[Federal Register Volume 70, Number 238 (Tuesday, December 13, 2005)]
[Rules and Regulations]
[Pages 73556-73559]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-23911]


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DEPARTMENT OF AGRICULTURE

Grain Inspection, Packers and Stockyards Administration

7 CFR Part 800

RIN 0580-AA87


Export Inspection and Weighing Waiver for High Quality Specialty 
Grains Transported in Containers

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 amending regulations under the United States Grain Standards 
Act (USGSA) to waive the mandatory inspection and weighing requirements 
of the USGSA for high quality specialty grains exported in containers. 
GIPSA is establishing this waiver to facilitate the marketing of high 
quality specialty grains exported in containers. This action is 
consistent with the objectives of the USGSA and will promote the 
continuing development of the high quality specialty export market. 
This waiver will be in effect for a maximum of 5 years, and if after 
this time period GIPSA determines that this waiver continues to advance 
the objectives of the USGSA, GIPSA will consider making this waiver 
permanent.

DATES: Effective January 12, 2006

FOR FURTHER INFORMATION CONTACT: John Sharpe, Director, Compliance 
Division, at his e-mail address: [email protected] or telephone 
him at (202) 720-8262.

SUPPLEMENTARY INFORMATION:

Background

    The USGSA authorizes the Department to waive the mandatory 
inspection and weighing requirements of the USGSA in circumstances when 
the objectives of the USGSA would not be impaired. Current waivers from 
the official inspection and Class X weighing requirements for export 
grain appear in section 7 CFR 800.18 of the regulations. These waivers 
are provided for grain exported for seeding purposes, grain shipped in 
bond, grain exported by rail or truck to Canada or Mexico, grain not 
sold by grade, exporters and individual elevator operators shipping 
less than 15,000 metric tons during the current and preceding calendar 
years, and when services are not available or in emergency situations.
    This final rule provides a waiver for high quality specialty grains 
exported in containers.

[[Page 73557]]

    The high quality specialty grain market has evolved in recent years 
as specialty grain shippers have catered to the specific needs of 
buyers around the world. Transactions involving high quality specialty 
grains are typically made between dedicated buyers and sellers who have 
ongoing business relationships and fully understand each other's 
specific needs and capabilities. Prototypically, sales are for small 
volumes of grain meeting strict commercial contract specifications for 
quality, production, handling, and packaging. The contractual 
specifications may require a single or limited number of seed varieties 
and may specify certain agronomic, harvesting, conditioning, or 
handling practices.
    The quality management processes employed by participants of the 
high quality specialty grain market typically exceed those practiced in 
the commodity grain market where commingling and blending of different 
quality grains is an inherent part of the marketing process. As a 
result, the characteristics of these high quality specialty grains are 
differentiated from commodity grain.
    Traditionally, shippers of high quality specialty grain exported in 
containers handled less than 15,000 metric tons of grain annually and 
thereby, were exempt from mandatory inspection and weighing 
requirements in accordance with Section 800.18(b) of the regulations 
under the USGSA. However, as the high quality specialty grain market 
has grown, volumes have begun to exceed the 15,000 metric ton waiver 
threshold requiring shippers to have their high quality specialty 
grains inspected and weighed in accordance with the USGSA. The cost of 
official inspection and weighing for these specialty operations is 
approximately $1.80 per metric ton compared to an average $0.34 per 
metric ton for bulk commodity exports. Furthermore, the contract 
quality specifications for high quality specialty grains typically 
exceed the grade limits for U.S. No. 1 grain. GIPSA is therefore 
waiving high quality specialty grains, as defined by GIPSA, exported in 
containers from the mandatory export inspection and weighing 
requirements.
    Accordingly, this action will promote the marketing of high quality 
specialty grains and will not impair the objectives of the USGSA. 
Organizations exporting high quality specialty grain will continue to 
be required to notify GIPSA of their actions for registration purposes 
in accordance with the USGSA. Moreover, nothing in this exemption will 
prevent buyers and sellers from requesting and receiving official 
inspection and weighing services should they desire such services.
    On April 28, 2005, GIPSA published an interim final rule with 
request for comments in the Federal Register (70 FR 21921) to amend the 
regulations under the USGSA to waive the mandatory inspection and 
weighing requirements for high quality specialty grains exported in 
containers. GIPSA established this waiver to facilitate the marketing 
of high quality specialty grains exported in containers and this action 
is consistent with the objectives of the USGSA. GIPSA believes that 
this waiver will promote the continuing development of the high quality 
specialty export market.
    In the interim final rule, GIPSA defined high quality specialty 
grain as grain sold under contract terms that (1) specify quality 
better than the grade limits for U.S. No. 1 grain, or (2) specify 
``organic'' as defined by the regulations 7 CFR part 205 under the 
Organic Foods Production Act of 1990, as amended.
    To ensure that exporters of high quality specialty grains comply 
with this waiver, GIPSA is requiring exporters to maintain records 
generated during their normal course of business that pertain to these 
shipments and make these documents available to GIPSA upon request for 
review or copying purposes. GIPSA is not requiring exporters of high 
quality specialty grains to complete or submit new Federal government 
record(s), form(s), or report(s). GIPSA is requiring exporters to 
maintain, submit upon request, and make available documentation that 
fully and correctly disclose transactions concerning high quality 
specialty grain exported in containers. These records shall be 
maintained for a period of 3 years. This information collection 
requirement is essential to ensure that exporters who ship high quality 
specialty grain in containers comply with the waiver provisions.
    The Paperwork Reduction Act requires the Agency to measure 
recordkeeping burden. Under this final rule, exporters must maintain 
records generated during the normal course of business. Experience has 
shown that the U.S. grain industry maintains grain contracts which 
specify quality parameters agreed to by buyers and sellers of grain. 
GIPSA believes that grain contracts would provide sufficient 
information to determine if exporters of high quality specialty grain 
are complying with the waiver.
    This waiver will be in affect for a maximum of 5 years and if after 
this time period GIPSA determines that this waiver continues to advance 
the objectives of the USGSA, GIPSA will consider making this waiver 
permanent. GIPSA will monitor this waiver of official inspection and 
weighing requirements; however, if at any time, GIPSA determines that 
this waiver is not consistent with the objectives of the Act, GIPSA 
will remove this waiver.

Comment Review

    GIPSA received comments from two separate commenters in response to 
its interim final rule published on April 28, 2005, in the Federal 
Register (70 FR 21921). An individual representing a high quality 
specialty grain company submitted two e-mail comments, and another 
comment was submitted on behalf of a grain trade association. The 
following paragraphs address comments received regarding the interim 
final rule.

1. Definition of High Quality Specialty Grains

    The comments received questioned the meaning of the definition of 
high quality specialty grain as provided in the interim final rule. The 
grain trade association stated that the definition of high quality 
specialty grain is too narrow in that it provides only for organic 
grains and for grains with quality specifications higher than U.S. No. 
1. Specifically, the commenter suggested that the definition of high 
quality specialty grains be ``revised to include grains with specific 
intrinsic characteristics that give value to customers beyond the 
official U.S. grain grading factors in U.S. No. 2 or 1 corn.''
    GIPSA does not believe that it should expand the definition of high 
quality specialty grains to include specific intrinsic characteristics. 
GIPSA believes that the inclusion of such characteristics in the 
definition would allow a broader exemption from the mandatory 
inspection and weighing requirements than is consistent with the USGSA. 
Accordingly, GIPSA is not making any changes to the definition based on 
this comment.
    The comment received from the high quality specialty grain company 
suggested that GIPSA clarify its definition of high quality specialty 
grain to define whether some factors or all factors must exceed the 
grade limits for U.S. No. 1 grain. The commenter also expressed 
concerns about the difficulty in procuring specialty soybeans with test 
weight that exceeds U.S. No. 1 because of environmental or varietal 
influences. After reviewing these issues, GIPSA believes that the 
definition should be clarified.
    Virtually all high quality specialty grain is traded on contract 
specifications

[[Page 73558]]

that require all factors exceed the grade limits for U.S. No. 1 grain 
with the exception of test weight. GIPSA recognizes that test weight is 
a factor that is used throughout the market in making stowage 
calculations, as a measurement of stocks (volume) and production 
(yield), and as a general indicator of grain quality. However, other 
attributes in high quality specialty grain such as oil and protein 
content, etc. may provide a better indicator for end-use quality. 
Consequently, the definition merits clarification and is amended to 
read as follows: ``Grain sold under contract terms that specify all 
factors exceed the grade limits for U.S. No. 1 grain, except for the 
factor test weight * * *''
    The commenter also asked why the example of post-harvest, 
pesticide-free corn would qualify for an exemption since 90 percent of 
corn harvested has no post-harvest chemicals applied. This comment has 
merit and, as a result, GIPSA will not use it in the future as an 
example of high quality specialty grain.

2. Phyto-Sanitary Certification

    The comment from the grain trade association questioned why GIPSA's 
interim final rule did not address the requirement for phyto-sanitary 
certification for specialty grain exported in containers. The commenter 
recommended that GIPSA's interim final rule should permit approved 
private labs to perform phyto-sanitary certification to reduce cost. In 
brief, the USGSA does not provide GIPSA authority to regulate phyto-
sanitary inspections and/or certification; consequently, GIPSA can not 
address this issue.
    GIPSA will develop instructions to provide further guidance on 
requirements for high quality specialty grain exported in containers. 
GIPSA will also monitor exporters of high quality specialty grain in 
containers to ensure compliance with these waiver provisions.
    GIPSA did not receive any comments regarding the information 
collection and recordkeeping requirements published in its interim 
final rule.
Executive Orders 12866 and 12988
    This rule has been determined to be non-significant for the purpose 
of Executive Order 12866 by the Office of Management and Budget (OMB). 
This rule has been reviewed under Executive Order 12988, Civil Justice 
Reform. This action is not intended to have a retroactive effect. The 
USGSA provides in Sec 87g that no subdivision may require or impose any 
requirements or restrictions concerning the inspection, weighing, or 
description of grain under the Act. Otherwise, this rule 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.
Paperwork Reduction Act and Government Paperwork Elimination Act
    In compliance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
Chapter 35), the information collection and record keeping requirements 
included in this final rule has been approved by OMB under Control No. 
0580-0022. GIPSA estimates that the time required for each exporter to 
maintain, submit upon request, and make available contractual 
information in a manner consistent with this rule is an average of 6-
hours per year at $5.50 per hour for a total annual burden of $33.00 
per exporter. Assuming that the estimated 80 exporters of high quality 
specialty grain in containers provide GIPSA this contractual 
information, the total annual burden is estimated to be $2,640.
    GIPSA is committed to compliance with the Government Paperwork 
Elimination Act, which requires Government agencies, in general, to 
provide the public the option of submitting information or transacting 
business electronically to the maximum extent possible.
Regulatory Flexibility Act Certification
    GIPSA has determined that this final rule does 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 has considered the economic impact of this final rule on small 
entities and has determined that its provisions would not have a 
significant economic impact on a substantial number of small entities 
because it eliminates burden. This final rule would effectively 
eliminate the cost impact on small businesses that would otherwise have 
to pay for onsite inspection and weighing services for specialty grain 
exported in containers.
    The proliferation of high quality specialty grain exported in 
containers has caused shippers of high quality specialty grains to 
exceed the 15,000 metric ton waiver threshold for export inspection and 
weighing. GIPSA posed this situation to its Advisory Committee on 
November 16, 2004. GIPSA's Advisory Committee is composed of members 
representing producers, handlers, processors, and exporters. The 
Advisory Committee resolved that GIPSA should continue to enforce the 
mandatory export inspection and weighing requirements for commodity 
grains and establish a waiver for high quality specialty grains 
exported in containers. GIPSA believes that waiving high quality 
specialty grains exported in containers is consistent with the intent 
of the USGSA and will allow this market to continue to evolve.
    Various methods were considered to address the challenges facing 
U.S. high quality specialty grain producers, marketers, processors, and 
handlers exporting via containers from global competition. GIPSA looked 
at requiring relaxed inspection and weighing requirements for these 
grains and decided that they would still place an undue burden on these 
types of shipments.
    This final rule will allow exporters of high quality specialty 
grains shipped in containers to ship such grain without the burden of 
mandatory inspection and weighing, while allowing them to request the 
service when desired. Relieving this burden will allow the industry to 
grow and better compete in the global market.
    This rule poses minimal additional cost to exporters. However, this 
rule eliminates the cost of the mandatory export inspection and 
weighing requirements for high quality specialty grain exported in 
containers. GIPSA estimates this cost to be at $1.80 per metric ton of 
grain exported and GIPSA believes that the benefits of this rule 
outweighs the cost.

List of Subjects in 7 CFR Part 800

    Administrative practice and procedure, Export, Grain

0
For reasons set out in the preamble, 7 CFR part 800 is amended as 
follows:

PART 800--GENERAL PROVISIONS

0
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).


0
2. Section 800.0 is amended as follows:
0
a. Paragraphs (b)(44) through (106) are redesignated as (b)(45) through 
(107), respectively.
0
b. New paragraph (b)(44) is added to read as follows:


Sec.  800.0  Meaning of Terms.

* * * * *
    (b) * * *
    (44) High Quality Specialty Grain. Grain sold under contract terms 
that specify all factors exceed the grade limits for U.S. No. 1 grain, 
except for the

[[Page 73559]]

factor test weight, or specify ``organic'' as defined by 7 CFR part 
205. This definition expires July 31, 2010.
* * * * *

0
3. Section 800.18 is amended by revising paragraph (b)(8) to read as 
follows:


Sec.  800.18  Waivers of the official inspection and Class X weighing 
requirements.

* * * * *
    (b) * * *
    (8) High Quality Specialty Grain Shipped in Containers. Official 
inspection and weighing requirements do not apply to high quality 
specialty grain exported in containers. Records generated during the 
normal course of business that pertain to these shipments shall be made 
available to the Service upon request, for review or copying. These 
records shall be maintained for a period of 3 years. This waiver 
expires July 31, 2010.
* * * * *

James E. Link,
Administrator, Grain Inspection, Packers and Stockyards Administration.
[FR Doc. 05-23911 Filed 12-12-05; 8:45 am]
BILLING CODE 3410-EN-P