[Federal Register Volume 67, Number 162 (Wednesday, August 21, 2002)]
[Proposed Rules]
[Pages 54133-54136]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-21158]


 ========================================================================
 Proposed Rules
                                                 Federal Register
 ________________________________________________________________________
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 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
 
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 

  Federal Register / Vol. 67, No. 162 / Wednesday, August 21, 2002 / 
Proposed Rules  

[[Page 54133]]



DEPARTMENT OF AGRICULTURE

Grain Inspection, Packers and Stockyards Administration

7 CFR Part 800

RIN 0580-AA58


Review Inspection Requirements

AGENCY: Grain Inspection, Packers and Stockyards Administration, USDA

ACTION: Proposed rule.

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

SUMMARY: The Grain Inspection, Packers and Stockyards Administration 
(GIPSA) is proposing to revise the regulations under the United States 
Grain Standards Act (Act), as amended, to allow interested persons to 
specify the quality factor(s) that would be redetermined during a 
reinspection or appeal inspection for grade. Currently, reinspections 
and appeal inspections for grade must include a redetermination (i.e., 
a complete review or examination) of all official factors that may 
determine the grade, are reported on the original certificate, or are 
required to be shown. Requiring that all quality factors be completely 
reexamined during a reinspection or appeal inspection is not efficient, 
is time consuming, and can be costly. Further, a detailed review of the 
preceding inspection service is not always needed to confirm the 
quality of the grain. This proposed action would allow interested 
parties to specify which official factor(s) should be redetermined 
during the reinspection or appeal inspection service.

DATES: Comments must be received on or before October 21, 2002.

ADDRESSES: Written comments must be submitted to Tess Butler, GIPSA, 
USDA, Room 1647-S, Stop 3604, Washington, DC 20250; FAX (202) 690-2755; 
e-mail, [email protected].
    All comments received will be made available for public inspection 
in Room 1647-South Building, 1400 Independence Avenue, SW., Washington, 
DC, during regular business hours (7 CFR 1.27(b)).

FOR FURTHER INFORMATION CONTACT: John Giler, at (202) 720-1748.

SUPPLEMENTARY INFORMATION:

Background

    Pursuant to the United States Grain Standards Act (Act) (7 U.S.C. 
71 et seq.) the Official United States Standards for Grain are used to 
measure and describe the physical and biological properties of grain at 
the time of inspection. The grade, class, and condition that are 
reported on the official inspection certificate are based on factors 
that are defined in these standards. There are three kinds of factors: 
condition factors, grade determining factors, and nongrade determining 
factors.
    1. Condition factors include heating, odor (musty, sour, and 
commercially objectionable), infestation, special grade factors (e.g., 
smut and garlic), and distinctly low quality factors, such as toxic 
seeds. When grain is found to contain an unacceptable level of one or 
more of these conditions factors, it is graded U.S. Sample Grade or 
assigned a special grade, such as Infested.
    2. Grade determining factors include, but are not limited to, test 
weight per bushel, foreign material, damaged kernels, and other 
classes. These factors are common to most grain. As the percentage of 
such factors increase (or decreases, as in the case of test weight per 
bushel), the numerical grade decreases. For example: U.S. No. 2 Hard 
Red Winter wheat may contain not more than 4.0% total damaged kernels, 
U.S. No. 3 may contain not more than 7.0%, and U.S. No. 4 may contain 
not more than 10.0%.
    3. Non-grade determining factors include moisture in all grains, 
dockage in certain small grains, protein in wheat and soybeans, oil in 
soybeans and sunflower seed, and aflatoxin in corn. The value of each 
of these factors varies with crop year and end-use. Therefore, except 
for dockage and moisture, which must always be determined, these 
factors are only determined upon request.
    After the sample has been analyzed for all factors, a grade is 
assigned to the sample equal to the lowest grade determined for any one 
of the factors. For example, if all of the factors were determined to 
be at the U.S. No. 1 level, except for one factor that was at the U.S. 
No. 3 level, then the lot would be graded U.S. No. 3. Therefore, the 
final grade assigned to a sample or lot is directly dependent on 
achieving accuracy (closeness to the true value) and precision 
(repeatability) in the values obtained for the various grading factors. 
Accuracy and precision are affected mainly by the type of sampling 
device, the sampling procedure, and the grading factors; i.e., machine-
determined values (objective), human judgement values (subjective), and 
sample homogeneity (inherent). The sources of variation are highly 
interrelated; each is involved, to some extent, in the final value 
ascribed to each grading factor of a lot and to the grade designation 
of that lot.
    Due to inherent sampling and inspection variability, users of the 
official inspection system have an opportunity to obtain another 
inspection service when certificated results are questionable. That is, 
if an interested party disagrees with the grade or factor results 
assigned to a lot of grain, they may request that the official agency 
(or in some cases, GIPSA) reinspect the grain or ask GIPSA to perform 
an appeal inspection. There is a limit, however, on the number of times 
this can be done. From the original inspection service an interested 
person may obtain a reinspection service, an appeal inspection service, 
and a Board Appeal inspection service. The same inspection office that 
provided the original inspection service provides the reinspection 
service. The appeal inspection service is handled at one of the GIPSA 
field offices. The Board of Appeals and Review provides the Board 
Appeal inspection service, the highest level of inspection service 
available, in Kansas City, Missouri. The scope of the reinspection or 
appeal inspection is limited to the scope of the original inspection. 
Official criteria are considered separately from official grade and 
official factors when determining kind and scope. If the request 
specifies a different kind and scope, the request must be dismissed.
    Finally, a reinspection certificate supersedes the original 
inspection certificate and an appeal inspection certificate supersedes 
the original and reinspection certificate, if a reinspection was 
performed. The superseded certificate(s) are considered null and void 
as of the date of the reinspection or appeal inspection certificate, 
and must be promptly surrendered. If the

[[Page 54134]]

superseded original certificate(s) is in the custody of the office that 
performed the review inspection, it is marked VOID. If the superseded 
certificate is not in the custody of the reviewing office at the time 
the reinspection or appeal inspection certificate is issued, the 
following statement is shown on the appeal certificate: ``The 
superseded certificate has not been surrendered.'' Furthermore, each 
reinspection and appeal inspection certificate must clearly show the 
word ``Reinspection'' or ``Appeal Inspection,'' and the following 
statement: ``This certificate supersedes Certificate No. __, dated 
____________.
    For export vessels, a reinspection or appeal inspection may be 
requested on either the entire lot or on a material portion (i.e., part 
of a lot that has been found to be inferior to the contract or declared 
grade). When a material portion occurs, the applicant for service is 
entitled to one field review (either a reinspection or appeal 
inspection) and a Board Appeal inspection in an attempt to remove the 
material portion designation. If the review inspection does not 
eliminate the material portion designation and the applicant elects to 
leave the grain on board the carrier, it is considered as a separate 
lot and is certificated as such. If the review inspection eliminates 
the material portion designation, the review inspection results replace 
the original results on the shiplot inspection log. In such cases, no 
statement regarding the reinspection is required to be shown on the 
inspection certificate.
    In addition to these restrictions, Secs. 800.125 and .135 of the 
regulations currently require that reinspections and appeal inspections 
for grade must include a complete review of all official factors that: 
(1) May determine the grade; or (2) are reported on the original 
certificate; and (3) are required to be shown. Consequently, even if 
the official inspector who is performing the reinspection or appeal 
inspection finds there is only one grade-determining factor, all of the 
factors that were reported on the original certificate must be 
redetermined.
    In most instances, the applicant for service does not need a 
complete review. Usually, applicants for a reinspection or an appeal 
inspection service only question the result of a specific quality 
factor. This is evidenced by the many applications for reinspections 
and appeal inspections that request a review inspection of a specific 
factor. In addition to being unwanted, redetermining all official 
factors requires significant time to complete. This increases 
inspection costs and may cause delays in elevator operations.
    Various industry groups have indicated that requiring all factors 
to be completely reviewed on reinspections and appeal inspections is 
usually unnecessary and always costly. But, others have indicated that 
the regulations must not allow official personnel to overlook 
questionable factor results just because the applicant for the 
inspection does not request that certain factors be redetermined during 
the course of a review inspection. Both of these views have merit. All 
official inspections (original, reinspection, or appeal inspection) 
must be accurate.
    To provide effective and efficient official inspection services 
that better meet industry needs, GIPSA proposes that applicants for 
service would be allowed to specify the factor(s) that are to be 
redetermined as part of a reinspection or an appeal inspection service. 
However, reinspections for grade, appeal and Board appeal inspections 
for grade may include a review of any pertinent factor(s), as deemed 
necessary by official personnel. If there is an indication that a 
factor (or factors) may have been misgraded or overlooked on the 
previous inspection, then the factor(s) in question will be 
redetermined.
    Under the current regulations, when official grade or official 
factor and official criteria are reported on the same certificate, a 
reinspection or appeal inspection certificate is required to show a 
special statement. The special statement indicates that the 
reinspection results or appeal or Board appeal inspection results 
represent the official grade, official factors or official criteria and 
that all other results are those of the original, reinspection, or, in 
the case of a Board appeal, the appeal inspection service. In 
formulating this proposal, GIPSA considered requiring reinspection and 
appeal inspection certificates to show a statement that would identify 
which factors were determined during the review inspection(s) and which 
were determined on a preceding inspection. GIPSA has not included such 
additional certification requirements in this proposal. However, GIPSA 
is seeking comments specifically about this issue, particularly from 
those who are currently using official inspection services.

Proposed Action

    GIPSA proposes to revise Sec. 800.125 to allow requests for 
reinspection to be limited to one or more grade or condition factors, 
and to revise Sec. 800.135 to allow requests for appeal inspections to 
be limited to one or more grade or condition factors. In addition, 
GIPSA is proposing to revise Secs. 800.125 and 800.135 to simplify the 
wording of both regulations.

Executive Order 12866 and Effect on Small Entities

    This proposed rule has been determined to be significant for 
purpose of Executive Order 12866 and, therefore, has been reviewed by 
the Office of Management and Budget (OMB). In addition, pursuant to 
requirements set forth in the Regulatory Flexibility Act (RFA)(5 U.S.C. 
601 et seq.), GIPSA has considered the economic impact of this proposed 
rule on small entities and has determined that its provisions would not 
have a significant economic impact on a substantial number of small 
entities.
    The proposed rule will affect entities engaged in shipping grain to 
and from points within the United States and exporting grain from the 
United States. GIPSA estimates there are approximately 9,500 off-farm 
storage facilities and 57 export elevators in the United States that 
could receive official inspection services by GIPSA, delegated States, 
or designated agencies. Official inspection services are provided by 12 
GIPSA field offices, 2 Federal/State offices, 7 GIPSA suboffices, 8 
delegated States, and 59 designated agencies. Under provisions of the 
Act, it is not mandatory for non-export grain to be officially 
inspected. Further, most users of the official inspection services and 
those entities that perform these services do not meet the requirements 
for small entities. Even though some users could be considered small 
entities, this proposed rule relieves regulatory requirements and 
improves the efficiency of official inspection services. No additional 
cost is expected to result from this action.
    Requiring all reinspections and appeal inspections for grade to 
include a complete review of all official factors is not needed by 
applicants or other parties to transactions, or by official inspection 
personnel. Furthermore, this requirement often reduces the efficiency 
of providing official inspection services and may cause unnecessary 
delays in elevator operations. Allowing applicants to specify which 
official factor(s) are to be redetermined during the reinspection or 
appeal inspection service will improve the efficiency of the inspection 
service due to the time required to analyze all official quality 
factors.
    Prior to developing this proposed rule change, GIPSA considered 
restricting the proposed action to either appeal

[[Page 54135]]

inspections or to reinspections. Our analysis was as follows:

1. Restrict Proposed Action To Appeal Inspections

    GIPSA inspectors, who are assigned to specific GIPSA field offices, 
are the only ones who can perform appeal inspections. Currently, GIPSA 
has only fourteen field offices and less than 200 full-time GIPSA 
inspectors nationwide. Most domestic inspection services are provided 
by official agencies and not by GIPSA field offices. Therefore, 
applicants for service usually opt for a reinspection, rather than 
requesting an appeal inspection. (See Table 1.) The only applicants for 
service that would benefit from this alternative are those located at 
the few export ports where GIPSA does onsite original inspection 
services. GIPSA believes that restricting the current proposed action 
to only appeal inspections would adversely impact the cost benefits and 
the flexibility associated with the current proposal. Table 1 below 
illustrates this point.

                                                  Table 1.--Full-Grade Inspection Summary, FY 1994-2001
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                        Original inspections                      Reinspections                Appeals
                             Year                             ------------------------------------------------------------------------------------------
                                                                 OA's \1\    GIPSA \2\      Total       OA's \1\    GIPSA \2\      Total      GIPSA \2\
--------------------------------------------------------------------------------------------------------------------------------------------------------
FY 1997......................................................    1,828,519      119,907    1,948,426       36,698        4,844       41,542        3,140
FY 1998......................................................    1,861,718      117,267    1,918,985       29,012        5,058       34,078        3,443
FY 1999......................................................    1,750,211      117,916    1,868,127       26,046        4,529       30,575        3,103
FY 2000......................................................    1,717,625      110,114    1,827,739       19,778        4,515       24,293        3,103
FY 2001......................................................    1,706,817      102,295    1,809,112       22,073        4,797       26,870       3,105
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Total performed by all state and private official agencies.
\2\ Total performed by all GIPSA field offices.

2. Restrict Proposed Action to Reinspections

    Licensed inspectors employed by state or private official agencies 
perform most reinspections. GIPSA only performs reinspections at 
certain export port locations. GIPSA believes that if the proposed 
action were limited to reinspections, more applicants for service could 
potentially benefit than limiting the proposed action to appeal 
inspections. Some applicants, however, might be placed at a competitive 
disadvantage because their sales contracts require them to request 
appeal inspections on some or all original inspection services. 
Additionally, about ten percent of all reinspections are appealed. If 
the grading procedures for appeals are different from the preceding 
reinspection, the review inspection process is not similar for all 
levels of the review inspection process.
    The review inspection process should provide all applicants the 
same opportunity for inspection services. Reinspection services and 
appeal inspection services should be similar in scope and effect. For 
this reason, GIPSA decided to propose the regulatory change that would 
favorably affect both the reinspection process and the appeal 
inspection process.
    The cost savings of the proposed action on the grain industry could 
be very positive. Although it is impossible to estimate an exact dollar 
savings, the time spent waiting for inspection results could be reduced 
by at least 50 percent and could, in certain circumstances, exceed 90 
percent. Since grain elevators often ``idle'' their load-out operations 
until the results of a reinspection or appeal are known, domestic 
shippers could save several hundred dollars in operation and demurrage 
costs on an average 100-car unit train. The savings for exporters could 
reach $10,000 for some vessels. For example: If elevator X has a fixed 
operating cost of $500 an hour and it takes an average of 30 minutes to 
perform a reinspection or appeal inspection, then each reinspection or 
appeal will cost the elevator an additional $250 in down time. If the 
time required to perform the reinspection or appeal is reduced to 15 
minutes, the elevator saves $125 per inspection due to the more 
efficient inspection service. These savings could be multiplied if the 
time saved on performing the reinspections or appeals allows the 
elevator to avoid or limit demurrage (i.e., a fee assessed to the 
elevator for failing to complete the loading of a unit train or ship 
within a specified period). Currently, the demurrage for railcars can 
range up to $50 per day per car. The demurrage on export vessels can 
reach $10,000 a day.
    The potential revenue impact of the proposed action on GIPSA and 
official agencies should not be significant. In the long run, this 
proposed rule may encourage slightly more reinspection and appeal 
inspection services because of the increased efficiencies associated 
with the proposal. However, GIPSA does not believe that its net revenue 
will significantly change. GIPSA routinely reviews the agency's revenue 
and cost of service as part of its ongoing fee review process. If 
inspection services and revenue from those services change 
significantly, GIPSA may determine a change in fees is needed and would 
do so as part of a fee proposal.

Executive Order 12988 and 12898

    This proposed rule has been reviewed under Executive Order 12988, 
Civil Justice Reform. It is not intended to have a 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 administration procedures that must be exhausted 
prior to any judicial challenge to the provision of this rule.
    Pursuant to Executive Order 12898, ``Federal Actions to Address 
Environmental Justice in Minority Populations and Low Income 
Populations,'' GIPSA has considered potential civil rights implications 
of this proposed rule on minorities, women, or persons with 
disabilities to ensure that no person or group will be discriminated 
against on the basis of race, color, sex, national origin, religion, 
age, disability, or marital or familial status. The proposed rule will 
apply in the same manner to all persons and groups whose activities are 
regulated, regardless of race, gender, national origin, or disability. 
Preliminary information indicates that the proposal will have no effect 
on protected populations. GIPSA will make wide distribution of this 
proposal and will address all comments in the final rulemaking.

Information Collection and Recordkeeping Requirements

    In compliance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
3501 et seq.), the information collection and recordkeeping 
requirements in Part 800 have been previously approved by OMB and 
assigned OMB No. 0580-0013.

[[Page 54136]]

List of Subjects in 7 CFR Part 800

    Administrative practice and procedure, Grains.

PART 800--GENERAL PROVISIONS

    For reason set out in the preamble, GIPSA proposes to amend 7 CFR 
part 800 as follows:
    1. The authority citation for part 800 continues to read as 
follows:

    Authority: Pub. L. 94-582, 90 Stat. 2867, as amended (7 U.S.C. 
71 et seq.).

    2. Section 800.125 (b) is revised to read as follows:


Sec. 800.125  Who may request reinspection services or review of 
weighing services.

* * * * *
    (b) Kind and scope of request. A reinspection or review of weighing 
service is limited to the kind and scope of the original service. If 
the request specifies a different kind or scope, the request shall be 
dismissed but may be resubmitted as a request for original services: 
Provided, however, that an applicant for service may request a 
reinspection of a specific factor(s), official grade and factors, or 
official criteria. In addition, reinspections for grade may include a 
review of any pertinent factor(s), as deemed necessary by official 
personnel. Official criteria are considered separately from official 
grade or official factors when determining the kind and scope. When 
requested, a reinspection for official grade or official factors and 
official criteria may be handled separately even though both sets of 
results are reported on the same certificate. Moreover, a reinspection 
or review of weighing may be requested on either the inspection or 
Class X weighing results when both results are reported on a 
combination inspection and Class X weight certificate.
    3. Section 800.135(b) is revised to read as follows:


Sec. 800.135  Who may request appeal inspection services.

* * * * *
    (b) Kind and scope of request. An appeal inspection service is 
limited to the kind and scope of the original or reinspection service; 
or, in the case of a Board Appeal inspection service, the kind and 
scope of the appeal inspection service. If the request specifies a 
different kind or scope, the request shall be dismissed but may be 
resubmitted as a request for original services: Provided, however, that 
an applicant for service may request an appeal or Board Appeal 
inspection of a specific factor(s), official grade and factors, or 
official criteria. In addition, appeal and Board Appeal inspections for 
grade may include a review of any pertinent factor(s), as deemed 
necessary by official personnel. Official criteria are considered 
separately from official grade or official factors when determining 
kind and scope. When requested, an appeal inspection for grade, or 
official factors, and official criteria may be handled separately even 
though both results are reported on the same certificate. Moreover, an 
appeal inspection may be requested on the inspection results when both 
inspection and Class X weighing results are reported on a combination 
inspection and Class X weight certificate.

(Approved by the Office of Management and Budget under control 
number 0580-0013)

    Dated: August 15, 2002.
Donna Reifschneider,
Administrator.
[FR Doc. 02-21158 Filed 8-20-02; 8:45 am]
BILLING CODE 3410-EN-P