.

DATES: Effective May 19, 1999.
    The incorporation by reference of Analysis for Starch in Corn, 
Method A-20, Second Revision, April 15, 1986, Standard Analytical 
Methods of the Member Companies of the Corn Refiners Association, Inc., 
listed in this final rule, is approved by the Director of the Federal 
Register as of July 1, 1998.

FOR FURTHER INFORMATION CONTACT: Sharon Vassiliades, GIPSA, USDA, STOP 
3649, Washington, D.C. 20250-3649; FAX to (202) 720-4628; or e-mail 
[email protected]; or John Giler, GIPSA, USDA, STOP 3632, 
Washington, D.C., 20250-3632; telephone (202) 720-0252; or E-mail 
[email protected].

SUPPLEMENTARY INFORMATION:

Executive Order 12866

    This final rule has been determined to be not significant for 
purposes of Executive Order 12866 and, therefore, has not been reviewed 
by the Office of Management and Budget.

Executive Order 12988

    This final rule has been reviewed under Executive Order 12988, 
Civil Justice Reform. This action is not intended to have a retroactive 
effect. The United States Grain Standards Act (USGSA), as amended, 
provides in section 87g that no State or subdivision may require or 
impose any requirements or restrictions concerning the inspection, 
weighing, or description of grain under the USGSA. Otherwise, this 
final rule will not preempt any State or local laws, regulations, or 
policies, unless they present an irreconcilable conflict with this 
final rule. There are no administrative procedures which must be 
exhausted prior to any judicial challenge to the provisions of this 
final rule.

Effect on Small Entities

    The Administrator of GIPSA has determined that this final rule will 
not have a significant economic impact on a substantial number of small 
entities as defined in the Regulatory Flexibility Act (5 U.S.C. 601 et 
seq.).
    Currently, NIRS analyzers are being used to determine protein in 
wheat and protein and oil in soybeans in both domestic and export 
markets. This final rule expands the use of currently approved NIRS 
analyzers to test corn for oil, protein, and starch content; 
establishes tolerances for corn oil, protein, and starch analyzers. The 
fees for these services are identical to the fees already established 
for wheat protein and soybean oil and protein testing services.
    There are 53 official agencies (46 private entities, 7 States) 
designated by GIPSA to perform official grain inspection services. In 
addition, there are 8 delegated States. Most of the agencies could be 
considered small entities under Small Business Administration criteria. 
The extent to which these agencies will choose to provide this service 
is difficult to quantify because GIPSA is offering this service as 
official criteria, on a request basis, and locations where service is 
requested infrequently may make arrangements with a neighboring agency 
to provide the service (7 CFR 800.196(g)(1)). GIPSA believes that 
offering this service would have a beneficial effect on those agencies 
electing to provide the service.
    For the 1998 crop year, high-oil corn production is estimated at 
1.5 million acres. Currently, producers, grain handlers, exporters, and 
feedlot operators rely primarily on private laboratories to determine 
percent oil, protein, and starch in corn. Further, grain handlers and 
exporters are using this information to determine value and premiums. 
While exact numbers are not known, it can be assumed that many of the 
value-enhanced corn producers, grain handlers, exporters, and feedlot 
operators could be considered small entities under Small Business 
criteria. The extent to which these entities will request the official 
testing of corn for oil, protein, and starch, or the impact of offering 
this service through the official system, is difficult to quantify. 
However, GIPSA believes users of the inspection system will rely on the 
official system to provide reliable testing procedures and accurate 
results that the market can rely on to negotiate price, value, and 
premium. GIPSA performed 2 million inspections for all grains in fiscal 
year 1998.
    To recover the cost of providing this service, GIPSA will charge 
fees as follows: $1.50 per test when the test is performed at the 
applicant's facility; $8.10 per test if the test is performed 
elsewhere; and $15.85 for an appeal. These fees are the same as fees 
charged for similar tests. The impact on applicants for services will 
vary depending upon usage since these tests are provided on a request 
basis.

Information Collection and Recordkeeping Requirements

    In accordance with the Paperwork Reduction Act of 1995, the 
recordkeeping and reporting burden imposed by Part 801 was previously 
approved by OMB under control number 0580-0013 and will not be affected 
by this final rule.

Background

    In its 1997-98 report, Value-Enhanced Corn Quality Report, dated 
April 1998, the U.S. Feed Grains Council defined value-enhanced corn as 
corn with particular quality characteristics that add end-user value. 
Value-enhanced

[[Page 19020]]

corn, also referred to as speciality corn, includes waxy corn, high-
lysine and other essential amino acid corn, hard endosperm corn, 
popcorn, sweet corn, white corn, and high-oil corn. Additionally, work 
is under way to develop nutritionally dense hybrid corn, which usually 
includes some combination of higher-oil, higher protein, and/or altered 
amino or fatty acid profiles.
    The report estimated that value-enhanced corn is produced on 3.3 to 
3.7 million acres (representing 4.5 to 5.1 percent of the U.S. 
harvested corn acreage). It projected the U.S. acreage of value-
enhanced corn to remain essentially unchanged, with the exception of 
high-oil corn, which is considered the fastest growing value-enhanced 
corn produced in the marketplace. Approximately 1.5 million acres of 
high-oil corn is projected for the 1998 crop year (up from virtually 
none in 1993), and the acreage is expected to more than double in 1999. 
The report suggested that high-oil corn will continue to be a 
significant part of the value-enhanced corn produced and traded in the 
marketplace and the market potential for both high-oil and 
nutritionally dense corn is very high, representing the most 
significant growth potential for the value-enhanced corn market.
    High-oil corn is used by livestock feeders to replace animal fat 
previously added to livestock rations and to help the animals gain 
weight more quickly. U.S. No. 2 corn typically averages less than 4.5 
percent oil content, while high-oil corn can contain up to 8.0 percent. 
At this time, depending on the oil content, high-oil corn premiums 
range from 5 to 24 cents per bushel. High-oil corn is almost 
exclusively grown through contracts with livestock feeders or companies 
that will export the grain.
    For several years, corn processors and producers have expressed an 
interest in having corn officially analyzed for oil, protein, and 
starch content. GIPSA received a calibration database from Optimum 
Quality Grains, Inc. Optimum Quality Grains, Inc. (a joint venture 
between DuPont and Pioneer Hi-Bred), is a source of high-oil corn 
germplasm. The calibration database consists of several hundred samples 
which represent germplasm from a broad range of sources.
    GIPSA used the database to derive calibrations in cooperation with 
Optimum Quality Grains, Inc. GIPSA then tested the calibrations' 
performance using an additional set of 92 corn samples not used in the 
calibration database. The 92 corn samples represent oil, protein, and 
starch ranges of 4.0 to 8.5 percent, 8.0 to 12.0 percent, and 64 to 72 
percent (dry basis), respectively. Data collected on the 92 corn 
samples were statistically analyzed.
    The standard deviation of differences (SDD) between NIRS oil values 
and official solvent oil extraction reference results was 0.44 percent. 
A comparison of near-infrared transmittance (NIRT) analyzer protein 
values and official Combustion Nitrogen Analyzer reference results 
yielded an SDD of 0.40 percent. The SDD between NIRS analyzer starch 
predictions and reference values obtained using the Corn Refiners 
Association Method A-20 was 2.20 percent. GIPSA has determined that 
this level of accuracy is commensurate with prospective official 
customer needs.
    To further assure the performance of the NIRT analyzer for corn 
measurements, GIPSA established the maintenance tolerances for corn oil 
content at 0.20 percent mean deviation from the national 
standard NIRT analyzers, which are referenced and calibrated to the 
GIPSA solvent oil extraction method; for protein content at 
0.30 percent mean deviation from the national standard NIRT 
analyzers, which are referenced and calibrated to the Combustion 
method, AOAC International Method 992.23; and for starch content at 
0.35 percent mean deviation from the national standard NIRT 
analyzers, which are referenced and calibrated to the Starch method, 
Corn Refiners Association Method A-20.
    On June 30, 1998, GIPSA published in the Federal Register (63 FR 
35502) an interim rule announcing the immediate availability of 
official oil, protein, and starch testing service for corn as official 
criteria under the authority of the USGSA. The interim rule also 
announced the establishment of performance tolerances between NIRS and 
reference methods for oil, protein, and starch determinations and 
established fees for the service. Additionally, a 30-day comment period 
that ended July 30, 1998, was provided. The fees for the service 
established by the interim rule were revised and finalized in a rule 
published in the Federal Register December 23, 1998 ( 63 FR 70990), and 
became effective February 1, 1999.

Comment Summary

    During the 30-day comment period, GIPSA received comments from Dow 
AgroSciences, Iowa State University (ISU), Zeltex Inc., and MBS Inc. A 
summary of the four comments received is as follows:
    (1) Dow AgroSciences, a business unit of the Dow Chemical Co., is a 
supplier and developer of biotechnology seeds (e.g., nutritionally 
enhanced corn and high oleic/low linolenic canola). Dow AgroSciences 
has cooperated with ISU in the development of NIRT corn calibrations. 
Their concern is that the GIPSA calibration was developed from Optimum 
Quality Grains, Inc., data that did not include their corn. 
Consequently, they believe the GIPSA calibration will not accurately 
measure their commodity, which could put them at a competitive 
disadvantage.
    (2) Iowa State University is a public land-grant institution that 
provides technical support for NIRS calibration development and 
operates a grain quality lab that monitors the quality of Iowa's corn 
production. ISU raised questions regarding the acquisition of GIPSA's 
calibration data, the representativeness of the calibration data set, 
and the performance tolerances for the instrumentation.
    (3) Zeltex Inc. is an NIRS company that is developing a whole grain 
analyzer which they plan to submit for approval as a moisture meter 
under the National Conference of Weights and Measures' National Type 
Evaluation Program (NTEP). Zeltex Inc. has been cooperating with ISU on 
the development of corn and soybean calibrations for their instrument. 
They questioned the calibration development and the approval of a 
single instrument for analysis. Zeltex Inc. is concerned that the GIPSA 
calibration sample data set was insufficient in size and was not 
representative of other corn varieties traded in the marketplace. 
Additionally, they are concerned that the GIPSA-approved Foss 
instrument will prevent Zeltex Inc. from marketing their NIRS 
instrument in the United States.
    (4) MBS Inc. is a foundation seed company that develops and markets 
new soybean varieties and value-enhanced corn hybrids, with 
characteristics targeted for specific end-users and provides NIRS 
calibrations and support to the grain and seed industry. They use the 
calibrations developed at ISU. MBS Inc.'s comments questioned the 
representativeness and source of the calibration data, and questioned 
the performance of the calibration. They also questioned how future 
calibrations would be developed.
    Commenters suggested that GIPSA: (1) withdraw the current proposal; 
(2) promote dialogue among all interested parties regarding calibration 
development; and (3) develop an open procurement process to obtain 
calibration data.

[[Page 19021]]

Comment Review

    GIPSA believes that the commenters' suggestion to withdraw the 
current proposal is unwarranted. For several years, high-oil corn 
processors and producers have expressed an interest in having corn 
officially analyzed for oil, protein, and starch content. Future crop 
production estimates identified high-oil corn as the fastest growing 
value-enhanced corn in the marketplace. For the 1998 crop year, high-
oil corn production is estimated at 1.5 million acres and is expected 
to more than double in 1999. Also, the possible introduction of 
nutritionally dense hybrid corn makes it necessary to provide the grain 
industry with a reliable official testing procedure it can use to 
negotiate price, value, and premium. Additionally, GIPSA is offering 
this service upon request as official criteria which has no effect on 
the grade designation. Consequently, GIPSA believes that offering this 
service will enhance the marketability of speciality corn domestically 
and for export.
    Commenters misinterpreted the information in the interim rule to 
suggest the calibrations were developed based on only 92 samples. In 
fact, the calibration was based on several hundred samples and 
validated with an additional 92 corn samples. Based on its assessment 
of samples in the database, GIPSA determined that the calibration 
database obtained from Optimum Quality Grains, Inc., was representative 
of current samples in the marketing system. When GIPSA explored the 
possibility of providing official testing of corn for oil, protein, and 
starch content, other NIRS calibration sources (including ISU and MBS 
Inc.) were contacted to enlist their cooperation. After reviewing the 
available sources of NIRS calibration data, GIPSA decided to use the 
Optimum Quality Grains, Inc., database for the following reasons: (1) 
Optimum Quality Grains, Inc., is the dominant source of high-oil corn 
in the current market; (2) their analytical procedures were reviewed 
and were compatible with GIPSA's procedures for calibration 
development; (3) their calibration data contained several hundred 
samples; and (4) they provided their calibration data to GIPSA at no 
cost and without restrictions on its use.
    One commenter suggested that, because GIPSA proposes to charge fees 
for corn analysis, its choice of the Optimum Quality Grains, Inc. 
database for purposes of calibration of near-infrared transmittal 
(NIRT) analyzers represents procurement of an outside service by GIPSA. 
The commenter suggests that procurement bidding protocol for government 
procurements required GIPSA to evaluate other databases or request 
derived dry basis calibrations from other databases in an organized 
manner following government procurement procedures.
    The Office of Federal Procurement Policy Act provides the following 
definition of ``procurement,'' in relevant part: ``all stages of the 
process of acquiring property or services.'' 41 USCA 403(2). The 
Federal Acquisition Regulation (FAR), 48 CFR parts 1-52, which applies 
to all ``acquisitions'' (except where expressly excluded) (48 CFR 
1.104) defines an ``acquisition,'' in relevant part, as ``the acquiring 
by contract with appropriated funds of supplies or services * * * by 
and for the use of the Federal Government through purchase or lease, * 
* * '' (48 CFR 2.101).
    GIPSA's choice of the Optimum Quality Grains, Inc., sample 
information as a data standard constitutes neither a ``procurement'' 
nor an ``acquisition'' under these definitions, and the applicability 
of government procurement laws is not predicated on the fact that the 
government may charge a fee for a service it may perform. Instead, 
GIPSA's choice is part of the policy-making process in the development 
of a rule which includes fees for providing official testing services. 
The policy basis for the fee charged is based on an already established 
fee for a specific method of testing. Therefore, GIPSA chose to use the 
Optimum Quality Grains, Inc., database for calibration purposes because 
their analytical methods were compatible with the methods employed by 
GIPSA. GIPSA's choice of an outside data source for incorporation into 
the regulatory action, which is a practice permitted for rulemakings by 
the Director of the Federal Register in accordance with 5 U.S.C. 552(a) 
and 1 CFR part 1, is part of the rulemaking process outlined under 5 
U.S.C. 553 of the Administrative Procedure Act (APA). The adoption of 
an outside reference point, standard, scientific study, or other data 
as part of the factual basis of a rulemaking cannot be converted from a 
question of the sufficiency of the rulemaking under the APA into a 
procurement or acquisition of goods and services subject to Federal 
statutes applicable to government procurement.
    Commenters also indicated that GIPSA's choice of the Optimum 
Quality Grains, Inc., database creates a monopoly for the company that 
created the method from which GIPSA derived the calibration. GIPSA 
disagrees with this comment.
    The initial GIPSA calibration is intended to represent the majority 
of high oil corn that will be traded in the 1998 crop year. GIPSA's 
plan for future calibration development will expand the population of 
the database to other sources of value-enhanced corn. GIPSA intends to 
provide opportunities for interested parties to supply samples of 
material from other germplasm sources for inclusion in its calibration 
updates. Consequently, as additional hybrids reach the feed and food 
marketing channels, GIPSA will solicit new samples for inclusion in the 
calibration data set. GIPSA will then maintain and control the NIRS 
corn oil, protein, and starch calibrations in a similar manner as it 
maintains and controls other official calibrations (e.g., wheat protein 
and soybean oil and protein).
    After receiving the already established database, GIPSA derived and 
tested the calibrations using its calibration development software and 
methodology. Commenters suggested that other calibrations are more 
accurate than the GIPSA calibrations. This conclusion appears to have 
been based on results from different sample sets. Also, some 
assumptions and conclusions reached by ISU regarding the GIPSA 
calibration performance were based on limited information. GIPSA's 
assessments of the relative accuracies of the available calibrations 
support the choice of the calibration based on the Optimum Quality 
Grains, Inc., database. To further assure the performance of the NIRT 
analyzer for corn measurements, GIPSA is establishing the maintenance 
tolerances of 0.20, 0.3, and 0.35 
percent mean deviation for oil, protein, and starch, respectively, from 
the national standard NIRS instruments, which are referenced and 
calibrated to standardized analytical methods.
    GIPSA decided to use current instrument technology because it was 
already approved and available within the official inspection system. A 
single instrument model with a single calibration will provide 
significantly better consistency across inspection laboratories than 
multiple instrument types or multiple calibrations. This fact has been 
demonstrated by GIPSA in the past and was actually supported by one of 
the commenters. Further, GIPSA decided to utilize currently approved 
equipment because it provided an opportunity to implement a new service 
with minimal additional cost to the official inspection program. Cross-
utilizing instruments already available in the official laboratories is 
reasonable and cost effective. Allowing multiple

[[Page 19022]]

instrument models and/or calibrations for corn measurements would 
greatly increase the cost of the GIPSA standardization program, would 
increase the cost of the overall inspection service, and would reduce 
the reliability of official inspection results. In addition, GIPSA does 
not regulate or control the use of analytical instruments outside of 
the official inspection system. Consequently, unofficial inspection 
service providers may use other instruments and/or calibrations.
    This final rule also incorporates by reference the Corn Refiners 
Association Method A-20, Starch method, into the regulations. GIPSA 
will use this method as the chemical reference method for determining 
the starch content in corn.
    GIPSA is required to collect fees for providing official testing 
service to cover, as nearly as practicable, GIPSA's costs for 
performing the service, including related administrative and 
supervisory costs. Testing procedures and time necessary to determine 
oil, protein, and starch in corn using the approved NIRT analyzers are 
the same as those required for NIRT wheat protein or NIRT soybean oil 
and protein determinations. Therefore, GIPSA has decided to collect 
fees identical to the fees established for NIRT wheat protein or NIRT 
soybean oil and protein testing services. These fees will be $1.50 per 
test when the service is performed at an applicant's facility in an 
onsite Federal Grain Inspection Service (FGIS) laboratory; $8.10 per 
test when an original inspection service is performed at a location 
other than an applicant's facility in an FGIS laboratory; and $15.85 
per test when an appeal inspection service is performed at a location 
other than an applicant's facility in an FGIS laboratory.
    GIPSA has carefully considered the comments received regarding this 
action and has determined that it is in the best interest of American 
agriculture to offer this service. This decision is based on the fact 
that (1) the calibration data set represents a significant part of the 
1998 corn market, (2) GIPSA plans to expand the calibration data set to 
incorporate new germplasm sources as they are released to the 
commercial market, (3) future calibration enhancements will remain 
under the direct control of GIPSA, and (4) the performance of the NIRT 
instruments will continue to satisfy market needs.

Final Action

    Value-enhanced corn is produced on 3.3 to 3.7 million acres. It is 
projected that the U.S. acreage of value-enhanced corn is to remain 
essentially unchanged, with the exception of high-oil corn. 
Approximately 1.5 million acres of high-oil corn is projected for the 
1998 crop year and is expected to more than double in 1999. High-oil 
corn will continue to be a significant part of the value-enhanced corn 
produced and traded in the marketplace (the market potential for high-
oil corn is very high, representing the most significant growth 
potential for the value-enhanced corn market). Also, the possible 
introduction of nutritionally dense hybrid corn makes it necessary to 
provide the grain industry with a reliable official testing procedure 
it can use to negotiate price, value, and premium. Additionally, GIPSA 
is offering this service upon request as an official criteria, which 
will have no effect on the grade designation.
    For several years, corn processors and producers have expressed an 
interest in having corn officially analyzed for oil, protein, and 
starch content. When GIPSA explored the possibility of providing 
official testing of corn for oil, protein, and starch content, several 
NIRS calibration sources (including ISU and MBS Inc.) were contacted to 
enlist their cooperation. After reviewing the available sources of NIRS 
calibration data, GIPSA decided to use the Optimum Quality Grains, 
Inc., database for the following reasons: (1) Optimum Quality Grains, 
Inc., is a significant source of high-oil corn in the current market; 
(2) their analytical procedures were reviewed and were compatible with 
GIPSA's procedures for calibration development; (3) their calibration 
data contained several hundred samples; and (4) they provided their 
calibration data to GIPSA at no cost and without restrictions on its 
use.
    The initial GIPSA calibration is intended to represent the majority 
of high oil corn that will be traded in 1998. GIPSA's plan for future 
calibration development will expand the population of the database to 
other sources of value-enhanced corn. GIPSA intends to provide 
opportunities for interested parties to supply samples of material from 
other germplasm sources for inclusion in its calibration updates. 
Consequently, as additional hybrids reach the feed and food marketing 
channels, GIPSA will solicit new samples for inclusion in the 
calibration data set.
    GIPSA has carefully considered the comments received regarding this 
action and has determined that it is in the best interest of the corn 
industry to offer this service. This decision is based on the fact that 
(1) the calibration data set represents a significant part of the 1998 
corn market, (2) GIPSA plans to expand the calibration data set to 
incorporate new germplasm sources as they are released to the 
commercial market, (3) future calibration enhancements will remain 
under the direct control of GIPSA, and (4) the performance of the NIRT 
instruments will continue to satisfy market needs. GIPSA believes that 
offering this service will enhance both the export and domestic 
marketability of speciality corn.
    Therefore, GIPSA will offer corn oil, protein, and starch testing 
services as official criteria under the authority of the USGSA. Upon a 
request for service, official inspection personnel will determine corn 
oil, protein, and starch content. Percent corn oil, protein, and starch 
will be reported to the nearest tenth percent on a dry matter basis 
(zero moisture basis) unless another moisture basis is requested.
    Based on this and other available information, GIPSA has determined 
that the interim rule amending Part 801 as published at 63 FR 35502 
will be adopted as the final rule.

List of Subjects in 7 CFR Part 801

    Grains, Incorporation by reference.

PART 801--OFFICIAL PERFORMANCE REQUIREMENTS FOR GRAIN INSPECTION 
EQUIPMENT

    Accordingly, the interim rule amending 7 CFR Part 801 which was 
published at 63 FR 35502 on June 30, 1998, is adopted as a final rule 
without change.
James R. Baker,
Administrator, Grain Inspection, Packers and Stockyards Administration.
[FR Doc. 99-9518 Filed 4-16-99; 8:45 am]
BILLING CODE 3410-EN-P