[Federal Register Volume 86, Number 169 (Friday, September 3, 2021)]
[Rules and Regulations]
[Pages 49466-49470]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-19034]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 800

[Doc. No. AMS-FGIS-20-0001]
RIN 0581-AD94


Fees for Supervision of Official Inspection and Weighing Services 
Performed by Delegated States and Designated Agencies, Miscellaneous 
Fees for Other Services, and Removal of Specific Fee References

AGENCY: Agricultural Marketing Service, Department of Agriculture 
(USDA).

ACTION: Final rule.

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SUMMARY: This final rule revises regulations under authority of the 
United States Grain Standards Act (USGSA) by implementing a 
standardized formula model for calculating Federal Grain Inspection 
Service (FGIS) supervision fees. The revision enables FGIS to adjust 
supervision fees annually in order to maintain an appropriate operating 
reserve as required by the USGSA. As with other Agricultural Marketing 
Service (AMS) fee-based programs, AMS will publish annual FGIS fee 
updates in the Federal Register and post updated fee schedules on its 
website. The revision also eliminates or revises certain registration 
and duplication fees charged by FGIS.

[[Page 49467]]


DATES: 
    Effective date: October 4, 2021.
    Applicability date: October 1, 2021.

FOR FURTHER INFORMATION CONTACT: Denise Ruggles, FGIS Executive Program 
Analyst, AMS, USDA; Telephone: (816) 702-3897; Email: 
[email protected].

SUPPLEMENTARY INFORMATION: The USGSA (7 U.S.C. 71 et seq.) authorizes 
FGIS, a program area within AMS, to supervise grain inspection and 
weighing services provided by official agencies and to charge and 
collect reasonable fees to cover costs of such supervision. These fees 
are charged by official agencies to their customers (grain industry) as 
part of the overall fee charged for inspection and weighing services. 
Supervision fees collected by FGIS cover, as nearly as practicable, all 
operating and administrative costs associated with supervising official 
agencies.
    FGIS regularly reviews user-fees to determine whether fees are 
adequate and would likely maintain appropriate operating reserve funds. 
On July 1, 2016, following such a review (81 FR 41790; June 28, 2016), 
FGIS suspended the assessment of fees for supervision of official 
inspection and weighing services performed by delegated States and 
designated agencies to reduce the operating reserve. This suspension 
ended on December 31, 2020. FGIS's operating reserve at that time was 
adequate to cover six months' operating expenses as required, but FGIS 
resumed the assessment of tonnage fees to cover operating costs of 
supervision.
    FGIS is implementing the use of a standardized formula model to 
determine if user-fee adjustments are necessary to recover costs 
associated with administering the official agency supervision program. 
This action is intended to assure FGIS maintains the financial 
stability necessary to provide inspection and weighing services to the 
grain industry, which facilitates the sound and orderly marketing of 
grain in domestic and export markets.
    AMS invited comments on the proposed rule identifying changes to 
the methodology for establishing FGIS user fees for supervision of 
official inspection and weighing services performed by delegated 
agencies and the removal of specific references to user fees (86 FR 
12119; March 2, 2021). AMS received two comments in response to the 
proposed rule that were supportive. Comments indicated that this 
approach would moderate fee changes and provide for predictable time 
intervals.
    Fees for supervising official agencies were last revised in 2005 
(70 FR 50149; August 26, 2005). The fee schedule at 7 CFR 800.71(a)(2) 
(Schedule B) has not been changed since then. Currently, the FGIS fee 
for supervision of official agencies is set at $0.011 per metric ton of 
domestic U.S. grain shipments inspected or weighed, or both, including 
land carrier shipments to Canada or Mexico.
    Financial data for the supervision of official agencies program for 
fiscal years (FY) 2016 through 2020 is reviewed in Table 1.

                          Table 1--Supervision of Official Agencies Financial Analysis
                                             [Millions of dollars] *
----------------------------------------------------------------------------------------------------------------
                                       FY 16           FY 17           FY 18           FY 19           FY 20
----------------------------------------------------------------------------------------------------------------
Revenue.........................           $1.91           $0.00           $0.00           $0.00           $0.00
Obligations.....................            1.43            1.78            1.88            1.55            1.81
Annual Surplus or (Deficit).....            0.47          (1.78)          (1.88)          (1.55)          (1.81)
Operating Reserve--running                  8.73            6.95            5.08            3.53            1.73
 balance........................
----------------------------------------------------------------------------------------------------------------
* Figures may not sum due to rounding and adjustments of prior year obligations.

    As illustrated by Table 1, though revenues have been suspended 
since July 2016, FGIS obligations have generally increased due to 
inflation and cost of living adjustments. The exception was in FY19, 
when accounts of the former Grain Inspection, Packers and Stockyards 
Administration (GIPSA), which included FGIS, were merged with AMS, 
along with the close-out of obligations. As explained above, the 
current fee structure generated a recurring annual operating surplus 
for several years, resulting in a decision to suspend the collection of 
the fees in 2016 to gradually reduce operating reserves to meet AMS's 
target of maintaining funds to cover between three to six months' 
expenses. Monthly costs to operate the supervision of official agencies 
in FY 2020 were $151,000. Thus, AMS would consider an operating reserve 
between $0.45 million and $0.91 million (3 and 6 times the monthly 
operating cost, respectively) at the end of FY 2020 to be appropriate. 
At the end of FY 2020, the operating reserve balance was $1.73 million, 
enough to cover 11\1/2\ months of expenses.
    To prevent accumulating a reserve balance beyond the targeted 
amount (3 to 6 times the monthly operating cost), AMS is adopting a 
standardized formula for calculating user fees for each calendar year 
(CY). AMS expects that reducing fees in this manner will gradually 
reduce the reserve fund balance, while allowing FGIS to continue making 
strategic operational expenditures to meet industry expectations and 
achieve United States Department of Agriculture (USDA) goals.

Calculations

    AMS will calculate the supervision tonnage fee using prior year's 
actual costs and average yearly tonnage of domestic U.S. grain 
shipments inspected or weighed, or both, including land carrier 
shipments to Canada and Mexico during the previous 5 fiscal years.
    AMS adds new Sec.  800.71(b)(2)(i) and (ii) to include the 
following formulas for calculating fee rates for CY 2021 and succeeding 
years:
    Operating Reserve Adjustment. FGIS will divide the total prior year 
supervision costs by 2 to determine the 6-months operating reserve 
goal. From that value, FGIS will subtract the FY operating reserve 
ending balance to obtain the operating reserve adjustment for 
determining the supervision tonnage fee.
    The operating reserve adjustment for calendar year 2021 is -
$821,925. The calculation, using FY 2020 supervision costs of 
$1,807,633, is: $1,807,633 divided by 2, which equals $903,817. 
Subtract the FY 2020 operating reserve ending balance of $1,725,742 to 
equal -$821,925.
    Supervision tonnage fee. FGIS will add total prior-year supervision 
costs and the operating reserve adjustment, then divide the result by 
the average tonnage for the previous 5-years. If the calculated fee is 
zero or a negative value, FGIS will suspend collection of supervision 
tonnage fees for the next calendar year.

[[Page 49468]]

    The supervision tonnage fee for calendar year 2021 is $0.004 per 
ton. The calculation, based on FY 2020 supervision costs of $1,807,633, 
is $1,807,633 plus the operating reserve adjustment of -$821,925, which 
equals $985,670. Divide this adjustment rate by the 5-year average 
tonnage of 232,398,847, to derive $0.004 per ton.

------------------------------------------------------------------------
                     Fiscal year                          Metric tons
------------------------------------------------------------------------
2016.................................................        238,996,932
2017.................................................        244,355,906
2018.................................................        234,298,085
2019.................................................        206,693,881
2020.................................................        237,649,430
5-year Rolling Average...............................        232,398,847
------------------------------------------------------------------------

    In addition to implementing a new formula for calculating 
supervision tonnage fees, this final rule also revises:
     Section 801.71(a)(2)--Schedule B--to remove the currently 
specified fee and to provide that annual supervision fees will be as 
published on the AMS website.
     The introductory text of Sec.  801.71(b)--Annual review of 
fees--to convey that weighing and inspection fees, as well as 
supervision fees, will be recalculated annually.
     Section 801.71(b)(1)--to clarify that tonnage fees 
calculated in that section pertain only to FGIS inspection and weighing 
(Schedule A) fees.
     Section 801.71(b)--by redesignating paragraph (b)(2) as 
paragraph (b)(3) and adding a new paragraph (b)(2) that outlines 
supervision fee calculations, as described earlier.

Miscellaneous Fees for Other Services

    In addition to the above changes related to supervision fees, AMS 
is implementing the following changes to other fee requirements in 
Sec.  801.71(d).
    This final rule removes the introductory text of Sec.  
801.71(d)(1)(i)--Registration certificates and renewals, and 
consolidates paragraphs (d)(1)(i)(A) and (B) of that section, which 
currently provide flat fees for registering business operations that 
buy, handle, weigh, or transport grain for sale in foreign commerce or 
for such businesses that are also in a control relationship with 
respect to a business that buys, handles, weighs, or transports grain 
for sale in interstate commerce. Currently, the registration fee for 
the former is $135, and the registration fee for the latter is $270. 
This final rule combines the two charges into one. AMS will calculate 
the export registration fee using the following formula and adjust the 
fees annually, as necessary.
    Registration certificates and renewals. FGIS will multiply the 
Sec.  800.71(a) Table 1 of Schedule A noncontract hourly rate by a 
quantity of five. The fee covers FGIS personnel costs to review 
applications, fee publication expenses, and administrative expenses. 
The Schedule A non-contract hourly rate is currently $63. Thus, the 
consolidated certificate registration and application fee for 2021 will 
be $63 multiplied by a quantity of 5, or $315. AMS will publish the 
annual rate in the Federal Register and on the AMS website.
    This final rule removes Sec.  800.71(d)(1)(ii), which provides 
charges for providing extra copies of registration certificates, as 
certificates are now provided electronically for printing by the 
applicant.
    This final rule revises Sec.  800.71(d)(2) to remove the provision 
of a flat fee for applications to amend an official agency designation. 
FGIS will instead calculate the rate using the following formula, and 
the rate will be adjusted annually and published on the AMS website.
    Designation amendments. FGIS will calculate the rate using the 
Federal Register publication rate for three columns, plus one hour of 
noncontract hourly rate from Sec.  800.71(a) Table 1 of Schedule A. The 
fee covers FGIS personnel costs, administrative expenses, and Federal 
Register publication costs.
    The current rate is $75 per application; AMS calculates the fee 
will be $540 for calendar year 2021 using current publication fees. AMS 
typically receives only one or two requests each year, so the overall 
cost to official agencies is not expected to be significant. AMS will 
review the cost to process and publish designation amendments and 
adjust the fees annually, as necessary.
    Finally, this final rule removes Sec.  800.71(d)(3), which provides 
a flat application fee for operating a scale testing organization. FGIS 
hasn't approved such an organization in the past 5 years. States that 
operate as scale testing organizations, in addition to FGIS, provide 
service in areas that are not in reasonably close proximity to FGIS 
duty stations. Scale operators pay far less in travel costs by 
obtaining services provided by their local State scale testing 
organizations on behalf of FGIS. Additionally, this increases FGIS 
efficiency by reducing staff travel and allowing staff to be deployment 
to other mission duties.

Executive Orders 12866 and 13563

    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 rule does not meet the criteria of a significant 
regulatory action under Executive Order 12866 as supplemented by 
Executive Order 13563. Therefore, the Office of Management and Budget 
(OMB) has not reviewed this rule under those orders.
    AMS considered several alternatives to changes made by this rule, 
including reinstating the current fee or applying a standardized 
formula using one year of supervision tonnage versus the five-year 
supervision tonnage average. Ultimately, AMS determined that the 
proposed approach of recalculating the fee each year using a standard 
formula based on a five-year supervision tonnage average would provide 
savings to the industry when the operating reserve balance exceeds 
FGIS's goal and would limit large fee increases following years where 
supervision tonnage volumes are significantly less. AMS expects changes 
made by this rule to benefit the grain industry by adjusting 
supervision fees as needed annually to reflect actual expenses related 
to grain inspections supervision and maintaining appropriate operating 
reserve balances. AMS does not expect the rule to provide any 
environmental, public health, or safety benefits. AMS has not 
identified any costs related to this action.

Executive Order 12988

    This rule has been reviewed under Executive Order 12988--Civil 
Justice Reform. This rule is not intended to have retroactive effect. 
The USGSA provides in Sec. 87g that no State or subdivision thereof may 
require or impose any requirements or restrictions concerning the 
inspection, weighing, or description of grain under the Act. This rule 
does 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 provisions of this rule.

Executive Order 13175

    This rule has been reviewed under E.O. 13175--Consultation and 
Coordination with Indian Tribal Governments, which requires agencies to 
consider whether their rulemaking actions would have tribal 
implications. AMS has determined that this rule is

[[Page 49469]]

unlikely to have substantial direct effects on one or more Indian 
tribes, on the relationship between the Federal Government and Indian 
tribes, or on the distribution of power and responsibilities between 
the Federal Government and Indian tribes.

Regulatory Flexibility Analysis

    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (RFA) (5 U.S.C. 601-602), AMS has 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.
    This rule sets fees for three different FGIS functions: (1) Fees 
for FGIS Supervision, (2) fees for registration certificates and 
renewals for exporters of grain, and (3) fees for amending the 
designation of official agencies.
    AMS has determined that this rule does not have a significant 
economic impact on a substantial number of small entities because most 
applicants (grain industry) that apply for these official services and 
are subjected to AMS supervision fees do not meet the requirements for 
small entities. This rule will affect entities engaged in shipping 
grain to and from points within the United States and exporting grain 
from the United States to Canada and Mexico. There are approximately 
9,500 off-farm storage facilities in the United States that could 
receive grain services from delegated States or designated agencies. 
AMS estimates 25 percent of these users would be considered small 
businesses based on criteria established by the Small Business 
Administration (13 CFR 121.201) (SBA). SBA uses the North American 
Industry Classification System (NAICS) to categorize various industry 
businesses. SBA defines small grain retailers and warehouse and storage 
facilities, NAICS codes 424510 and 493130, respectively, as those whose 
annual receipts do not exceed $30,000,000 or who have no more than 200 
employees, respectively.
    With respect to fees for supervision, these fees are a minor amount 
compared to the total value of grain shipments. Carrier types shipped 
by small entities are submitted samples and trucks with a standardized 
weight of 23.95 metric tons and railcars with a standardized weight of 
99.79 metric tons. Supervision fees assessed on these carriers at the 
current published rate are $0.26 per truck (2020 corn market-year value 
of $2,700) and $1.10 per railcar (2020 corn market-year value of 
$12,600).
    The registration certificate and renewal fee applies to persons 
engaged in the business of buying grain for sale in foreign commerce 
and in the business of handling, weighing, or transporting grain for 
sale in foreign commerce. Under provisions of the USGSA, grain exported 
from the United States must be officially inspected and weighed. 
Mandatory inspection and weighing services were provided by AMS and 
official agencies on a fee basis for 97 registered exporters in CY 
2020. Eighty-three of the registered entities are owned and managed by 
multi-national corporations, large cooperatives, or public entities 
that do not meet the criteria for small entities established by the 
SBA. In 2020, approximately fourteen small exporters registered with 
FGIS. As explained, with the registration fees for 2021 calculated to 
be $315, FGIS believes the change in registration fees would have a 
minor effect on the small number of small business that register with 
FGIS.
    Finally, the designation amendment fee applies to an official 
agency requesting a modification to its designation within the five-
year designation period. AMS has 42 designated States and agencies, and 
13 of these designated agencies meet the criteria for small entities 
established by the SBA. As explained earlier, the designation amendment 
fee for 2021 is calculated to be $540. FGIS believes the revised 
designation amendment fee would have a minor impact on small 
businesses, since it typically receives no more than two modification 
requests per year.
    The adoption of standardized AMS user-fee rate calculations for 
2021 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 grain supervision program to determine whether further 
adjustments are necessary.
    AMS has determined this rule would not have a significant economic 
impact on a substantial number of entities as defined under the RFA 
because fewer than half of the applicants for grain inspection services 
meet the definition of small entities.
    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 
for the program providing supervision of official agencies have 
previously been approved by OMB under control number 0580-0013. No 
additional reporting, record keeping, or other compliance requirements 
will be imposed as a result of this 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 800

    Administrative practice and procedure, Grain.

    For reasons set forth in the preamble, AMS amends 7 CFR part 800 as 
follows:

PART 800--GENERAL REGULATIONS

0
1. The authority citation for part 800 continues to read as follows:

    Authority:  7 U.S.C. 71-87k.


0
2. Amend Sec.  800.71 by:
0
a. Revising paragraph (a)(2);
0
b. Revising paragraph (b) introductory text;
0
c. Revising the first sentence in paragraph (b)(1);
0
d. Redesignating paragraph (b)(2) as paragraph (b)(3);
0
e. Adding new paragraph (b)(2); and
0
f. Revising paragraph (d).
    The revisions and addition read as follows:


Sec.  800.71   Fees assessed by the Service.

    (a) * * *
    (2) Schedule B--Fees for Supervision of Official Inspection and 
Weighing Services Performed by Delegated States and Designated Agencies 
in the United States. The Service will assess a supervision fee per 
metric ton of domestic U.S. grain shipments inspected or weighed, or 
both, including land carrier shipments to Canada and Mexico. For each 
calendar year, the Service will calculate Schedule B fees as defined in 
paragraph (b) of this section. The Service will publish a notice in the 
Federal Register and post Schedule B fees on the Agency's public 
website.
    (b) Annual review of fees. For each calendar year, starting with 
2021, the Service will review fees included in this section and publish 
fees each year according to the following:
    (1) Tonnage fees. Tonnage fees in Schedule A in paragraph (a)(1) of 
this section will consist of the national tonnage fee and local tonnage 
fees and

[[Page 49470]]

the Service will calculate and round the fee to the nearest $0.001 per 
metric ton. * * *
* * * * *
    (2) Supervision fee. Supervision fee in Schedule B in paragraph 
(a)(2) of this section will be set according to the following:
    (i) Operating reserve adjustment. The operating reserve adjustment 
is the supervision program costs for the previous fiscal year divided 
by 2 less the end of previous fiscal year operating reserve balance.
    (ii) Supervision tonnage fee. The supervision tonnage fee is the 
sum of the prior fiscal year program costs plus operating reserve 
adjustment divided by the average yearly tons of domestic U.S. grain 
shipments inspected or weighed, or both, including land carrier 
shipments to Canada and Mexico during the previous 5 fiscal years. If 
the calculated value is zero or a negative value, the Service will 
suspend the collection of supervision tonnage fees for one calendar 
year.
* * * * *
    (d) Miscellaneous fees for other services. For each calendar year, 
the Service will review fees included in this section and publish fees 
in the Federal Register and on the Agency's public website.
    (1) Registration certificates and renewals. The fee for 
registration certificates and renewals will be published annually in 
the Federal Register and on the Agency's public website, and the 
Service will calculate the fee using the noncontract hourly rate 
published pursuant to 7 CFR 800.71(a)(1) multiplied by five. If you 
operate a business that buys, handles, weighs, or transports grain for 
sale in foreign commerce, or you are also in a control relationship 
with respect to a business that buys, handles, weighs, or transports 
grain for sale in interstate commerce, you must complete an application 
and pay the published fee.
    (2) Designation amendments. The fee for amending designations will 
be published annually in the Federal Register and on the Agency's 
public website. The Service will calculate the fee using the cost of 
publication plus one hour at the noncontract hourly rate. If you submit 
an application to amend a designation, you must pay the published fee.

Erin Morris,
Associate Administrator, Agricultural Marketing Service.
[FR Doc. 2021-19034 Filed 9-2-21; 8:45 am]
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