[Federal Register Volume 66, Number 65 (Wednesday, April 4, 2001)]
[Rules and Regulations]
[Pages 17775-17779]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-8146]



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  Federal Register / Vol. 66, No. 65 / Wednesday, April 4, 2001 / Rules 
and Regulations  

[[Page 17775]]



DEPARTMENT OF AGRICULTURE

Grain Inspection, Packers and Stockyards Administration

7 CFR Part 868

[Docket No. FGIS-2000-002b]
RIN: 0580-AA74


Fees for Commodity and Rice Inspection Services

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

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: The Grain Inspection, Packers and Stockyards Administration 
(GIPSA) is implementing an approximate 3.7 percent increase in fees for 
all hourly rates and certain unit rates for inspection services 
performed under the Agricultural Marketing Act (AMA) of 1946 in the 
commodity and rice inspection programs. These increases are needed to 
cover increased operational costs resulting from the mandated January 
2001 Federal pay increase. This final rule reflects a change made to 
the Rice program's contract hourly rate from the rate that appeared in 
the proposed rule.

EFFECTIVE DATE: May 4, 2001.

FOR FURTHER INFORMATION CONTACT: David Orr, Director, Field Management 
Division, at his E-mail address: [email protected], or telephone 
him at (202) 720-0228.

SUPPLEMENTARY INFORMATION:

A. Executive Order 12866, the Regulatory Flexibility Act, and the 
Paperwork Reduction Act

    This rule has been determined to be nonsignificant for the purpose 
of Executive Order 12866 and, therefore, has not been reviewed by the 
Office of Management and Budget.
    Also, pursuant to the requirements set forth in the Regulatory 
Flexibility Act, it has been determined that this 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.).
    GIPSA regularly reviews its user-fee programs to determine if the 
fees are adequate and continues to seek cost saving opportunities and 
implement appropriate changes to reduce costs. Such actions can provide 
alternatives to fee increases. Employee salaries and benefits are major 
program costs that account for approximately 84 percent of GIPSA's 
total operating budget. A January 2001 general and locality salary 
increase that averages 3.7 percent for all GIPSA employees will 
increase program costs in both the commodity and the rice inspection 
programs.

1. Commodity Inspection Program

    The commodity inspection program consists of two different 
programs, i.e., graded commodities and processed commodities. Current 
fees for these programs are in Tables 1 and 2 of 7 CFR 868.90. These 
programs serve two different markets: The graded commodity market is 
made up of producers and processors of edible beans, peas, and lentils. 
The processed commodity market consists of processors and shippers of 
products such as wheat flour, soybean meal, vegetable oil, and corn 
meal. USDA's Farm Service Agency (FSA) implemented program changes 
during FY 2000 that eliminated requirements for end-item and vessel 
loading observation inspections for processed commodities. Program 
changes, including personnel adjustments, have been implemented to 
begin offsetting operating costs due to the loss of the FSA program 
inspections. Additional cost-cutting measures will continue in FY 2001. 
Even with these cost-saving measures, the commodity inspection program 
will continue to lose funds. In FY 1999, operating costs in the 
commodity inspection program were $5,951,852 with revenue of $7,190,879 
that resulted in a positive margin of $1,239,027 and a positive reserve 
balance of $1,764,140. In FY 2000, operating costs were $5,206,585 with 
revenue of $5,402,686 that resulted in a positive margin of $196,101 
and a positive reserve of $2,062,849. However, in the last two months 
of FY 2000, since all FSA program changes were implemented, we received 
$579,274 in revenue and $745,125 in costs that resulted in a $165,851 
negative margin. The salary adjustment will increase GIPSA's costs in 
the commodity inspection program by approximately $95,000. The current 
positive margin and reserve balance will not continue due to the loss 
of processed commodity inspection and the remaining programs in the 
commodity inspection program cannot absorb the 3.7 percent salary 
increase even with the planned cost-cutting measures.
    The fee increase for our graded commodities program applies 
primarily to GIPSA customers that produce, process, and market graded 
commodities for the domestic and international markets. There are 
approximately 156 such customers located primarily in the States of 
North Dakota, South Dakota, Oregon, Kansas, Colorado, Montana, Texas, 
Michigan, Nebraska, Minnesota, Washington, Idaho, and California. Many 
of these customers meet the criteria for small entities established by 
the Small Business Administration criteria for small businesses. Even 
though the fees are being increased, the increase will not be excessive 
(3.7 percent) and should not significantly affect those entities. Those 
entities are under no obligation to use our service and, therefore, any 
decision on their part to discontinue the use of our service should not 
prevent them from marketing their products.

2. Rice Inspection Program

    The existing fee schedule for GIPSA's rice inspection program will 
not generate sufficient revenues to cover program costs while 
maintaining an adequate reserve balance. Fees for this program are in 
Tables 1 and 2 of 7 CFR 868.91. In FY 1999, GIPSA's operating costs in 
its rice inspection program were $4,105,564 with revenue of $4,412,131 
that resulted in a positive margin of $306,567 and a negative reserve 
balance of $395,793. In FY 2000, operating costs in the rice program 
were $4,034,964 with revenue of $4,837,116 that resulted in a positive 
margin of $802,152 and a positive reserve of $406,359. The current 
positive reserve balance is well below the desired 3-month reserve of 
approximately $1 million.
    We have reviewed the financial position of our rice inspection 
program

[[Page 17776]]

based on the increased salary and benefit costs, along with the 
projected FY 2001 workload. Even though the financial status of the 
rice inspection program has improved, we have concluded that we cannot 
absorb the increased costs caused by the 3.7 percent salary increase 
with the small positive reserve balance. This fee increase will collect 
an estimated $155,500 in additional revenues in the rice program based 
on the projected FY 2001 work volume of 3.9 million metric tons.
    This fee increase applies primarily to GIPSA customers that 
produce, process, and market rice for the domestic and international 
markets. There are approximately 550 such customers located primarily 
in the States of Arkansas, Louisiana, and Texas. Many of these 
customers meet the criteria for small entities established by the Small 
Business Administration criteria for small businesses. Even though the 
fees are being increased, the increase will not be excessive (3.7 
percent) and should not significantly affect those entities. Those 
entities are under no obligation to use our service and, therefore, any 
decision on their part to discontinue the use of our service should not 
prevent them from marketing their products.
    There will be no additional reporting or record keeping 
requirements imposed by this action. In compliance with the Paperwork 
Reduction Act of 1995 (44 U.S.C. 35), the information collection and 
record keeping requirements in Part 868 have been previously approved 
by the Office of Management and Budget under control number 0580-0013. 
GIPSA has not identified any other Federal rules which may duplicate, 
overlap, or conflict with this rule.

B. 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. This action will not preempt any State or local laws, 
regulations, or policies unless they present irreconcilable conflict 
with this rule. There are no administrative procedures that must be 
exhausted prior to any judicial challenge to the provisions of this 
rule.

C. Background

    In the November 3, 2000, Federal Register (65 FR 66189) GIPSA 
proposed an approximate 3.7 percent increase in fees for commodity and 
rice inspection services performed under the Agricultural Marketing Act 
of 1946. Under the provisions of the AMA (7 U.S.C. 1621, et seq.), 
commodity and rice inspection services are provided upon request and 
GIPSA must collect a fee from the customer to cover the cost of 
providing such services. Section 203 (h) of the AMA (7 U.S.C. 1622 (h)) 
provides for the establishment and collection of fees that are 
reasonable and, as nearly as practicable, cover the costs of the 
services rendered. These fees cover the GIPSA administrative and 
supervisory costs for the performance of official services, including 
personnel compensation and benefits, travel, rent, communications, 
utilities, contractual services, supplies, and equipment.
    The commodity inspection fees were last amended on December 18, 
1996, and became effective February 18, 1997 (61 FR 66533). The rice 
inspection fees were last amended on March 30, 2000, and became 
effective May 1, 2000 (65 FR 16787). These fees were to cover, as 
nearly as practicable, the level of operating costs as projected for FY 
1997 and FY 2000, respectively. GIPSA continually monitors its cost, 
revenue, and operating reserve levels to ensure that there are 
sufficient resources for operations. During FY 1998, GIPSA implemented 
cost-saving measures in the rice program in an effort to provide more 
cost-effective services. The purpose of these measures was to reduce 
operating costs in order to reduce the negative retained earnings in 
this program. The cost containment measures included employee buyouts 
and better cross utilization of personnel between programs.
    GIPSA regularly reviews its user-fee-financed programs to determine 
if the fees are adequate and continues to seek out cost-saving 
opportunities and implement appropriate changes to reduce costs. Such 
actions can provide alternatives to fee increases.

1. Commodity Inspection Program

    The commodity inspection program consists of two different 
programs, graded and processed commodities. Fees for these programs can 
be found in 7 CFR 868.90 (a), Tables 1 and 2. These programs serve two 
different markets with different applicants. The graded commodity 
market is made up of producers and processors of edible beans, peas, 
and lentils. The processed commodity market consists of processors and 
shippers of products such as wheat flour, soybean meal, vegetable oil, 
and corn meal. USDA's Farm Service Agency (FSA) implemented program 
changes during FY 2000 that has resulted in a 96 percent reduction in 
processed commodity inspections. The processed commodity inspection 
program represents approximately 86 percent of all revenue and 62 
percent of the cost. Initial program changes, including personnel 
adjustments, have been implemented to begin offsetting the lost revenue 
and reduce operating costs. Additional cost-cutting measures will 
continue in FY 2001. Even with these cost-saving measures, the 
commodity inspection program will continue to lose funds. In FY 1999, 
operating costs in the commodity inspection program were $5,951,852 
with revenue of $7,190,879 that resulted in a positive margin of 
$1,239,027 and a positive reserve balance of $1,764,140. In FY 2000, 
operating costs were $5,206,585 with revenue of $5,402,686 that 
resulted in a positive margin of $196,101 and a positive reserve of 
$2,062,849. However, $579,274 in revenue and $745,125 in costs, for the 
last two months of FY 2000, since all FSA program changes have been 
implemented, has resulted in a $165,851 negative margin. The salary 
adjustment will increase GIPSA's costs in the commodity inspection 
program by approximately $95,000. The current positive margin and 
reserve balance will not continue due to the loss of processed 
commodity inspection and the remaining programs in the commodity 
inspection program cannot absorb the 3.7 percent salary increase even 
with the planned cost-cutting measures.
    The costs associated with salaries and benefits are recovered by 
the hourly rates for personnel performing direct service. Other 
associated costs, including non-salary related overhead, are collected 
through other fees contained in the fee schedule and are at levels that 
do not require any change. GIPSA is increasing fees by 3.7 percent to 
the hourly rates and certain unit rates in 7 CFR 868.90, (a) Table 1--
Hourly Rates (Fees for Inspection of Commodities Other Than Rice). 
Currently, the regular workday hourly rate is $33.00, while Saturday, 
Sunday, and Holidays are $42.50. The other current unit rates are:

Miscellaneous Processed Commodities: (1) Additional
 Tests (cost per test, assessed in addition to the
 hourly rate):
    (i) Aflatoxin Test (Thin Layer Chromatography)......          $51.40
    (ii) Falling Number.................................           12.00
    (iii) Aflatoxin Test Kit............................            7.50

[[Page 17777]]

 
Graded Commodities (Beans, Peas, Lentils, Hops, and
 Pulses):
(1) Additional Tests--Unit Rates (Beans, Peas, Lentils):
    (i) Field run (per lot or sample)...................           22.70
    (ii) Other than field run (per lot or sample).......           13.50
    (iii) Factor analysis (per factor)..................            5.50
(2) Additional Tests--Unit Rates (Hops): (i) Lot or                29.00
 sample (per lot or sample).............................
(3) Additional Tests--Unit Rates (Nongraded Nonprocessed            5.50
 Commodities): (i) Factor analysis (per factor).........
(4) Stowage Examination (service--on-request):
    (i) Ship (per stowage space) (minimum $250 per ship)           50.00
    (ii) Subsequent ship examination (same as original)
     (minimum $150 per ship)
    (iii) Barge (per examination).......................           40.00
    (iv) All other carriers (per examination)...........           15.00
 

2. Rice Inspection Program

    The existing fee schedule for GIPSA's rice inspection program will 
not generate sufficient revenues to cover program costs while 
maintaining an adequate reserve balance. Fees for this program are in 7 
CFR 868.91, Tables 1 and 2. In FY 1999, GIPSA's operating costs in the 
rice program were $4,105,564 with revenue of $4,412,131 that resulted 
in a positive margin of $306,567 and a negative reserve balance of 
$395,793. In FY 2000, operating costs in the rice program were 
$4,034,964 with revenue of $4,837,116 that resulted in a positive 
margin of $802,152 and a positive reserve of $406,359. The current 
positive reserve balance is well below the desired 3-month reserve of 
approximately $1 million.
    We have reviewed the financial position of our rice inspection 
program based on the increased salary and benefit costs, along with the 
projected FY 2001 workload. Even though the financial status of our 
rice inspection program has improved, we have concluded that with the 
small positive reserve balance we cannot absorb the increased costs 
caused by the 3.7 percent salary increase. This fee increase will 
collect an estimated $155,500 in additional revenues in the rice 
program based on the projected FY 2001 work volume of 3.9 million 
metric tons.
    In 7 CFR 868.91, Table 1--Hourly Rates/Unit Rate Per CWT and Table 
2--Unit Rates, currently the regular workday contract and noncontract 
fees are $42.80 and $52.40, respectively, while the nonregular workday 
contract and noncontract fees are $59.60 and $72.40, respectively. The 
unit rate per hundredweight for export port services is currently 
$0.052 per hundredweight. The rice current unit rates are:

----------------------------------------------------------------------------------------------------------------
                                                                                  Brown rice for
                             Service                                Rough rice      processing      Milled rice
----------------------------------------------------------------------------------------------------------------
Inspection for quality (per lot, sublot, or sample inspection)..          $34.50          $29.80          $21.20
Factor analysis for any single factor (per factor):
    (a) Milling yield (per sample)..............................           26.75           26.75  ..............
    (b) All other factors (per factor)..........................           12.70           12.70           12.70
Total oil and free fatty acid...................................  ..............           42.00           42.00
Interpretive line samples:
    (a) Milling degree (per set)................................  ..............  ..............           89.20
    (b) Parboiled light (per sample)............................  ..............  ..............           22.35
Extra copies of certificates (per copy).........................            3.00            3.00            3.00
----------------------------------------------------------------------------------------------------------------

D. Comment Review

    GIPSA received one comment in response to the proposed rulemaking 
published November 3, 2000, at 65 FR 66189. The commenter stated that 
the fees for providing regular commodity and rice inspection services 
were being increased by 4.47 percent and 4.67 percent, respectively, 
while other rates were being increased at close to the projected 3.75 
percent needed to cover the mandated salary increase. The commenter 
raised a concern because of this apparent disparity in rate increases 
and recommended prior to implementing any fee adjustment, the Agency 
should offer a coherent business rationale for the rate adjustment 
disparity.
    The comment was received after the closing date for comments to be 
received. Nonetheless, GIPSA reviewed the proposed fee increases and 
concluded that the Rice program's contract hourly fee was too high by 
$0.20. Accordingly, GIPSA has reduced the Rice program's contract 
hourly rate to $44.60.

E. Final Action

    Section 203 of the AMA (7 U.S.C. 1622) provides for the 
establishment and collection of fees that are reasonable and, as nearly 
as practicable, cover the costs of the service rendered. These fees 
cover the GIPSA costs, including administrative and supervisory costs, 
for the performance of official services, including personnel 
compensation, personnel benefits, travel, rent, communication, 
utilities, contractual services, supplies, and equipment.

List of Subjects in 7 CFR Part 868

    Administrative practice and procedure, Agricultural commodities.

    For reasons set out in the preamble, 7 CFR Part 868 is amended as 
follows:

PART 868--GENERAL REGULATIONS AND STANDARDS FOR CERTAIN 
AGRICULTURAL COMMODITIES

    1. The authority citation for part 868 continues to read as 
follows:


    Authority: Secs. 202-208, 60 Stat. 1087 as amended (7 U.S.C. 
1621, et seq.)


    2. In Sec. 868.90, paragraph (a) is revised to read as follows:


Sec. 868.90  Fees for certain Federal inspection services.

    (a) The fees shown in Table 1 apply to Federal Commodity Inspection 
Services specified below.

[[Page 17778]]



                       Table 1.--Hourly Rates 1, 3
          [Fees for inspection of commodities other than rice]
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Hourly Rates (per service representative):
    Monday to Friday....................................          $34.20
    Saturday, Sunday, and Holidays......................           44.40
Miscellaneous Processed Commodities: 2
    (1) Additional Tests (cost per test, assessed in
     addition to the hourly rate):
        (i) Aflatoxin Test (Thin Layer Chromatography)..           51.40
        (ii) Falling Number.............................           12.50
        (iii) Aflatoxin Test Kit........................            7.50
Graded Commodities (Beans, Peas, Lentils, Hops, and
 Pulses):
    (1) Additional Tests--Unit Rates (Beans, Peas,
     Lentils):
        (i) Field run (per lot or sample)...............           23.00
        (ii) Other than field run (per lot or sample)...           13.75
        (iii) Factor analysis (per factor)..............            5.65
    (2) Additional Tests--Unit Rates (Hops): (i) Lot or            29.30
     sample (per lot or sample).........................
    (3) Additional Tests--Unit Rates (Nongraded                     5.65
     Nonprocessed Commodities): (i) Factor analysis (per
     factor)............................................
    (4) Stowage Examination (service-on-request) 4 (i)             50.50
     Ship (per stowage space) (minimum $252.50 per ship)
        (ii) Subsequent ship examinations (same as
         original) (minimum $151.50 per ship)
        (iii) Barge (per examination)...................           40.50
        (iv) All other carriers (per examination).......          15.50
------------------------------------------------------------------------
1 Fees for original commodity inspection and appeal inspection services
  include, but are not limited to, sampling, grading, weighing, stowage
  examinations, pre-inspection conferences, sanitation inspections, and
  other services requested by the applicant and that are performed
  within 25 miles of the field office. Travel and related expenses
  (commercial transportation costs, mileage, and per diem) will be
  assessed in addition to the hourly rate for service beyond the 25-mile
  limit. Refer to Sec.  868.92. Explanation of service fees and
  additional fees, for all other service fees except travel and per
  diem.
2 When performed at a location other than the Commodity Testing
  Laboratory.
3 Faxed and extra copies of certificates will be charged at $1.50 per
  copy.
4 If performed outside of normal business hours, 1\1/2\ times the
  applicable unit fee will be charged.

    3. Section 868.91 is revised to read as follows:
* * * * *


Sec. 868.91  Fees for certain Federal rice inspection services.

    The fees shown in Tables 1 and 2 apply to Federal rice inspection 
services.

                                    Table 1.--Hourly Rates/Unit Rate Per Cwt
                                   [Fees for federal rice inspection services]
----------------------------------------------------------------------------------------------------------------
                                                                       Regular Workday       Nonregular workday
                             Service 1                                (Monday-Saturday)       (Sunday-holiday)
----------------------------------------------------------------------------------------------------------------
Contract (per hour per Service representative)....................                $44.60                 $61.80
Noncontract (per hour per Service representative).................                 54.30                  75.00
Export Port Services (per hundredweight) 2........................                   .054                   .054 
----------------------------------------------------------------------------------------------------------------
1 Original and appeal inspection services include: Sampling, grading, weighing, and other services requested by
  the applicant when performed at the applicant's facility.
2 Services performed at export port locations on lots at rest.


                                              Table 2.--Unit Rates
----------------------------------------------------------------------------------------------------------------
                                                                                  Brown rice for
                          Service 1, 3                              Rough rice      processing      Milled rice
----------------------------------------------------------------------------------------------------------------
Inspection for quality (per lot, sublot, or sample inspection)..          $34.80          $30.00          $21.50
Factor analysis for any single factor (per factor):
    (a) Milling yield (per sample)..............................           27.00           27.00  ..............
    (b) All other factors (per factor)..........................           12.90           12.90           12.90
Total oil and free fatty acid...................................  ..............           42.60           42.60
Interpretive line samples:2
    (a) Milling degree (per set)................................  ..............  ..............           91.00
    (b) Parboiled light (per sample)............................  ..............  ..............           22.60
Extra copies of certificates (per copy).........................            3.00            3.00           3.00
----------------------------------------------------------------------------------------------------------------
1 Fees apply to determinations (original or appeals) for kind, class, grade, factor analysis, equal to type,
  milling yield, or any other quality designation as defined in the U.S. Standards for Rice or applicable
  instructions, whether performed singly or in combination at other than at the applicant's facility.

[[Page 17779]]

 
2 Interpretive line samples may be purchased from the U.S. Department of Agriculture, GIPSA, FGIS, Technical
  Services Division, 10383 N. Ambassador Drive, Kansas City, Missouri 64153-1394. Interpretive line samples also
  are available for examination at selected FGIS field offices. A list of field offices may be obtained from the
  Director, Field Management Division, USDA, GIPSA, FGIS, 1400 Independence Avenue, SW, STOP 3630, Washington,
  D.C. 20250-3630. The interpretive line samples illustrate the lower limit for milling degrees only and the
  color limit for the factor ``Parboiled Light'' rice.
3 Fees for other services not referenced in table 2 will be based on the noncontract hourly rate listed in Sec.
  868.90, table 1.


    Dated: March 28, 2001.
David R. Shipman,
Acting Administrator, Grain Inspection, Packers and Stockyards 
Administration.
[FR Doc. 01-8146 Filed 4-3-01; 8:45 am]
BILLING CODE 3410-EN-P