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[Federal Register Volume 63, Number 104 (Monday, June 1, 1998)]
[Rules and Regulations]
[Pages 29530-29531]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-14054]

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DEPARTMENT OF AGRICULTURE

Grain Inspection, Packers and Stockyards Administration

7 CFR Part 868

RIN 0580-AA54

General Regulations and Standards for Certain Agricultural 
Commodities

AGENCY: Grain Inspection, Packers and Stockyards Administration, USDA.

ACTION: Final rule.

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SUMMARY: The Grain Inspection, Packers and Stockyards Administration 
(GIPSA) is amending the regulations under the Agricultural Marketing 
Act (Act) of 1946 to allow GIPSA and State cooperators to use 
contractors to perform specified inspection services. GIPSA has 
determined that private firms, institutions, and individuals, working 
under contract with GIPSA field offices and State cooperators, may be 
able to perform some inspection services, at certain locations, more 
effectively or at less cost than if those services were performed by 
Department or State employees. Consequently, GIPSA is amending the 
regulations to allow GIPSA and State cooperators to contract for 
service work and to license individual contractors and those employed 
by contractors.

EFFECTIVE DATE: July 1, 1998.

FOR FURTHER INFORMATION CONTACT: George Wollam, USDA, GIPSA, Room 0623-
S, Stop 3649, Washington, D.C. 20250-3649; FAX (202) 720-4628; or E-
mail [email protected].

SUPPLEMENTARY INFORMATION:

Executive Order 12866

    This final 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 final rule has been reviewed under Executive Order 12988, 
Civil Justice Reform. This action is not intended to have preemptive 
effect with respect to any State or local laws, regulations, or 
policies unless they present an irreconcilable conflict with this rule. 
This final rule is not intended to have retroactive effect. There are 
no administrative procedures which must be exhausted prior to any 
judicial challenge to the provisions of this rule or application of its 
provisions.

Effects on Small Entities

    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 Regulatory Flexibility Act (5 U.S.C. 601 et seq.). 
GIPSA believes that allowing contracts with private firms, 
institutions, individuals, and others for inspection work will foster 
more cost-effective operations. Many users of the inspection services 
do not meet the requirements for small entities as defined in the 
Regulatory Flexibility Act. For example, the primary user of pulse 
inspection services is the U.S. Government. It is estimated that 
between 80 and 90 percent of all inspections are performed (directly or 
indirectly) at the request of either the USDA's Farm Service Agency or 
Foreign Agricultural Service, or the U.S. Agency for International 
Development. The action will allow GIPSA and the 13 State cooperators 
to use contractors to perform specified inspection services. Currently, 
contract samplers are used by both GIPSA and State cooperators which 
has resulted in reduced operating expenses and, in many cases, quicker 
services to applicants for services. It is expected that this action 
would result in similar benefits.

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 
in Part 868 have been approved previously by OMB and assigned OMB No. 
0580-0013.

Background

    GIPSA is committed to carrying out its statutory and regulatory 
mandates in a cost-effective manner that best serves the public 
interest. Concurrently, GIPSA is constantly seeking ways to reduce the 
cost of providing official services, without reducing the quality of 
that service. One measure that has proven effective is the use of 
contract samplers at outlying service points or during periods of peak 
demand. By judiciously using contract samplers, GIPSA field offices and 
State cooperators have been able to reduce their operating expenses 
and, in many cases, provide quicker service to their applicants for 
services. GIPSA believes that contract inspections may be equally 
beneficial in certain situations; e.g., providing quality inspections 
on an intermittent basis at geographically isolated service points.
    On January 15, 1998, GIPSA published in the Federal Register (63 FR 
2353) a proposal to amend the regulations under the Act of 1946 to 
allow GIPSA and State cooperators to use contractors to perform 
specified inspection services. The Act of 1946 provides authority to 
the Secretary of Agriculture to enter into contracts and agreements 
with States and agencies of States, private firms, institutions, and 
individuals for the purpose of performing specified inspection 
services. According to Section 868.1(b)(23) of the regulations, such 
services may include ``applying such tests and making examinations of a 
commodity and records by official personnel as may be necessary to 
determine the kind, class, grade, other quality designation, the 
quantity, or condition of commodity; performing condition of container, 
carrier stowage examination; and any other services as related to 
commodities, as necessary; and issuing an inspection certificate.'' 
However, Section 868.80(a)(1) of the regulations states that only 
persons employed by a cooperator may be licensed to inspect commodities 
or to perform related services. Consequently, GIPSA proposed to amend 
the regulations to provide for GIPSA and State cooperators to contract 
for quality (grading) inspection services and to license individual 
contractors and those employed by a contractor.

Comment Review

    During the 60-day comment period, GIPSA received eight comments: 
One from a Midwest bean export company; one from a national association 
that represents grain, feed, and processing companies; one from a 
regional grain exchange; one from an animal welfare organization; and 
four from privately-owned official inspection and weighing agencies. 
Seven of the commenters supported the proposed action, as written. One 
commenter noted several concerns, but did not object to the proposed 
action.
    Several of the commenters indicated that private firms, 
institutions, and individuals, working under contract with GIPSA field 
offices and State cooperators, would improve the timeliness of service. 
One commenter stated that allowing GIPSA to use contractors ``would 
eliminate time consumed by mailing samples to the field offices, which 
should result in quicker turnaround and be more cost-effective.'' 
Another indicated that this action ``would greatly simplify and speed 
up the process of exporting.''

[[Page 29531]]

    The national grain industry association commented that, ``In 
today's highly competitive business environment, it is important that 
all service providers seek new ways to meet customer needs in the most 
cost-effective way possible. We are not surprised to learn that GIPSA 
has determined that private contractors can, in some cases, perform 
inspection services more effectively or, at least, at less cost than 
traditional service providers. For example, GIPSA reports that the use 
of private contractors has proven effective when using contract 
samplers at remote service points. Also, as GIPSA notes, the use of 
private contractors can increase the flexibility of GIPSA and State 
cooperators to meet customer needs during periods of peak demand.'' An 
official agency also commented that using contractors would help lower 
the cost of providing official services.
    The animal welfare organization indicated several concerns about 
any type of inspection services which the Government is considering 
contracting out. The organization stated that it is imperative that 
``All contractors, subcontractors, and employees of either must be 
properly trained and free of any financial or other business interest 
in any of the `commodities' they inspect.'' They went on to state that 
``Citizens expect that the law and its regulations will be enforced 
objectively, and the inspectors will be licensed using criteria which 
is designed to select only experienced and qualified men and women.'' 
We do note that all official inspection personnel, whether employed by 
GIPSA, a cooperator, or a contractor, will be held to the same 
standards of fitness; i.e., they must be fully trained, tested 
according to established GIPSA procedures, free of any conflicts of 
interest, and licensed/authorized by GIPSA to inspect graded 
commodities.
    On the basis of these comments and other available information, 
GIPSA has decided to amend the regulations to allow GIPSA and 
cooperators to contract for service work and to license individual 
contractors and those employed by contractors.

Final Action

    To provide for more responsive, cost-effective inspection services 
under the Act of 1946, GIPSA is revising:
    1. Section 868.1(b)(13) to expand the definition of contractor to 
provide for cooperators to use contractors for specified services.
    2. Section 868.80(a)(1) to add provisions for licensing individual 
contractors and employees of contractors.

List of Subjects in 7 CFR Part 868

    Administrative practice and procedure, Agricultural commodities.

    For reasons set forth in the preamble, 7 CFR part 868 is amended as 
follows:

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

    1. The authority citation for Part 868 continues to read as 
follows:

    Authority: Secs. 202-208, 60 Stat. 1087, as amended (7 U.S.C. 
1621 et seq.).

    2. Section 868.1(b)(13) is revised to read as follows:

Sec. 868.1  Meaning of terms.

* * * * *
    (b) * * *
    (13) Contractor. Any person who enters into a contract with the 
Service or with a cooperator to perform specified inspection services.
* * * * *
    3. Section 868.80(a)(1) is revised to read as follows:

Sec. 868.80  Who may be licensed.

    (a) Inspectors. * * *
    (1) Is employed by a cooperator, is a contractor, or is employed by 
a contractor.
* * * * *
    Dated: May 21, 1998.
James R. Baker,
Administrator, Grain Inspection, Packers and Stockyards Administration.
[FR Doc. 98-14054 Filed 5-29-98; 8:45 am]
BILLING CODE 3410-EN-P
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