[Federal Register Volume 61, Number 131 (Monday, July 8, 1996)]
[Proposed Rules]
[Pages 35687-35691]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-16853]


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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. 61, No. 131 / Monday, July 8, 1996 / Proposed 
Rules

[[Page 35687]]



DEPARTMENT OF AGRICULTURE

Grain Inspection, Packers and Stockyards Administration

7 CFR Part 868

RIN 0580-AA48


Fees for Commodity Inspection

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

ACTION: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: The Federal Grain Inspection Service (FGIS), a program of the 
Grain Inspection, Packers and Stockyards Administration (GIPSA), is 
proposing to make the following changes to fees charged for inspection 
services for commodities, other than rice, performed under the 
Agricultural Marketing Act of 1946: Increase hourly and unit fees; 
charge actual travel and per diem costs; charge for sanitation 
inspections, pre-inspection conferences, and related services; 
establish hourly fees at time and one-half for service provided on 
Saturdays, Sundays, and Federal holidays; eliminate the provisions for 
entering into a contract for service; and change in the fee structure 
for stowage examinations from an hourly rate to a unit fee.
    These revisions are designed to generate revenue sufficient to 
cover, as nearly as practicable, the projected operating costs, 
including related supervisory and administrative costs, for commodity 
inspection services rendered and to maintain an appropriate operating 
reserve.

DATES: Written comments must be submitted on or before August 7, 1996.

ADDRESSES: Written comments must be submitted to George Wollam, USDA-
GIPSA-ART, Room 0623--South Building, 1400 Independence Avenue, SW., 
Washington, DC 20090-6454, or FAX (202) 720-4628. Comments may be sent 
by electronic mail or Internet to: <a href="/cdn-cgi/l/email-protection#4f28382023232e220f2928263c613a3c2b2e61282039"><span class="__cf_email__" data-cfemail="d8bfafb7b4b4b9b598bebfb1abf6adabbcb9f6bfb7ae">[email protected]</span></a>.
    All comments received will be available for public inspection 
during regular business hours in Room 062--South Building, 1400 
Independence Avenue, SW., Washington, DC (7 CFR 1.27(b)).

FOR FURTHER INFORMATION CONTACT:
George Wollam at the address above or by telephone at (202) 720-0292.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

    This rule has been determined to be significant for the purposes of 
Executive Order 12866 and, therefore, has been reviewed by the Office 
of Management and Budget. The five changes being proposed are designed 
to generate revenue sufficient to recover the operating costs for 
commodity inspection services and to maintain an appropriate operating 
reserve. FGIS is proposing the following changes: (1) Increase in the 
hourly and unit fees for commodity inspection services, (2) begin 
charging actual travel costs for airlines, rental cars, etc. and per 
diem for travel beyond 25 miles of an official assigned duty location, 
(3) begin charging for sanitation inspections, pre-inspection 
conferences, and related services, (4) establish new hourly fees at 
time and one-half for service provided on Saturdays, Sundays, and 
Federal holidays, (5) eliminate the provisions for entering into a 
contract for service; and (6) change in the fee structure for stowage 
examinations from an hourly rate to a unit fee.
    Fees for commodity inspection services were last increased on June 
28, 1984 (49 FR 26547). For nearly 10 years, the 1984 fee schedule 
sufficiently recovered operating expenses and maintained a minimum 3-
month operating reserve. However, by fiscal year (FY) 95, increased 
operating costs coupled with reductions in the number of services 
requested rendered the 1984 fee schedule inadequate for generating 
sufficient revenue to cover operating expenses. The operating reserve, 
which has been funding losses to the commodity inspection program for 
the past 4 years, was drawn down to the minimum 3-month operating 
reserve. Given these conditions, the Administrator of GIPSA determined 
that a fee necessary to meet rising costs and maintain an adequate 
reserve balance.

Executive Order 12778

    This proposed rule has been reviewed under Executive Order 12778, 
Civil Justice Reform. It is not intended to have a retroactive effect, 
nor will this proposed rule preempt any State or local laws, 
regulations, or policies unless they present irreconcilable conflict 
with this rule. No administrative procedures must be exhausted prior to 
any judicial challenge to provisions of this rule.

Regulatory Flexibility Act Certification

    James R. Baker, Administrator, GIPSA, has determined that this 
proposed 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.) because most users of the 
commodity inspection services do not meet the requirements for small 
entities. In addition, FGIS is required by statute to recover the costs 
of commodity inspection services, as nearly as practicable.

Information Collection and Record Keeping Requirements

    In compliance with the Paperwork Reduction Act of 1980 (44 U.S.C. 
Chapter 35), the previously approved information collection and 
recordkeeping requirements for applications for inspection services, 
including official commodity inspections, have been approved by the 
Office of Management and Budget under control number 0580-0013.

Background

    The commodity inspection fees were last amended effective June 28, 
1984 (49 FR 26547). These fees were to cover, as nearly as practicable, 
the operating costs for the program. They presently appear in 
Sec. 868.90, Tables 1 and 2, of the regulations (7 CFR 868.90, Tables 1 
and 2).
    The majority of processed commodity inspections performed under the 
Agricultural Marketing Act of 1946 are on purchases made by the Farm 
Service Agency (FSA) formerly Agricultural Soil Conservation Service. 
Historically, approximately 92 percent of the services performed have 
been for FSA purchases. Defense Personnel Support Center (DPSC) 
inspections account for approximately 2 percent of the inspections; the 
remaining 6 percent are performed under nongovernment contracts. 
Approximately 65 percent of graded commodity inspections are for 
government purchases, and the

[[Page 35688]]

remaining 35 percent are for commercial sales.
    Several actions have caused a general decrease in the number of 
inspections performed for both graded and processed commodities. 
Beginning in FY 92, FSA commodity purchases began to decline as a 
result of the success of a market-oriented farm program that virtually 
eliminated government-owned commodity grain stocks and, in turn, the 
portion of processed commodities derived from these stocks. In 
addition, in FY 94, responsibility for inspecting many products for 
DPSC was transferred from FGIS to AMS.
    Processed commodities comprise approximately 90 percent of the 
program's revenue. In FY 91, FGIS inspected 26,218 lots. By FY 92, the 
number of inspected lots dropped to 24,004; in FY 93, 17,494 lots were 
inspected; and FY 94 saw a slight increase to 19,664. In FY 95, 
however, the total again decreased to 15,065, or a 43 percent reduction 
from the number of lots inspected in FY 91. Corresponding decreases 
have also been experienced for graded commodities.
    Revenue collected in FY 91 totaled $6,562,940 and operating costs 
totaled $5,987,299 for a positive margin of $575,570. Revenue in FY 92 
dropped to $5,158,903 due to the decrease in inspections and resulted 
in a $179,396 loss to the program. Losses were incurred in each of the 
following years: $1,184,602 in FY 93, $764,865 in FY 94, and $1,456,944 
in FY 95. At the same time, FGIS reduced operating costs for the 
program from $5,987,370 in FY 91 to $5,468,059 in FY 95.
    FGIS maintains an operating reserve specifically to cover the cost 
of shutting down the program in case of an emergency. Agency policy is 
to maintain the reserve at a level equal to 3 months operating 
expenses. In FY 91, the reserve was $4,942,934, which represented 10 
months of operating costs. The loss of $179,396 in FY 92 was covered by 
this reserve.
    In FY 92, FGIS reviewed the program's operating reserve to 
determine if the fund was being maintained at an adequate level. The 
Agency determined that, while the level exceeded the three-month 
reserve minimum, it would not be prudent to decrease the reserve 
because of anticipated downturns in the number of service requests and 
the consequent need to cover program losses while restructuring the 
program.
    Again in FY 93, the $1,184,602 loss was covered by the reserve, 
which was drawn down to a year-end total of $3,889,429. Even with the 
loss, the fund still represented an 8.5 month reserve. By FY 94, the 
reserve had dropped to $3,173,033, or the equivalent of 7 months' 
operating costs. The losses incurred in FY 95 reduced the margin to 
$1,716,090, which is a 3.2 month reserve and represents the target 
level for the fund.
    In FY 94, FGIS responded to the decline in services requests by 
initiating a field restructuring plan that continued into FY 95. During 
this time period, three field offices and one suboffice that were 
directly involved with providing services were closed and consolidated. 
This eliminated the cost of maintaining a field office and streamlined 
overall operations. On two separate occasions, retirement incentives 
(buyouts) were offered to employees which reduced the staffing levels 
in this program. Other personnel were transferred to field offices and 
redirected to other programs. In FY 91, approximately 103 staff years 
where devoted to this program. By FY 95, the staffing level had been 
reduced by 35 percent to 67 staff years. The FY 95 level of 15,065 
services performed is expected to remain fairly constant in the future. 
Large numbers of service requests as seen in the late 1980s and early 
1990s are not forecasted. However, further losses are projected if 
adjustments to the fee schedule are not made.
    Due to reduced and sporadic FSA purchases, efficiencies gained 
through volume inspections have disappeared. Fluctuations in service 
demand have increased, even at locations that routinely requested 
service on a daily basis. These changes have impacted on FGIS' ability 
to maintain qualified staff at some locations and especially those that 
are large distances from a field office. In addition, there has been an 
increase in the proportion of inspections requested by facilities that 
may need service only one or two weeks per year. Many of these 
locations are far from field offices. The result is a great deal of 
long-distance travel from field offices to remote locations for one or 
two week jobs. Such travel has increased operating costs and, in some 
instances, has offset the savings gained through the restructuring.
    The 1984 fee schedule was designed to recover all costs associated 
with performing commodity inspection service, including overtime, 
travel, per diem, and other related services. For nearly ten years, the 
1984 fee schedule generated sufficient revenue to cover operating 
expenses. This was due, in large part, to continuously improved 
efficiencies in service delivery and strong market demand for 
inspection services. Although additional costs saving measures were 
implemented during fiscal years 94 and 95, operating expenses and 
service demand have reached a level at which the 1984 fee schedule no 
longer generates sufficient revenue to cover costs of providing 
service.
    Since FY 90, there has been a 40 percent decrease in the amount of 
commodity inspections requested. The commodity inspection program 
experienced a $1,642,720 loss (revenue $4,011,116 and cost $5,468,059) 
during FY 95. The commodity program's retained earnings are currently 
$1,476,487, a 3.8-month operating reserve. Further losses are projected 
if adjustments to the 1984 fee schedule are not made.

Proposed Action

    Section 203 of the AMA (7 U.S.C. 1622) provides for the 
establishment and collection of fees that are reasonable and, as nearly 
as practicable, cover the costs of the services rendered. In accordance 
with this section, FGIS proposes the following changes to maintain the 
current commodity inspection program: (1) Increase hourly and unit 
fees; (2) charge actual travel and per diem costs; (3) charge for 
sanitation inspections, pre-inspection conferences, and related 
services; (4) establish hourly fees at time and one-half for service 
provided on Saturdays, Sundays, and Federal holidays; (5) eliminate the 
provisions for entering into a contract for service; and (6) change in 
the fee structure for stowage examinations from an hourly rate to a 
unit fee.
    1. Hourly Rates. The proposed new hourly rates are divided into two 
categories: Regular Workday (Monday through Friday) and Nonregular 
Workday (Saturday, Sunday, and Holiday). Section 868.90, Tables 1 and 
3, currently define Saturday as a Regular Workday. The revised Table 1 
redefines a Nonregular Workday as a Saturday, Sunday, and Holiday and 
the hourly rate reflects time and one-half paid to employees. In 
addition, the two separate hourly rates for regular and nonregular 
workdays contained in Tables 1 and 3 are combined into one set of 
hourly rates in a revised Table 1 that covers all services.
    Section 868.90, Tables 1 and 3, currently provide for reduced 
hourly fees for applicants who elect to enter into a contract with 
FGIS. No applicants have used this provision since it was introduced in 
1984. Because the current trends of decreasing service requests and 
increasing demand fluctuations indicate less likelihood for applicants 
to use this provision in the future, it is eliminated.

[[Page 35689]]

    The rate for a Regular Workday will increase to $33.00 and 
Nonregular Workday will increase to $42.80. These new hourly fees cover 
FGIS' administrative and supervisory costs for the performance of 
official services. These costs include personnel compensation and 
benefits, rent, communications, utilities, contractual services, 
supplies, and equipment.
    2. Unit Rates. Section 868.90, Table 2 currently provides unit fees 
for the grading of beans, peas, lentils, hops, and other nongraded, 
nonprocessed commodities. These rates are increased and the current 
Table 2 is deleted and combined with proposal Table 1. The new unit 
rates cover FGIS' administrative and supervisory costs for performing 
the official service, including costs for personnel compensation and 
benefits, rent, communication, utilities, contractual services, 
supplies, and equipment.
    3. Travel and Per Diem. FGIS is making changes to Sec. 868.92 of 
the regulations concerning the application of fees covered in Table 1. 
Specifically, service, as provided under Sec. 868.90, Table 1, will 
include service provided within 25 miles of the employee's assigned 
duty point. Travel, per diem, and other related costs will be assessed 
for providing service beyond the 25-mile limit. Section 868.91, Table 
1, Fees for certain Federal rice inspection services, remain unchanged; 
travel, per diem, and other related costs continue to be included in 
the hourly rate.
    4. Services Other Than Inspections. FGIS is proposing a change in 
the fee structure for stowage examinations from an hourly fee that 
recovers all costs to a service-specific fee structure currently funded 
by the hourly rate. The service-specific fee will be a unit fee and 
will apply only to stowage examinations.
    FGIS is revising Footnote 1 to include provisions for charging for 
sanitation examinations, pre-inspection conferences, and other related 
services for which FGIS does not currently charge.
    5. Fees for Laboratory Testing Services. Fees For Laboratory Test 
Services, Table 4, Fees for Official Laboratory Test Services Performed 
At the FGIS Commodity Testing Laboratory at Beltsville, Maryland, For 
Processed Agricultural Products is revised to read: Table 2--Commodity 
Testing Laboratory.

List of Subjects in 7 CFR Part 868

    Administrative practice and procedure, Agricultural commodities.
    For reasons set out in the preamble, 7 CFR part 868 is proposed to 
be 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 868.90 is revised to read as follows:


Sec. 868.90  Fees for certain Federal inspection services.

    (a) The fees shown in Table 1 apply to Federal Commodity Inspection 
Services specified below.

                     Table 1.--Hourly Rates \1\ \3\                     
          [Fees for Inspection of Commodities Other Than Rice]          
------------------------------------------------------------------------
                                                                        
------------------------------------------------------------------------
Hourly Rates (per service representative):                              
    Monday to Friday--$33.00                                            
    Saturday, Sunday, and Holidays--$42.80                              
Miscellaneous Processed Commodities \2\:                                
(1) Additional Tests (cost per test, assessed in                        
 addition to the hourly rate):                                          
    (i) Aflatoxin Test (Thin Layer Chromatography)...             $51.40
    (ii) Falling Number..............................              12.00
    )iii) Aflatoxin Test Kit.........................               7.50
Graded Commodities (Beans, Peas, Lentils, Hops, and                     
 Pulses):                                                               
(1) Additional Tests--Unit Rates (Beans, Peas,                          
 Lentils):                                                              
    (i) Field run (per lot or sample)................              22.70
    (ii) Other than field run (per lot or sample)....              13.50
    (iii) Factor analysis (per factor)...............               5.50
(2) Additional Tests--Unit Rates (Hops)--(i) Lot or                     
 sample (per lot or sample)..........................              29.00
(3) Additional Tests--Unit Rates (Nongraded                             
 Nonprocessed Commodities--(i) Factor analysis (per                     
 factor).............................................               5.50
(4) Stowage examination (service-on-request) \4\:                       
    (i) Ship (per stowage space).....................              50.00
                                                            (minimum    
                                                          $250 per ship)
(ii) Subsequent ship examinations (same as original)                    
                                                            (minimum    
                                                          $150 per ship)
    (iii) Barge (per examination)....................              40.00
    (iv) All other carriers (per examination)........              15.00
------------------------------------------------------------------------
\1\ Fees for original commodity inspection and appeal inspection        
  services include, but are not limited to, sampling, grading, weighing,
  stowage examinations, pre-inspection conferences, sanitation          
  inspections, and other services requested by the applicant and that   
  are performed within 25 miles of the field office. Travel and related 
  expenses (commercial transportation costs, mileage and per diem) will 
  be assessed in addition to the hourly rate for service beyond the 25- 
  mile limit. Refer to Secs.  868.92, Explanation of service fees and   
  additional fees for all other service fees except travel and per diem.
\2\ When performed at a location other than at the commodity testing    
  laboratory.                                                           
\3\ Faxed and extra copies of certificates will be charged at $3.00 per 
  copy.                                                                 
\4\ If performed outside of normal business, 1\1/2\ times the applicable
  unit fee will be charged.                                             

    (b) In addition to the fees, if any, for sampling or other 
requested service, a fee will be asssessed for each laboratory test 
(original, retest, or appeal) listed in Table 2.
    (c) If a requested test is to be reported on a specified moisture 
basis, a fee for a moisture test will also be assessed.

[[Page 35690]]

    (d) Laboratory tests referenced in Table 2 will be charged at the 
applicable laboratory fee when performed at field locations other than 
at the applicant's facility.

             Table 2.--Fees for Laboratory Test Services \1\            
------------------------------------------------------------------------
                      Laboratory tests                           Fees   
------------------------------------------------------------------------
(1) Alpha monoglycerides...................................       $18.00
(2) Aflatoxin test (other than TLC or Minicolumn method)...        22.50
(3) Aflatoxin (TLC)........................................        48.00
(4) Aflatoxin (Minicolumn method)..........................        25.00
(5) Appearance & odor......................................         3.00
(6) Ash....................................................         8.50
(7) Bacteria count.........................................        10.00
(8) Baking test (cookies)..................................        28.00
(9) Bostwick (cooked)......................................        12.60
(10) Bostwick (uncooked/cook test/dispersibility)..........         6.50
(11) Brix..................................................         8.00
(12) Calcium...............................................        12.50
(13) Carotenoid color......................................        12.50
(14) Cold test (oil).......................................        10.00
(15) Color test (syrups)...................................         6.50
(16) Cooking test (other than corn soy blend)..............         7.00
(17) Crude fat.............................................        10.00
(18) Crude fiber...........................................        13.00
(19) Dough handling (baking)...............................         8.50
(20) E. coli...............................................        19.00
(21) Falling number........................................        12.00
(22) Fat (acid hydrolysis).................................        14.00
(23) Fat stability (A.O.M.)................................        27.00
(24) Flash point (open & close cup)........................        14.00
(25) Free fatty acid.......................................        12.00
(26) Hydrogen ion activity (ph)............................         9.50
(27) Iron enrichment.......................................        15.00
(28) Iodine number/value...................................         9.50
(29) Linolenic acid (fatty acid profile)...................        50.00
(30) Lipid phosphorous.....................................        47.00
(31) Livibond color........................................        10.00
(32) Margarine (nonfat solids).............................        23.60
(33) Moisture..............................................         6.00
(34) Moisture average (crackers)...........................         4.00
(35) Moisture & volatile matter............................         8.50
(36) Performance test (prepared bakery mix)................        32.00
(37) Peroxide value........................................        13.50
(38) Phosphorus............................................        14.00
(39) Popcorn kernels (total defects).......................        19.00
(40) Popping ratio/value popcorn...........................        19.00
(41) Potassium bromate.....................................        20.00
(42) Protein...............................................         7.50
(43) Rope spore count......................................        31.50
(44) Salmonella............................................        40.00
(45) Salt or sodium content................................        12.50
(46) Sanitation (filth light)..............................        24.00
(47) Sieve test............................................         5.00
(48) Smoke point...........................................        22.00
(49) Solid fat index.......................................        85.00
(50) Specific volume (bread)...............................        21.80
(51) Staphylococcus aureus.................................        24.50
(52) Texture...............................................         6.50
(53) Tilletia controversa kuhn (TCK) (Qualitative).........        25.20
(54) Tilletia controversa kuhn (TCK) (Qualitative).........        76.00
(55) Unsaponifiable matter.................................        25.00
(56) Urease activity.......................................        12.50
(57) Visual exam (hops pellet).............................         7.50
(58) Visual exam (insoluble impurities oils & shortenings).         5.00
(59) Visual exam (pasta)...................................        10.50
(60) Visual exam (processed grain products)................        12.00
(61) Visual exam (total foreign material other than cereal              
 grains)...................................................         6.50
(62) Vitamin enrichment....................................         7.00
(63) Vomitoxim (TLC).......................................        40.00
(64) Vomitoxin (Qualitative)...............................        30.00
(65) Vomitoxin (Quantitative)..............................        40.00
(66) Water activity........................................        20.00
(67) Wiley melting point...................................        12.50

[[Page 35691]]

                                                                        
(68) Other laboratory tests................................        (\2\)
------------------------------------------------------------------------
\1\ When laboratory test service is provided for GIPSA by a private     
  laboratory, the applicant will be assessed a fee which, as nearly as  
  practicable, covers the costs to GIPSA for the service provided.      
\2\ Fees for other laboratory tests not referenced above will be based  
  on the noncontract hourly rate listed in Table 1.                     


    3. Section 868.92 (a)(2) is revised to read as follows:


Sec. 868.92  Explanation of service fees and additional fees.

    (a) * * *
    (2) The cost of per diem, subsistence, mileage, or commercial 
transportation to perform the service for rice inspection only in 
Sec. 868.91, Table 1, Fees for certain Federal rice inspection 
services. See Sec. 868.90, Table 1, footnote 1 for Fees for Inspection 
of Commodities Other Than Rice.
* * * * *
    Dated: June 25, 1996.
Michael V. Dunn,
Assistant Secretary, Marketing and Regulatory Programs.
[FR Doc. 96-16853 Filed 7-5-96; 8:45 am]
BILLING CODE 3410-EN-M


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