[Federal Register Volume 72, Number 10 (Wednesday, January 17, 2007)]
[Rules and Regulations]
[Pages 1913-1917]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 07-153]


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DEPARTMENT OF AGRICULTURE

Grain Inspection, Packers and Stockyards Administration

7 CFR Part 868

RIN 0580-AA92


Fees for Rice Inspection Services

AGENCY: Grain Inspection Packers and Stockyards Administration, USDA.

ACTION: Final rule.

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SUMMARY: This final rule revises the regulations governing the 
sampling, inspection, weighing, and certification for rice by 
increasing certain fees charged for the services by approximately 18 
percent. Further, the rice fees increase an additional 3 percent each 
year through fiscal year 2010 and establish a stowage examination fee. 
These revisions are necessary in order to recover, as nearly as 
practicable, the costs of performing these services under the 
Agricultural Marketing Act of 1946 (AMA).

EFFECTIVE DATE: February 16, 2007.

FOR FURTHER INFORMATION CONTACT: For information concerning program 
operations, contact John Giler, Deputy Director, Field Management 
Division, at his E-mail address: [email protected] or by telephone 
(202) 720-0228. For information concerning fee development contact, 
contact Ms. Patricia Donohue-Galvin, Director, Budget and Planning 
Staff, at her E-mail address: [email protected] or by 
telephone (202) 690-0231.

SUPPLEMENTARY INFORMATION:

Background

    The AMA authorizes official inspection and weighing services, on a 
user-fee basis, of rice (7 U.S.C. 1622(h)). The AMA provides that 
reasonable fees be collected from the users of the services to cover, 
as nearly as practicable, the costs of the services rendered.
    The regulations in 7 CFR 868 list user fees for inspection and 
weighing services provided by the Grain Inspection, Packers and 
Stockyards Administration (GIPSA or Agency). This final rule amends the 
schedule for fees and charges for inspection and weighing services that 
GIPSA provides to the rice industry to reflect the costs necessary to 
operate the program.
    GIPSA receives no directly appropriated funds to provide inspection 
and weighing services. Our ability to provide these services depends on 
user fees.
    For our user fees to cover our costs so that we can continue to 
provide services and to inform our customers of user fees in time for 
advance planning, we proposed to set user fees for our inspection and 
weighing services for fiscal years 2007 through 2010.
    GIPSA regularly reviews its user fee programs to determine if the 
fees are adequate. While GIPSA continues to search for opportunities to 
reduce its costs, the existing fee schedule will not generate 
sufficient revenues to cover program costs while maintaining the Agency 
3-month operating reserve.
    The cost of operating the rice program was $4.4 million during 
fiscal year 2006 and will increase to approximately $4.8 million by 
fiscal year 2010. These cost increases are due to estimated annual cost 
of living adjustments for employee salaries and benefits, equipment 
replacement, and information technology upgrades. Replacing aging rice 
inspection equipment will cost approximately $50,000. An information 
technology upgrade to improve certification efficiency and program 
management will cost approximately $300,000. The estimated costs 
incorporate plans to introduce program changes that will better control 
increases in long-term costs.
    We designed the revised fee structure to fund the rice program this 
fiscal year and future fiscal years to avoid a continued program 
deficit. The combination of the initial 18 percent increase and the 
subsequent annual 3 percent increases will ultimately cover the 
program's operating cost and replenish the 3-month retained earnings 
balance.
    We are also establishing a new fee for stowage examination services 
that we will provide as a service upon request.
    In the April 11, 2006 Federal Register (71 FR 18231-18236), we 
invited comments on our proposed rule identifying changes to the user 
fees we charge for rice inspection and weighing services. We solicited 
comments concerning our proposal for 60 days ending June 12, 2006. By 
the close of the comment period, we received two comments; one from 
representatives of a rice mill and one from a rice industry 
organization. Both commenters opposed the fee increases. The issues 
raised in these comments are discussed below.
    The comments, one from a rice industry trade organization and one 
from a rice mill, both opposed the fee increases. The trade 
organization stated that the fee increase was excessive and would lead 
to a reduction in service requested from the industry, resulting in a 
continuing cycle of fee increases. It also said that the fee increase 
was preemptive and premature considering the continuing nature of 
discussion on privatization.
    The trade organization indicated that GIPSA should eliminate costs, 
redesign its delivery system in certain locations, and it offered to 
work with GIPSA to evaluate options.
    The rice mill stated that the fees charged by GIPSA were much 
higher than private industry and that the increase would force the 
industry to look for alternatives. The mill also questioned a statement 
in the proposed rule concerning the voluntary nature of the inspection 
service, because GIPSA is the only agency issuing USDA Rice Inspection 
Certificates.
    We disagree with these comments.
    The rice inspection program is authorized under the AMA of 1946 and 
funded by user fees. The rice fees were last revised in 2003. Since 
that time, costs have increased and retained earnings have been 
depleted. Without

[[Page 1914]]

the fee increase, the program will continue at a deficit.
    We have adopted cost savings measures; however some aspects of the 
program required upgrades, as previously discussed. In fact, we have 
already adopted program changes that involved a realignment of staff to 
better control rising personnel costs in the future. Further, program 
costs and revenues have been projected out through 2010 with fee 
adjustments on a fiscal year basis. This will minimize the impact of 
the needed fee increase and will provide the industry a template to 
take into account future rice program fees and stabilize program 
finances.
    While the agency has implemented appropriate cost savings measures, 
we have also completed our feasibility study that considered 
restructuring the program as part of a government-wide initiative 
designed to improve efficiency and cost effectiveness (see OMB Circular 
A-76). Specifically, our feasibility study determined that the A-76 
action, which could include the use of private vendors to deliver 
inspection services, would not result in any savings to the rice 
inspection program or any long term savings to the rice industry. 
Therefore, a revision to the user fees is necessary now in order to run 
the inspection program without a deficit.
    Contrary to one of the commenter's statements, rice inspection is a 
voluntary service. Applicants in fact may choose to receive non-federal 
inspection services. While it is true that GIPSA is the only entity 
that issues USDA Rice Inspection Certificates, such certificates are 
not mandatory.
    Finally, we will continue to work with the rice industry, as 
appropriate, concerning this program.

Miscellaneous Changes

    We made the following minor miscellaneous changes in the regulation 
to add clarity. In Table 2 of 7 CFR 868.91, the fees listed as (a) and 
(b) under Stowage Examination are the same, so we added the actual fee 
in row (b) instead of implying it and only listing it in row (a). In 
footnote 2 of Table 2, we added a reference to the GIPSA Web site as an 
alternative source for field office information. We moved the text of 
footnote 3 in Table 2 to the introductory text of section 868.91 
because it refers the reader back to the fees in Table 1. As a result, 
we renumbered footnote 4 in Table 2 as footnote 3.
    Therefore, for the reasons given in this proposed rule and in this 
document, we are adopting the proposed rule as a final rule, with the 
changes noted in this document.

Executive Order 12866 and Regulatory Flexibility Act

    This rule has been determined to be not significant for the 
purposes of Executive Order 12866 and, therefore, the Office of 
Management and Budget (OMB) has not reviewed it.
    As required by the Regulatory Flexibility Act (RFA); we have 
considered the economic impact of this action on small entities. The 
purpose of the RFA is to fit regulatory actions to the scale of 
businesses subject to such actions in order that small businesses will 
not be unduly or disproportionately burdened.
    We are making these regulatory changes because additional user fee 
revenues are needed to cover the costs of providing current and future 
program operations and services.
    There are approximately 135 applicants who receive rice inspection 
and weighing services. A small portion of these users are small 
entities under the criteria established by the Small Business 
Administration (13 CFR 121.201).
    GIPSA has determined that this final rule will not have a 
significant economic impact on a substantial number of small entities 
as defined under the RFA because the majority of applicants that apply 
for services do not meet the requirements of small entities. Rice 
inspection and weighing services are provided upon request and the fees 
charged to users of these services vary with usage. However, the impact 
on all businesses, including small entities, is very similar. Further, 
the rice industry businesses are under no obligation to use these 
services, and, therefore, any decision on their part to discontinue the 
use of the services should not prevent them from marketing their 
products.
    GIPSA regularly reviews its user fee financed programs to determine 
if the fees are adequate. GIPSA has and will continue to seek out cost 
saving opportunities and implement appropriate changes to reduce its 
costs.
    GIPSA's cost of operating the rice program was $4.4 million during 
fiscal year 2006 and will gradually escalate to approximately $4.8 
million by fiscal year 2010. These cost increases through fiscal year 
2010 are due to employee salaries and benefits coupled with estimated 
annual cost of living adjustments, the future costs of approximately 
$50,000 to replace aging rice inspection equipment in the offices, and 
the need to fund approximately $300,000 for an information technology 
upgrade to improve certification efficiency and program management.
    The 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 18 percent fee increase will initially increase the revenue of 
the program. The 3 percent annual increase through fiscal year 2010 is 
expected to cover the program's operating cost and replenish the 3-
month reserve balance. To minimize the impact of a fee increase, GIPSA 
has decided to establish fee rates that will collect sufficient revenue 
over time to cover operating expenses, while striving to create a 3-
month operating reserve by FY 2010. The following table reflects 
GIPSA's financial rice program projections through fiscal year 2010. 
GIPSA will evaluate the financial status of the rice program on a 
continuous basis to determine if it is meeting the goal of obtaining a 
3-month operating reserve by FY 2010, and to determine if other 
adjustments are necessary.

                               Table 1.--Rice Program FY06 Actual and Projections
                                               [Million dollars]*
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                                                                     FY06      FY07      FY08     FY09     FY10
----------------------------------------------------------------------------------------------------------------
Revenue..........................................................     $4.0      $4.6      $5.0     $5.1     $5.3
Obligations......................................................      4.4       4.4       4.5      4.6      4.8
Projected Reserve (Retained Earnings)............................     (0.5)     (0.3)      0.2      0.7      1.2
Target Reserve (Retained Earnings) (3-months operating                 1.1       1.1       1.2      1.2     1.2
 obligations)....................................................
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\*\Figures may not sum due to rounding.


[[Page 1915]]

    GIPSA is also establishing a new fee for stowage examination 
services that we will provide as a service upon request.
    There is no additional reporting, recordkeeping, or other 
compliance requirements imposed upon small entities as a result of this 
final rule.

Paperwork Reduction 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 have been approved by OMB under control 
number 0580-0013.
    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.

Executive Order 12988

    We reviewed this final rule under Executive Order 12988, Civil 
Justice Reform. This action is not intended to have retroactive effect. 
This rule will not preempt any state or local laws, regulations or 
policies, unless they present an irreconcilable conflict with this 
rule. There are no administrative procedures that must be exhausted 
prior to any judicial challenge to the provisions of this rule.

List of Subjects in 7 CFR Part 868

    Administrative practice and procedure, Agricultural commodities, 
Reporting and recordkeeping requirements, Rice.

0
For reasons set out in the preamble, amend 7 CFR Part 868 as follows:

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

0
1. Revise the authority citation for part 868 to read as follows:

    Authority: 7 U.S.C. 1621-1627.


0
2. Revise section 868.91 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. Fees for other services not referenced in Table 2 will be 
based on the non-contract hourly rate listed in Sec.  868.91, Table 1.

                Table 1.--Hourly Rates/Unit Rate per CWT
------------------------------------------------------------------------
                                 Regular workday     Nonregular workday
         Service \1\            (Monday-Saturday)     (Sunday-Holiday)
------------------------------------------------------------------------
                       Effective February 16, 2007
------------------------------------------------------------------------
Contract (per hour per                      $54.80                $76.00
 Service representative)....
Noncontract (per hour per                    66.80                 92.10
 Service representative)....
Export Port Services (per                    0.066                 0.066
 hundredweight) \2\.........
------------------------------------------------------------------------
                        Effective October 1, 2007
------------------------------------------------------------------------
Contract (per hour per                      $56.40                $78.30
 Service representative)....
Noncontract (per hour per                    68.80                 94.80
 Service representative)....
Export Port Services (per                    0.068                 0.068
 hundredweight) \2\.........
------------------------------------------------------------------------
                        Effective October 1, 2008
------------------------------------------------------------------------
Contract (per hour per                      $58.10                $80.70
 Service representative)....
Noncontract (per hour per                    70.90                 97.70
 Service representative)....
Export Port Services (per                    0.070                 0.070
 hundredweight) \2\.........
------------------------------------------------------------------------
                        Effective October 1, 2009
------------------------------------------------------------------------
Contract (per hour per                      $59.90                $83.10
 Service representative)....
Noncontract (per hour per                    73.00                100.60
 Service representative)....
Export Port Services (per                    0.072                 0.072
 hundredweight) \2\.........
------------------------------------------------------------------------
                        Effective October 1, 2010
------------------------------------------------------------------------
Contract (per hour per                      $61.70                $85.60
 Service representative)....
Noncontract (per hour per                    75.20                103.60
 Service representative)....
Export Port Services (per                    0.074                0.074
 hundredweight) \2\.........
------------------------------------------------------------------------
\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 Service \1\
------------------------------------------------------------------------
 
------------------------------------------------------------------------
                       Effective February 16, 2007
------------------------------------------------------------------------
Inspection for quality (per lot, sublot, or sample
 inspection):
  (a) Rough rice...........................................       $41.90
  (b) Brown rice for processing............................        36.00
  (c) Milled rice..........................................        26.00
Factor analysis for any single factor (per factor):
  (a) Milling yield (per sample) (Rough or Brown rice).....        32.50
  (b) All other factors (per factor) (all rice)............        15.60
Total oil and free fatty acid..............................        50.80

[[Page 1916]]

 
Interpretive line samples: \2\
  (a) Milling degree (per set).............................       111.00
  (b) Parboiled light (per sample).........................        27.20
Faxed and extra copies of certificates (per copy)..........         3.00
Stowage Examination (service-on-request) \3\
  (a) Ship (per stowage space) (minimum $252.50 per ship)..        50.50
  (b) Subsequent ship examination (same as original)               50.50
   (minimum $151.50 per ship)..............................
  (c) Barge (per examination)..............................        40.50
  (d) All other carriers (per examination).................        15.50
------------------------------------------------------------------------
                        Effective October 1, 2007
------------------------------------------------------------------------
Inspection for quality (per lot, sublot, or sample
 inspection):
  (a) Rough rice...........................................       $43.20
  (b) Brown rice for processing............................        37.10
  (c) Milled rice..........................................        26.80
Factor analysis for any single factor (per factor):
  (a) Milling yield (per sample) (Rough or Brown rice).....        33.50
  (b) All other factors (per factor) (all rice)............        16.10
Total oil and free fatty acid..............................        52.30
Interpretive line samples: \2\
  (a) Milling degree (per set).............................       114.30
  (b) Parboiled light (per sample).........................        28.00
Faxed and extra copies of certificates (per copy)..........         3.00
Stowage Examination (service-on-request) \3\
  (a) Ship (per stowage space) (minimum $252.50 per ship)..        50.50
  (b) Subsequent ship examination (same as original)               50.50
   (minimum $151.50 per ship)..............................
  (c) Barge (per examination)..............................        40.50
  (d) All other carriers (per examination).................        15.50
------------------------------------------------------------------------
                        Effective October 1, 2008
------------------------------------------------------------------------
Inspection for quality (per lot, sublot, or sample
 inspection):
  (a) Rough rice...........................................       $44.50
  (b) Brown rice for processing............................        38.20
  (c) Milled rice..........................................        27.60
Factor analysis for any single factor (per factor):
  (a) Milling yield (per sample) (Rough or Brown rice).....        34.50
  (b) All other factors (per factor) (all rice)............        16.60
Total oil and free fatty acid..............................        53.90
Interpretive line samples: \2\
  (a) Milling degree (per set).............................       117.70
  (b) Parboiled light (per sample).........................        28.80
Faxed and extra copies of certificates (per copy)..........         3.00
Stowage Examination (service-on-request) \3\
  (a) Ship (per stowage space) (minimum $252.50 per ship)..        50.50
  (b) Subsequent ship examination (same as original)               50.50
   (minimum $151.50 per ship)..............................
  (c) Barge (per examination)..............................        40.50
  (d) All other carriers (per examination).................        15.50
------------------------------------------------------------------------
                        Effective October 1, 2009
------------------------------------------------------------------------
Inspection for quality (per lot, sublot, or sample
 inspection):
  (a) Rough rice...........................................       $45.80
  (b) Brown rice for processing............................        39.40
  (c) Milled rice..........................................        28.40
Factor analysis for any single factor (per factor):
  (a) Milling yield (per sample) (Rough or Brown rice).....        35.50
  (b) All other factors (per factor) (all rice)............        17.10
Total oil and free fatty acid..............................        55.50
Interpretive line samples: \2\
  (a) Milling degree (per set).............................       121.30
  (b) Parboiled light (per sample).........................        29.70
Faxed and extra copies of certificates (per copy)..........         3.00
Stowage Examination (service-on-request) \3\
  (a) Ship (per stowage space) (minimum $252.50 per ship)..        50.50
  (b) Subsequent ship examination (same as original)               50.50
   (minimum $151.50 per ship)..............................
  (c) Barge (per examination)..............................        40.50
  (d) All other carriers (per examination).................        15.50
------------------------------------------------------------------------
                        Effective October 1, 2010
------------------------------------------------------------------------
Inspection for quality (per lot, sublot, or sample
 inspection):
  (a) Rough rice...........................................       $47.20
  (b) Brown rice for processing............................        40.60

[[Page 1917]]

 
  (c) Milled rice..........................................        29.30
Factor analysis for any single factor (per factor):
  (a) Milling yield (per sample) (Rough or Brown rice).....        36.60
  (b) All other factors (per factor) (all rice)............        17.60
Total oil and free fatty acid..............................        57.20
Interpretive line samples: \2\
  (a) Milling degree (per set).............................       124.90
  (b) Parboiled light (per sample).........................        30.60
Faxed and extra copies of certificates (per copy)..........         3.00
Stowage Examination (service-on-request) \3\
  (a) Ship (per stowage space) (minimum $252.50 per ship)..        50.50
  (b) Subsequent ship examination (same as original)               50.50
   (minimum $151.50 per ship)..............................
  (c) Barge (per examination)..............................        40.50
  (d) All other carriers (per examination).................       15.50
------------------------------------------------------------------------
\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.
\2\ Interpretive line samples may be purchased from the U.S. Department
  of Agriculture, GIPSA, FGIS, Technical Services Division, 10383 North
  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, DC 20250-3630 or from the GIPSA
  Web site (http://www.gipsa.usda.gov). The interpretive line samples
  illustrate the lower limit for milling degrees only and the color
  limit for the factor ``Parboiled Light'' rice.
\3\ If performed outside of normal business hours, 1\1/2\ times the
  applicable unit fee will be charged.


James E. Link,
Administrator, Grain Inspection, Packers and Stockyards Administration.
[FR Doc. 07-153 Filed 1-16-07; 8:45 am]
BILLING CODE 3410-KD-P