[Federal Register Volume 84, Number 168 (Thursday, August 29, 2019)]
[Proposed Rules]
[Pages 45439-45443]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-18602]
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Proposed Rules
Federal Register
________________________________________________________________________
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. 84, No. 168 / Thursday, August 29, 2019 /
Proposed Rules
[[Page 45439]]
DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 868
[Doc. No. AMS-FGIS-18-0088]
RIN 0581-AD85
Fees for Rice Inspection Services and Removal of Specific Fee
References
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Proposed rule.
-----------------------------------------------------------------------
SUMMARY: The Agricultural Marketing Service (AMS) invites comments on a
proposal to reduce the fees for the sampling, inspection, weighing, and
certification of rice performed under authority of the Agricultural
Marketing Act of 1946 (AMA), as amended. Under the proposal, fees would
decrease by 20 percent for fiscal year (FY) 2020 and by another 20
percent for FY 2021. The proposed changes are necessary to lower the
balance in the program's operating reserve to a level adequate to cover
three to six months' expenses. AMS is also proposing to adopt
standardized AMS user-fee calculations used in other AMS programs for
rice inspection services beginning in FY 2022.
DATES: Comments must be received on or before September 30, 2019.
ADDRESSES: Interested persons are invited to submit written comments
concerning this proposed rule. All comments must be submitted through
the Federal e-rulemaking portal at http://www.regulations.gov and
should reference the document number and the date and page number of
this issue of the Federal Register. All comments submitted in response
to this proposed rule will be included in the record and will be made
available to the public. Please be advised that the identity of the
individuals or entities submitting comments will be made public on the
internet at the address provided above.
FOR FURTHER INFORMATION CONTACT: Denise Ruggles, FGIS Executive Program
Analyst, AMS, USDA; Telephone: (816) 659-8406; Email:
[email protected].
SUPPLEMENTARY INFORMATION: The AMA (7 U.S.C. 1621-1638) authorizes the
Federal Grain Inspection Service (FGIS) to provide official inspection
and weighing services--on a user-fee basis--for rice (7 U.S.C.
1622(h)). FGIS, formerly part of the Grain Inspection and Packers and
Stockyards Administration (GIPSA), is now part of AMS, due to a recent
merger of the two agencies. Section 203(h) of the AMA provides for the
assessment and collection of reasonable fees from the users of the
services to cover, as nearly as practicable, the costs of the services
rendered. The fees reflect direct and indirect costs of providing
services. Direct costs include employee salaries and benefits and
certain operating expenses, such as travel. Indirect overhead costs
include expenses related to FGIS and AMS activities supporting the
services provided to the industry, including administrative and
supervisory expenses, rent, communication, utilities, contractual
services, supplies, and equipment. The formula used to calculate the
fee rates also includes the cost of building and maintaining an
operating reserve, as required by AMS. Reserves are held to meet
financial obligations in case of program closure or other unexpected
events.
The fees for rice inspection services were last revised in 2007 (72
FR 1931). The fee schedule at 7 CFR 868.91 provides for fee increases
at set intervals, the most recent taking effect in October 2010 for the
2011 fiscal year and beyond. Although fees have not increased since
then, the current fee structure has generated a recurring annual
operating surplus for several years, resulting in an estimated reserve
balance at the end of FY 2019 that would cover 21 months of rice
inspection program expenses, exceeding AMS's target of maintaining
funds to cover 3 to 6 months' expenses. Estimated monthly costs to
operate the rice inspection program in FY 2019 are $457,000. Thus, AMS
would consider an operating reserve of between $1.37 million and $2.74
million (3 and 6 times the monthly operating cost, respectively) at the
end of FY 2019 to be appropriate.
Financial data for the rice inspection program for fiscal years
2015 through 2019 is reviewed in Table 1.
Table 1-- Rice Program Financial Analysis
[Millions of dollars] *
----------------------------------------------------------------------------------------------------------------
FY 15 FY 16 FY 17 FY 18 FY 19 **
----------------------------------------------------------------------------------------------------------------
Revenue......................... $6.93 $5.79 $5.84 $5.50 $5.49
Obligations..................... 5.13 5.36 5.44 5.39 5.48
Annual Surplus or (Deficit)..... 1.80 0.43 0.40 0.11 0.01
Operating Reserve--running 8.45 8.88 9.28 9.38 9.39
balance........................
----------------------------------------------------------------------------------------------------------------
* Figures may not sum due to rounding and adjustments of prior year obligations.
** FY 2019 values are projections.
As illustrated by Table 1, even though revenues have generally
declined due to varying requests for service and increased
efficiencies, and obligations have generally increased over the last
five years due to inflation and costs of living adjustments, year-
after-year surpluses have continued to increase. The result is an
operating reserve running balance exceeding the range AMS deems
appropriate.
AMS proposes to address the surplus by reducing fees for rice
inspection services by 20 percent across the board for FY 2020 and by
another 20 percent for FY 2021. AMS expects that reducing fees in the
proposed manner would
[[Page 45440]]
gradually reduce the balance in the reserve fund while also allowing
FGIS to continue making strategic operational expenditures to meet
industry expectations and achieve United States Department of
Agriculture (USDA) goals.
The rates proposed in this rule are for Federal inspection services
only. Third-party inspection service providers establish their rates
independently.
Proposed fees for fiscal years 2020 and 2021 are shown in Tables 2
and 3 below:
Table 2--Hourly Rates/Unit Rate per CWT
------------------------------------------------------------------------
Regular workday Nonregular workday
Service \1\ (Monday-Saturday) (Sunday and holiday)
------------------------------------------------------------------------
FY 2020:
Contract (per hour per $49.40 $68.50
Service representative)
Noncontract (per hour 60.20 82.90
per Service
representative)........
-------------------------------------------
Export Port Services
(per hundredweight) \2\ 0.059
-------------------------------------------
FY 2021:
Contract (per hour per 39.50 54.80
Service representative)
Noncontract (per hour 48.20 66.30
per Service
representative)........
-------------------------------------------
Export Port Services
(per hundredweight) \2\ 0.047
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\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 3--Unit Rates Service 3
------------------------------------------------------------------------
FY 2020 FY 2021
------------------------------------------------------------------------
Inspection for quality (per
lot, sublot, or sample
inspection):
(a) Rough rice.......... $37.80 $30.20
(b) Brown rice for 32.50 26.00
processing.............
(c) Milled rice......... 23.40 18.70
Factor analysis for any
single factor (per factor):
(a) Milling yield (per 29.30 23.40
sample) (Rough or Brown
rice)..................
(b) All other factors 14.10 11.30
(per factor) (all rice)
Total free and fatty acid... 45.80 36.60
Stowage Examination (service-
on-request):
(a) Ship (per stowage 40.40 32.30
space) (minimum 5
spaces per ship).......
(b) Subsequent ship 40.40 32.30
examination (same as
original) (minimum 3
spaces per ship).......
(c) Barge (per 32.40 25.90
examination)...........
(d) All other carriers 12.40 9.90
(per examination)......
------------------------------------------------------------------------
\3\ 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 the applicant's facility.
For FY 2022 and beyond, AMS proposes to determine rice inspection
service fees by adopting the standardized formulas AMS has established
for calculating user fees for Cotton, Dairy, Fruits and Vegetables,
Meat and Livestock, Poultry, Science and Technology, and Tobacco.
Established in 2014 (79 FR 67313), the standardized method enables AMS
to use current information about resource needs and projected costs of
providing services to update rates for services on an annual basis,
thus better avoiding unexpected financial shortfalls or unintended
reserve surpluses. AMS announces the fees pertaining to all the AMS
inspection-related services for the coming year annually through a
notice in the Federal Register by the preceding June 1. AMS posts the
fees on the Agency's website for customer reference during the year.
AMS believes that this proposed action for rice would help FGIS adjust
the rice inspection reserve account as necessary and provide its
customers with information they need for planning purposes. Once the
reserve balance has reached an appropriate level, AMS anticipates that
the standardized formula for fee rates will appropriately account for
increases in the actual costs of providing inspection services.
Currently, 7 CFR 868.91--Fees for certain Federal rice inspection
services--provides the fees for rice inspections. Section 868.91 lists
the fees in two tables: Hourly rates or per unit rates per
hundredweight for contract and noncontract services, and unit rates for
inspecting, analyzing, or providing other related services. The tables
give annual rates effective in 2007, 2008, 2009, and 2010. The current
rates have not been adjusted since October 1, 2010. AMS proposes to
remove the two tables from Sec. 868.91 for FY 2020. AMS proposes to
publish instead reduced fees--as described in Tables 2 and Table 3
above--on the AMS website for FY 2020 and FY 2021.
For FY 2022 and beyond, AMS proposes to add a new Sec. 868.91(b)
specifying the formulas for calculating rice inspection fees on an
annual basis. As with other programs, AMS would perform financial
analyses each year to determine whether the current fees are adequate
to recover the costs incurred by providing rice inspection services.
AMS would use historical or prior year cost and workload data, along
with applicable projections to generate estimates of future obligations
and revenues. On the bases of these analyses and formulas, AMS would
determine the rates necessary to sustain rice inspection program
services. Using the formulas to calculate the fees, and reviewing the
fees on an annual basis, would more accurately reflect the actual
[[Page 45441]]
cost of providing inspection services each year and would provide
greater transparency and predictability to the rice industry. AMS would
publish the fees for each upcoming fiscal year in the annual AMS user-
fee notice in the Federal Register by the preceding June 1. The yearly
notice would include both the per-hour rates and the per-unit rates.
Updated fees schedules would no longer appear in the Code of Federal
Regulations but would be available on the AMS website.
Calculations
AMS proposes to base salary, hours, and most factors used in the
proposed calculations on the prior year's actual costs, workload data,
projection of expenses impacting program costs, cost of living
increase, and inflation. AMS would base cost of living increase and
inflation factors on the most recent economic data released by the
Office of Management and Budget (OMB) for budget development purposes.
AMS would round the final rates up to make the amounts divisible by the
quarter hour (15 minutes). Under the proposed rate formulas, the
minimum charge for services covered by the inspection fee rates would
be for 15 minutes. As explained later in this document, the applicant
requesting inspection service would be charged travel costs on an
actual basis. AMS chose to propose these formulas for rice inspection
fees so they would be consistent with the formulas used agency wide in
other AMS programs.
Currently, some rice inspection service fees are charged on a per
hour basis, and some are charged on a per unit basis. AMS proposes to
continue providing costs on both bases to maintain continuity. As well,
AMS would provide the specific amounts used to calculate each year's
rates upon request.
AMS proposes to add a new Sec. 868.91(b)(1) to include the
following formulas for calculating fee rates for FY 2022 and succeeding
fiscal years.
The regular rate is the Service's total grading,
inspection, certification, classification, audit, or laboratory service
program personnel direct pay divided by direct hours for the previous
year, which is then multiplied by the next year's percentage of cost of
living increase, plus the benefits rate, plus the operating rate, plus
the allowance for bad debt rate.
The overtime rate is the Service's total grading,
inspection, certification, classification, audit, or laboratory service
program personnel direct pay divided by direct hours for the previous
year, which is then multiplied by the next year's percentage of cost of
living increase and then multiplied by 1.5, plus the benefits rate,
plus the operating rate, plus the allowance for bad debt rate.
The holiday rate is the Service's total grading,
inspection, certification, classification, audit, or laboratory service
program personnel direct pay divided by direct hours for the previous
year, which is then multiplied by the next year's percentage of cost of
living increase and then multiplied by 2, plus the benefits rate, plus
the operating rate, plus the allowance for bad debt rate.
AMS further proposes to add a new Sec. 868.91(b)(2) to include the
following component formulas, which AMS would derive by using the
previous year's actual costs/historical costs.
The benefits rate is the Service's total inspection
program direct benefits costs divided by the total hours (regular,
overtime, holiday) worked, which is then multiplied by the next year's
percentage of cost of living increase. Some examples of direct benefits
are health insurance, retirement, life insurance, and Thrift Savings
Plan (TSP) retirement basic and matching contributions.
The operating rate is the Service's total inspection
program operating costs divided by total hours (regular, overtime, and
holiday) worked, which is then multiplied by the percentage of
inflation.
The allowance for bad debt rate is the total allowance for
bad debt, divided by total hours (regular, overtime, holiday) worked.
Finally, AMS proposes to add a new Sec. 868.91(b)(3), which would
specify that AMS would use the most recently released OMB economic data
to generate the cost of living and inflation factors used in the above
formulas.
Travel Expense
One factor that may have contributed to the operating reserve
buildup over time is the incorporation of an allowance for travel
expenses in the current rice inspection fee rates that may not have
reflected actual travel costs. AMS proposes to address this by
specifying in the fee calculation formulas that travel expenses related
to providing inspection services, such as commercial transportation
costs, mileage, and per diem, would be based on actual travel costs
incurred to perform the service. The fee rate calculations in proposed
Sec. 868.91(b) would specify that actual travel expenses for rice
inspection services may be added to the cost of providing the service,
consistent with current practice under most other AMS programs. This
change would be applicable to fee rates beginning in FY 2022.
As a conforming change, AMS proposes to remove the language in
Sec. 868.92(a)(2)--Explanation of service fees and additional fees,
which makes specific reference to the inclusion of travel expenses in
the current rice inspection fee calculations, as that language would be
obsolete.
Delegation of Authority
The Secretary of Agriculture delegated to the Under Secretary for
Marketing and Regulatory Programs (MRP) authorities ``related to grain
inspection, packers and stockyards.'' 7 CFR 2.22(a)(3)(i)-(vi). In 7
CFR 2.81, the Under Secretary for MRP further delegated these
authorities to the Administrator of GIPSA. In a November 14, 2017,
Secretary's Memorandum, the Secretary directed that the authorities at
7 CFR 2.81 be re-delegated to the Administrator of AMS, and that the
delegations to the Administrator of GIPSA be revoked. The delegations
to the Under Secretary of MRP related to grain inspection, packers, and
stockyards at 7 CFR 2.22(a)(3) remain unchanged.
The AMS Administrator has authority to administer former GIPSA
programs but does not currently have authority to revise the Code of
Federal Regulations sections that pertain to grain inspections. MRP
will address the transfer of such authority in a separate rulemaking.
AMS expects to change the meaning of certain terms in Sec. 868.1, such
as ``Administrator'' and ``Service,'' to reflect the change in
management from GIPSA to AMS at that time.
Executive Orders 12866, 13563, and 13771
Executive Orders 12866--Regulatory Planning and Review, and 13563--
Improving Regulation and Regulatory Review, direct agencies to assess
all costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). Executive
Order 13563 emphasizes the importance of quantifying both costs and
benefits of reducing costs, harmonizing rules, and promoting
flexibility. This proposed rule does not meet the criteria of a
significant regulatory action under Executive Order 12866 as
supplemented by Executive Order 13563. Therefore, OMB has not reviewed
this rule under those Orders. Additionally, because this
[[Page 45442]]
proposed rule does not meet the definition of a significant regulatory
action under Executive Order 12866, it does not trigger the
requirements contained in Executive Order 13771. See OMB's memorandum
titled ``Interim Guidance Implementing Section 2 of the E.O. of January
30, 2017, titled `Reducing Regulation and Controlling Regulatory Costs'
'' (February 2, 2017).
AMS considered several alternatives to the changes in this proposed
rule, including making larger decreases to the FY 2020 and FY 2021
rates to bring the reserve balance down more quickly or making a larger
fee rate decrease for FY 2020 only. Ultimately, AMS determined that the
proposed approach of making smaller--but still significant--reductions
two years in a row before transitioning to the standardized fee
calculations would be the alternative least disruptive to the industry
while moving toward desirable reserve levels. AMS expects the proposed
changes to benefit the rice industry by reducing rates by 20% for each
of the next two years and then adjusting rates as needed annually
thereafter to reflect actual expenses related to rice inspections.
Under the proposed rule, rice inspection service users would likely
enjoy further savings since most inspection sites are near FGIS field
offices and charges for travel would be based on actual expenses rather
than the standard flat amount incorporated into the current fee rates.
AMS does not expect the proposed rule to provide any environmental,
public health, or safety benefits. AMS has not identified any costs
related to this proposed action.
Executive Order 12988
This proposed rule has been reviewed under Executive Order 12988--
Civil Justice Reform. This rule 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. No administrative proceedings would be
required before parties could file suit in court challenging the
provisions of this rule.
Congressional Review Act
Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq.),
the Office of Information and Regulatory Affairs designated this rule
as not a major rule, as defined by 5 U.S.C. 804(2).
Regulatory Flexibility Analysis
Pursuant to the requirements set forth in the Regulatory
Flexibility Act (RFA) (5 U.S.C. 601-602), AMS has considered the
economic impact of this proposed 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.
There are approximately 169 applicants who receive rice inspection
services. AMS estimates 42 percent of these users would be considered
small businesses based on criteria established by the Small Business
Administration (13 CFR 121.201) to differentiate between large and
small business entities. SBA uses the North American Industry
Classification System (NAICS) to categorize various industry
businesses. SBA defines small rice farmers, NAICS code 111160, as those
whose annual receipts do not exceed $750,000 and small rice millers,
NAICS code 311212, as those with no more than 500 employees.
When the current rice inspection fees were set in 2007, an 18
percent increase was implemented to cover program deficits caused by
increases in employee salaries and benefits, the replacement of aging
rice inspection equipment, and upgrading the information technology
system used to generate certificates. The increase also was intended to
create the operating reserve. However, as explained earlier in this
document, revenues have continued to exceed expenditures, indicating
that an adjustment to the fee schedule is now warranted. In addition,
travel expenses were built into the hourly and unit fees currently
charged by the program, resulting in higher than necessary revenues to
cover the actual service provided.
Proposed changes to the fees would reduce the cost of rice
inspections by 20 percent for all services in FY 2020 across the board,
regardless of the business entity's size, for a projected savings of
approximately $1.17 million to the industry. A further 20 percent
reduction as proposed for FY 2021 would net approximately $2.13 million
in savings to the industry. All entities using rice inspection
services, large and small, would be expected to benefit from reduced
expenses for these services. Savings would be proportionate to the
number of inspection services an entity requests each year. Proposed
adoption of standardized AMS user-fee rate calculations for FY 2022 and
beyond would benefit all inspection applicants, regardless of size, as
fees would more closely reflect the current cost of inspections, and
the fee calculation process would be more transparent. Through its
annual review, AMS would be able to monitor the financial status of the
rice inspection program to determine whether further adjustments are
necessary.
AMS has determined this proposed rule would not have a significant
economic impact on a substantial number of entities as defined under
the RFA because fewer than half the applicants for rice inspection
services meet the definition of small entities. Further, rice
inspection and weighing services are provided upon request, and rice
industry businesses are under no obligation to use these services.
Finally, USDA has not identified any relevant Federal rules that
duplicate, overlap, or conflict with this rule.
Paperwork Reduction Act and E-Government Act
In compliance with the Paperwork Reduction Act of 1995 (44 U.S.C.
chapter 35), the information collection and record keeping requirements
of the rice inspection program have previously been approved by OMB
under control number 0580-0013. No additional reporting, record
keeping, or other compliance requirements would be imposed as a result
of this proposed rule.
AMS is committed to complying with the E-Government Act (44 U.S.C.
3601, et seq.), to promote the use of the internet and other
information technologies to provide increased opportunities for citizen
access to Government information and services, and for other purposes.
List of Subjects in 7 CFR Part 868
Administrative practice and procedure, Agricultural commodities.
For the reasons set out in the preamble, AMS proposes to amend 7
CFR part 868 as follows:
PART 868--GENERAL REGULATIONS AND STANDARDS FOR CERTAIN
AGRICULTURAL COMMODITIES
0
1. The authority citation for part 868 continues to read as follows:
Authority: 7 U.S.C. 1621-1627.
0
2. Revise Sec. 868.91 to read as follows:
Sec. 868.91 Fees for certain Federal rice inspection services.
The fees for services in paragraph (a) of this section apply to
Federal inspection services. Starting with fiscal year 2022,
calculations provided in paragraph (b) of this section will be used to
determine annual fee rates.
(a) Fees for services are published on the Service's website.
(b) For each fiscal year, starting with 2022, the Administrator
will calculate the rates for services, issue a public notice, and
publish fees on the Service's
[[Page 45443]]
website with an effective date of October 1 of each year.
(1) For each year, the Administrator will calculate the rates for
services, per hour per inspection program employee using the following
formulas:
(i) Regular rate. The Service's total inspection program personnel
direct pay divided by direct hours, which is then multiplied by the
next year's percentage of cost of living increase, plus the benefits
rate, plus the operating rate, plus the allowance for bad debt rate. If
applicable, actual travel expenses may also be added to the cost of
providing the service.
(ii) Overtime rate. The Service's total inspection program
personnel direct pay divided by direct hours, which is then multiplied
by the next year's percentage of cost of living increase and then
multiplied by 1.5, plus the benefits rate, plus the operating rate,
plus an allowance for bad debt. If applicable, actual travel expenses
may also be added to the cost of providing the service.
(iii) Holiday rate. The Service's total inspection program
personnel direct pay divided by direct hours, which is then multiplied
by the next year's percentage of cost of living increase and then
multiplied by 2, plus the benefits rate, plus the operating rate, plus
an allowance for bad debt. If applicable, actual travel expenses may
also be added to the cost of providing the service.
(2) For each year, based on previous year/historical actual costs,
the Administrator will calculate the benefits, operating, and allowance
for bad debt components of the regular, overtime, and holiday rates as
follows:
(i) Benefits rate. The Service's total inspection program direct
benefits costs divided by the total hours (regular, overtime, holiday)
worked, which is then multiplied by the next year's percentage of cost
of living increase. Some examples of direct benefits are health
insurance, retirement, life insurance, and Thrift Savings Plan (TSP)
retirement basic and matching contributions.
(ii) Operating rate. The Service's total inspection program
operating costs divided by total hours (regular, overtime, and holiday)
worked, which is then multiplied by the percentage of inflation.
(iii) Allowance for bad debt rate. Total allowance for bad debt,
divided by total hours (regular, overtime, holiday) worked.
(3) The Administrator will use the most recent economic factors
released by the Office of Management and Budget for budget development
purposes to derive the cost of living expenses and percentage of
inflation factors used in the formulas in this section.
Sec. 868.92 [Amended]
0
3. Amend Sec. 868.92 by:
0
a. Removing paragraph (a)(2) and redesignating paragraphs (a)(3)
through (5) as paragraphs (a)(2) through (4), respectively.
0
b. In newly redesignated paragraph (a)(4), removing ``Sec. 868.92(c)''
and adding ``paragraph (c) of this section'' in its place.
Dated: August 23, 2019.
Greg Ibach,
Under Secretary, Marketing and Regulatory Programs.
[FR Doc. 2019-18602 Filed 8-28-19; 8:45 am]
BILLING CODE 3410-02-P