[Federal Register Volume 62, Number 181 (Thursday, September 18, 1997)]
[Rules and Regulations]
[Pages 48936-48939]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-24814]


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DEPARTMENT OF AGRICULTURE

Grain Inspection, Packers and Stockyards Administration

7 CFR Part 800

RIN 0580-AA56


Fees for Official Inspection and Official Weighing Services

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 implementing, effective October 1, 1997, a 12.5-percent 
increase in the administrative service fee for official inspection and 
weighing services performed in the United States under the United 
States Grain Standards Act (USGSA), as amended. The fee

[[Page 48937]]

adjustment is necessary to cover indirect field office and headquarters 
operational costs and to maintain a 3-month operational reserve. GIPSA 
is also deleting from the fee schedule the unit fees for submitted 
samples and factor only analysis performed online at an applicant's 
facility.

EFFECTIVE DATE: October 1, 1997.

FOR FURTHER INFORMATION CONTACT: George Wollam, USDA, GIPSA, at (202) 
720-4628.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

    This rule has been determined to be nonsignificant for the purpose 
of Executive Order 12866 and, therefore, has not been reviewed by the 
Office of Management and Budget.

Executive Order 12988

    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 Section 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 proposed 
rule. There are no administrative procedures which must be exhausted 
prior to any judicial challenge to provisions of this rule.

Effects on Small Entities

    James R. Baker, Administrator, GIPSA, has determined that this rule 
will 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.). Most users of the official inspection and weighing 
services do not meet the requirements for small entities. FGIS is 
required by statute to make services available and to recover costs of 
providing such services, as nearly as practicable.
    The fee revision applies to entities engaged in the export of 
grain. Under provisions of the USGSA, most grain exported from U.S. 
export port locations must be officially inspected and weighed. 
Mandatory inspection and weighing services are provided by FGIS on a 
fee basis at 37 export facilities. All of the export facilities are 
owned and managed by multi-national corporations, large cooperatives, 
or public entities that do not meet the criteria for small entities as 
defined under the Regulatory Flexibility Act and the regulations issued 
thereunder. A 3-percent increase in hourly and certain unit fees went 
into effect June 15, 1997, and will recover the increased operational 
costs caused by mandated cost-of-living increases to Federal salaries. 
That increase is anticipated to generate $218,100 in additional 
revenue, bringing to $22.21 million the projected total revenue for 
fiscal year 1997. This 12.5-percent increase in the administrative fee 
is designed to generate sufficient revenue to cover indirect costs 
associated with field office and headquarters operations and to 
maintain the retained earnings at a 3-month operating reserve for the 
inspection and weighing program. Additional revenue estimated for 
fiscal year 1998 is projected to be $440,000 at an 85.6 million metric 
ton level. The 12.5-percent increase will not have a significant 
economic impact on small entities.

Information Collection and Recordkeeping Requirements

    In compliance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
Chapter 35), the information collection and recordkeeping requirements 
contained in Part 800 have been previously approved by the Office of 
Management and Budget under control number 0580-0013.

Background

    The USGSA requires GIPSA to charge and collect reasonable fees for 
performing official inspection and weighing services. The fees are to 
cover, as nearly as practicable, FGIS' costs for performing these 
services, including related administrative and supervisory costs.
    Effective October 1, 1996, GIPSA changed the methodology it uses 
for fees charged for its inspection and weighing services. The current 
fee structure for these services consists of three basic components: 
(1) An hourly rate charged to recover the direct labor costs of 
providing service; (2) a unit test or service rate; and (3) a per 
metric ton administrative charge to recover the indirect costs, such as 
salaries and benefits for office management and support staff and rent, 
incurred both at field offices and headquarters. Fees charged in the 
first two components of the structure were increased by approximately 3 
percent effective June 15, 1997 (62 FR 31701, June 11, 1997, corrected 
at 62 FR 34342, June 25, 1997), to cover increased costs due to 
mandated Federal cost-of-living increases. At that time, GIPSA noted 
that a further adjustment of fees, including an adjustment to the 
administrative fee to recover the indirect costs of field offices and 
headquarters and to replenish the operating reserve, would be addressed 
in future rulemaking.
    The current USGSA administrative fee was published in the August 
22, 1996, Federal Register (61 FR 43301) and became effective on 
October 1, 1996. The per metric ton administrative charge recovers the 
indirect costs and administrative costs of FGIS field offices and 
headquarters such as the salaries and benefits for office management 
and support staff, Departmental charges, Animal and Plant Health 
Inspection Service and Agricultural Marketing Service charges, 
management of computers and software, utilities, and rent. The 3-
percent increase that became effective June 15, 1997, was intended to 
recover only increases to the salaries of service personnel responsible 
for inspection and weighing of grain. The administrative fee is 
assessed on all outbound grain inspected and/or weighed at an 
applicant's facility.
    Six levels of fees exist, ranging from 1 metric ton or less to over 
7,000,001 metric tons, with fees decreasing as the number of metric 
tons inspected increases. The charge is assessed in addition to the 
hourly rate. At the beginning of each fiscal year (October 1), all 
applicants pay the same per metric-ton-fee. Once a level has been 
reached, the fee for additional metric tons is reduced until the 
maximum volume is reached.

                           Administrative Fees                          
------------------------------------------------------------------------
                                                    Current    Proposed 
                   Metric tons                        fees       fees   
------------------------------------------------------------------------
1-1,000,000......................................     $0.090     $0.1013
1,000,000-1,500,000..............................       .082       .0923
1,500,001-2,000,000..............................       .042       .0473
2,000,001-5,000,000..............................       .032       .0360
5,000,001-7,000,000..............................       .017       .0192
7,000,000 +......................................       .002       .0023
------------------------------------------------------------------------

    This 12.5-percent increase in the administrative fee is designed to 
generate additional revenue to cover the indirect costs associated with 
field office and headquarters operations and maintain the retained 
earnings at a 3-month operating reserve for the inspection and weighing 
program.
    GIPSA estimates collecting $22.2 million in revenue for fiscal year 
1997 under the current fee schedule. This is $1 million less than the 
$23.2 million estimated cost of operations for fiscal year 1997. 
Similar losses have occurred for the past 3 years, with $753,000 in

[[Page 48938]]

fiscal year 1994; $630,000 in fiscal year 1995; and $1,273,000 in 
fiscal year 1996. These losses resulted in a retained earning balance 
of only $922,000 at the beginning of fiscal year 1997, significantly 
below a desired 3-month operating reserve of $6 million.
    Indirect costs for the inspection and weighing program are 
estimated at $4.68 million, or 20 percent of the total $23.2 obligation 
for the program. Because of a downturn in metric tons exported, the 
current administrative fee will generate only an estimated $3.5 million 
for fiscal year 1997, resulting in an estimated loss of $1.18 million. 
The administrative fee must be increased to ensure sufficient revenue 
is collected to recover indirect costs for an average export volume 
year. This will permit any excess revenue collected during high volume 
years, such as 89.9 million metric tons in fiscal year 1996, to offset 
low volume years such as this year, estimated at 76 million metric 
tons.
    The current administrative fee generates an estimated $4.09 million 
at the 5-year average export volume of 85.6 million metric tons. The 
12.5-percent increase will generate an estimated $4.53 million at the 
85.6 million metric ton level, or increase actual revenue by $440,000, 
or 10.75 percent.

Comment Review

    A proposed rule was published in the Federal Register on July 18, 
1997, (62 FR 38488). GIPSA received five comments from trade 
associations and industry representatives during the 30-day comment 
period. All five commentors opposed the 12.5-percent increase.
    In general, the commentors recommended that GIPSA initiate action 
to reduce administrative costs prior to any fee increase and that fee 
increases should not be used as the primary tool to reverse declining 
financial conditions. GIPSA agrees that all efforts should be taken to 
control administrative costs before proposing fee increases. This has 
been done in the past and GIPSA will continue to contain costs, as 
practicable, in the future.
    The administrative fee implemented on October 1, 1996, was designed 
to collect sufficient revenue to recover fiscal year 1993 indirect 
costs which were $4.09 million. Since fiscal year 1993, the Agency has 
experienced an estimated $1.7 million increase in indirect costs 
primarily due to Federal pay increases, coupled with a redistribution 
of indirect costs associated with headquarters operations beginning in 
fiscal year 1995. GIPSA has reduced its indirect costs by $1.1 million 
by staff reductions, consolidating financial management into the 
Department's Animal and Plant Health Inspection Service, and reducing 
the number of field locations from 31 to 23.
    Despite the Agency's aggressive cost containment efforts, indirect 
costs have increased $590,000 over the $4.09 million fiscal year 1993 
base and must be recovered. The suggestions by several commentors that 
overhead (indirect costs) be further reduced in general or by specific 
percentages, is not practical at this time. GIPSA has and will continue 
to reduce costs as is appropriate and cost effective where feasible.
    While the fee increase generally addresses cost recovery by GIPSA 
for original inspection and weighing services performed at export 
locations, several commentors suggested that these costs be passed on 
to all users of GIPSA services. In addition, commentors stated that the 
proposed fee increase would adversely impact on the competitive 
position of U.S. grain exports. Further, references were made that 
increased costs associated with export operations would be passed on to 
other industry members, including farmers, with one commentor 
indicating that the fees would have an economic impact on small 
entities as defined in the Regulatory Flexibility Act.
    With regard to expanding the base for cost recovery to all users of 
GIPSA's services, GIPSA has gone to great lengths to identify specific 
costs associated with the vast number of different customers we serve. 
This has allowed us to develop separate fee schedules that specifically 
address services to these unique customers. This process has worked 
well and GIPSA sees no need to change it based on the suggestions.
    An exporters' ability to compete in the international market place 
is influenced by many factors, not just the cost of inspection and 
weighing services. All inspection and weighing costs, regardless of 
where they are incurred in the marketing chain, i.e., farmer to 
exporter, are just one item used to determine the overall cost of a 
product. The additional $440,000 in fees, when spread over the total 
volume of grain traded in both the domestic and export markets, will 
not create a significant impact.
    Several commentors questioned whether the fees and the expenses 
upon which they are based were reasonable under the USGSA. GIPSA has 
reviewed this issue and determined that the proposed fees and expenses 
are consistent and reasonable under the provisions of the USGSA.
    One commentor suggested that the projected revenue from the 
proposed fee increase did not represent an across the board 12.5-
percent increase and should be $510,000 instead of the stated $440,000. 
They apparently based this on a straightline projection of 12.5 percent 
of total cost. They further questioned how the proposed increase will 
offset the projected $1.18 million loss.
    In order to calculate additional revenue for the administrative 
fee, one must first consider the existing fee structure. With the 
administrative fee decreasing as the number of metric tons increases 
and the volume of grain handled by export elevators varies, the 
estimated revenue collected from a 12.5 percent fee increase cannot be 
determined using a straightline projection. As stated in the proposal, 
an increase of 12.5 percent will generate an estimated $4.53 million at 
the 85.6 million metric ton level, or increase actual revenue by 
$440,000, or 10.75 percent.
    Also, as stated in the proposal, GIPSA expected to collect only 
$3.5 million in administrative fees in fiscal year 1997. With projected 
costs at $4.68 million, there is a $1.18 million shortfall. The current 
fees are set to collect $4.09 million at 85.6 million tons. As stated 
in the proposal, the proposed fee level is designed to collect $4.53 
million at an export volume of 85.6 million metric tons. Consequently, 
a revenue shortfall such as $1.18 million in 1997 with exports at 76 
million metric tons will be offset by increased revenue during high-
volume years such as 89.9 million metric tons in 1996. GIPSA is setting 
its fees at a reasonable level based on a 5-year level of exports.
    One commentor suggested that GIPSA make previously recommended 
program changes prior to proposing fee increases. The commentor had 
recommended the suggested program changes during GIPSA's overall review 
of existing regulations. The suggested program changes are being 
considered and will be addressed in a separate rulemaking, as 
appropriate.
    GIPSA has and will continuously monitor and adjust its resources to 
obtain optimum utilization of its personnel, in both direct and 
indirect areas, prior to proposing fee increases. However, as 
previously stated, GIPSA must recover its expenses for providing 
services and maintenance of a 3-month operating reserve and therefore 
must do so by implementing a 12.5-percent increase in the 
administrative fees.
    No comments were received in response to the proposal to delete 
Table I (3)(ii), fees for submitted samples and

[[Page 48939]]

factor only analysis performed online at an applicant's facility.

Final Action

    Effective October 1, 1997, the Agency will apply a 12.5-percent 
increase to Administrative Fees in 7 CFR 800.71, Table 1 (3), and will 
delete fees for Additional Service (assessed in addition to all other 
fees) in Table 1 (3)(ii).
    Good cause exists for not postponing the effective date of this 
rule until 30 days after publication in the Federal Register (5 U.S.C. 
553) because an October 1, 1997, effective date corresponds to the 
beginning of the 1998 fiscal year and the start of a new accounting 
cycle.

List of Subjects in 7 CFR Part 800:

    Administrative practice and procedure; Grain.

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

PART 800--GENERAL REGULATIONS

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

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

    2. Section 800.71 is amended by revising Table 1(3) in Schedule A 
of paragraph (a) to read as follows:


Sec. 800.71  Fees assessed by the Service.

    (a)
* * * * *

Schedule A--Fees for Official Inspection and Weighing Services 
Performed in the United States

    Table 1.--Fees For Official Services Performed at an Applicant's    
                Facility in an Onsite FGIS Laboratory \1\               
                  *        *        *        *        *                 
  (3) Administrative Fee (assessed in addition to all other applicable  
 fees, only one administrative fee will be assessed when inspection and 
          weighing services are performed on the same carrier).         
                                                                        
                                                                        
------------------------------------------------------------------------
(i) All outbound carriers (per-metric-ton) \4\                          
  (a) 1-1,000,000............................................    $0.1013
  (b) 1,000,001-1,500,000....................................      .0923
  (c) 1,500,001-2,000,000....................................      .0473
  (d) 2,000,001-5,000,000....................................      .0360
  (e) 5,000,001-7,000,000....................................      .0192
  (f) 7,000,001 +............................................     .0023 
------------------------------------------------------------------------
\1\ Fees for original inspection and weighing, reinspection, and appeal 
  inspection service include, but are not limited to, sampling, grading,
  weighing, prior to loading stowage examinations, and certifying       
  results performed within 25 miles of an employee's assigned duty      
  station. Travel and related expenses will be charged for service      
  outside 25 miles as found in Sec.  800.72 (a).                        
                                                                        
 *        *        *        *        *                                  
\4\ The administrative fee is assessed on an accumulated basis beginning
  at the start of the Service's fiscal year (October 1 each year).      

* * * * *
    Dated: September 12, 1997.
James R. Baker,
Administrator.
[FR Doc. 97-24814 Filed 9-17-97; 8:45 am]
BILLING CODE 3410-EN-P