[Federal Register Volume 60, Number 92 (Friday, May 12, 1995)]
[Proposed Rules]
[Pages 25624-25625]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-11743]



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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. 60, No. 92 / Friday, May 12, 1995 / Proposed 
Rules
[[Page 25624]]

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 29

[Docket No. TB-95-08]


Tobacco Fees and Charges for Mandatory Inspection

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

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SUMMARY: The Tobacco Inspection Act requires the Secretary to fix and 
collect fees and charges for inspection and certification, the 
establishment of standards, and other services, including 
administrative and supervisory costs, at designated tobacco auction 
markets in all tobacco producing areas. The fees collected must, as 
nearly as possible, cover the Department's costs of performing these 
services and also maintain a reserve sufficient to cover at least 4 
months of operation. This proposed rule would increase the fee from 
$.0070 to $.0083 per pound to cover the increased cost of operating the 
tobacco inspection program and replenish the operating reserve. The 
last increase in the fee was in 1991.

DATES: Comments are due on or before June 12, 1995.

ADDRESSES: Send comments to John P. Duncan, III, Director, Tobacco 
Division, Agricultural Marketing Service (AMS), United States 
Department of Agriculture (USDA), Room 502, Annex Building, P.O. Box 
96456, Washington, DC 20090-6456. Comments will be available for public 
inspection at this location during regular business hours.

FOR FURTHER INFORMATION CONTACT: John P. Duncan, III, Director, Tobacco 
Division, AMS, USDA, Room 502, Annex Building, P.O. Box 96456, 
Washington, DC 20090-6456. Telephone (202) 205-0567.

SUPPLEMENTARY INFORMATION: Notice is hereby given that the Department 
proposes to amend the regulations governing the mandatory inspection 
and certification of producer tobacco sold at designated auction 
markets throughout the tobacco producing areas. The proposed amendment 
would increase the fees and charges assessed by the Department for 
providing inspection and certification of tobacco at designated auction 
markets, establishment of standards, and other services. The new fee 
would cover the increased cost of operating the program, including 
administrative and supervisory costs, and replenish the operating 
reserve which has been drawn down for several years to cover the 
difference between revenue and obligations and is now below the 
required level of 4 months. Authority for these regulations is 
contained in the Tobacco Inspection Act (7 U.S.C. 511-511q).
    The current fee of $.0070 per pound has been in effect since July 
11, 1991, as published in the Federal Register (56 FR 31533-31534).
    The Department conducts a yearly review of the financial status of 
this program to determine whether the fee is sufficient. Obligations 
incurred during the 1993-94 marketing season were $13,468,000 while 
revenue, including investments, totaled $13,112,000 resulting in a loss 
of $356,000. However, there was still an operating reserve of almost 5 
months available. With 3 months remaining in the 1994-95 marketing 
season, obligations are estimated at $12,969,000 but revenues are 
expected to reach only $11,647,000 resulting in a loss of $1,322,000 
and reducing the operating reserve to 3.8 months. At the current level 
of service and fee structure, obligations for the 1995-96 marketing 
season are estimated at $13,754,000 with revenue of $12,155,000 for a 
loss of $1,599,000 and a further reduction in the operating reserve to 
2.2 months. If the same level of service and fee structure continues 
for the 1996-97 season the estimated loss would exceed $2,000,000 and 
the operating reserve would fall below 1 month.
    The major items affecting obligations are increases in salaries, 
benefits, travel costs and overall administrative costs in each year 
since 1991. Revenue depends on the amount of tobacco sold on the 
designated auction markets. Production quotas for flue-cured and burley 
were relatively stable for the 1992 and 1993 crops; fell sharply in 
1994 and were unchanged for burley for 1995 but increased 16 percent 
for flue-cured. However, the cost of providing the service has 
continued to rise. An analysis of available data indicates that a fee 
of $.0083 per pound effective for the 1995 crop would provide 
sufficient revenue to exceed obligations by $560,000 for the 1995-96 
marketing season and bring the operating reserve up to 4 months.
    Information on program income and expenses was presented to the 
National Advisory Committee for Tobacco Inspection Services at a 
meeting on January 19, 1995, in Lexington, Kentucky, and again on April 
6, 1995, in Raleigh, North Carolina. The National Advisory Committee, 
consisting of 14 members representing tobacco producers, and appointed 
by the Secretary of Agriculture, was established by law in 1981 to 
advise the Secretary on the level of services needed and the fees 
necessary to cover those services. The Committee recommended that the 
level of services remain unchanged and that the fee be increased to 
$.0075 per pound.
    In considering the Committee's recommendation the Department notes 
that while a fee of $.0075 per pound will result in smaller losses for 
the 1995 and 1996 marketing years, the operating reserve will continue 
to fall and would be below 2 months at the end of the 1996 season.
    Furthermore, the difference between $.0075 and $.0083 per pound is 
only $.80 for every 1,000 pounds; $8.00 for 10,000 pounds; and $80 for 
100,000 pounds so the additional yearly cost for an average producer 
would range between $20.00 and $40.00. Therefore, since the Committee 
does not recommend a reduction in the level of services, and the 
recommended fee will not cover the cost of the program, the Department 
is proposing a fee of $.0083 per pound effective at the start of the 
1995 marketing season.
    The marketing season for tobacco does not coincide with the Federal 
fiscal year. Therefore, it is anticipated that any increased fee would 
be made effective on July 1, 1995.
    This rule has been determined not significant for purposes of 
Executive Order 12866, and therefore has not been reviewed by the 
Office of Management and Budget.
    This proposed rule has been reviewed under Executive Order 12778, 
Civil [[Page 25625]] Justice Reform. This action is not intended to 
have retroactive effect. This proposed 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 which must be exhausted prior to any judicial challenge to 
the provisions of this rule.
    Additionally, in conformance with the provisions of the Regulatory 
Flexibility Act (5 U.S.C. 601 et. seq.) full consideration has been 
given to the potential economic impact upon small business. Most of the 
firms which would be affected by the rule are small businesses. Small 
agricultural producers have been defined by the Small Business 
Administration (13 CFR 121.601) as those having gross annual receipts 
of less than $500,000, and small agricultural service firms are defined 
as those whose annual receipts are less than $5,000,000. The 
Administrator, Agricultural Marketing Service, has determined that this 
action would not have a significant economic impact on a substantial 
number of small entities. This proposed rule would not substantially 
affect the normal movement of the commodity in the marketplace. 
Compliance with this proposed rule would not impose substantial direct 
economic costs, recordkeeping, or personnel workload changes on small 
entities, and would not alter the market share or competitive positions 
of small entities relative to the large entities and would in no way 
affect normal competition in the marketplace. Furthermore, the 
Department is required by law to fix and collect fees and charges to 
cover the Department's cost in operating the tobacco inspection 
program.
    All persons who desire to submit written data, views, or arguments 
for consideration in connection with this proposal may file them with 
the Director, Tobacco Division, AMS, USDA, Room 502, Annex Building, 
P.O. Box 96456, Washington, DC 20090-6456, not later than June 12, 
1995.

List of Subjects in 7 CFR Part 29

    Administrative practice and procedure, Advisory committees, 
Government publications, Imports, Pesticides and pests, Reporting and 
recordkeeping requirements, Tobacco.
    Accordingly, the Department is proposing to amend the regulations 
under the Tobacco Inspection Act contained in 7 CFR Part 29 as follows:

PART 29--TOBACCO INSPECTION

    1. The authority citation for Part 29, subpart B continues to read 
as follows:

    Authority: 7 U.S.C. 511m and 511r.


Sec. 29.123  [Amended]

    2. In Sec. 29.123, paragraph (a) is amended by removing the words 
``$.0070 per pound'' and adding in its place ``$.0083 per pound''.

    Dated: May 5, 1995.
Lon Hatamiya,
Administrator.
[FR Doc. 95-11743 Filed 5-11-95; 8:45 am]
BILLING CODE 3410-02-P