Fees for Official Inspection and Official Weighing Services

AGENCY:

Grain Inspection, Packers and Stockyards Administration, USDA.

ACTION:

Final rule.

SUMMARY:

The Federal Grain Inspection Service (FGIS) of the Grain Inspection, Packers and Stockyards Administration (GIPSA) is increasing fees by approximately 6.1 percent. Contract and noncontract hourly rates, certain unit rates, and the administrative tonnage fee are increased. These fees apply only to official inspection and weighing services performed in the United States under the United States Grain Standards Act (USGSA), as amended. This fee increase of approximately 6.1 percent is based on the cost-of-living increases utilizing an average of the locality pay adjustments and actual cost of performing official inspection services of 2.4 percent and 3.7 percent in fiscal year (FY) 2000 and FY 2001, respectively. GIPSA anticipates the increase in the user fees will generate approximately $575,000 in additional revenue.

EFFECTIVE DATE:

August 8, 2001.

FOR FURTHER INFORMATION CONTACT:

David Orr, Director, Field Management Division, at his E-mail address: Dorr@gipsadc.usda.gov, or telephone him at (202) 720-0228.

SUPPLEMENTARY INFORMATION:

Executive Order 12866, Regulatory Flexibility Act, and the Paperwork Reduction Act

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.

Also, pursuant to the requirements set forth in the Regulatory Flexibility Act, it has been determined that this final 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.).

GIPSA regularly reviews its user-fee-financed programs to determine if the fees are adequate. GIPSA has and will continue to seek out cost saving opportunities and implement appropriate changes to reduce costs. However, even with these efforts, GIPSA's existing fee schedule will not generate sufficient revenues to cover program costs while maintaining an adequate reserve balance. In FY 1999, GIPSA's operating costs were $23,176,643 with revenue of $22,971,204, resulting in a negative margin of $205,440. In FY 2000, GIPSA's operating costs were $24,146,428 with revenue of $23,150,188 that resulted in a negative margin of $996,240 and a negative reserve balance of $938,147. Using the most recent data available as of April 30, 2001, GIPSA's FY 2001 operating costs were $14,988,809 with revenue of $14,348,665 that resulted in a negative margin of $640,144. The current reserve negative balance of $954,547 continues to remain well below the desired 3-month reserve of approximately $3 million. In addition, GIPSA has revised its tonnage workload projection from 82 million metric tons to 79 million metric tons for FY 2001. This decrease in tonnage will adversely affect revenues. Notwithstanding GIPSA's efforts to contain and reduce costs, it anticipates that operating costs will continue to outpace revenues during FY 2001 and, therefore, additional fee increases are likely in the future.

Employee salaries and benefits are major program costs that account for approximately 84 percent of FGIS's total operating budget. Effective May 1, 2000, GIPSA increased fees as published March 30, 2000, in the Federal Register (65 FR 16783), by 2.4 percent. The average Federal salary increase effective January 2000 was 4.8 percent. GIPSA had anticipated that savings could offset the remaining 2.4 percent of the Federal salary increase. GIPSA had anticipated an increase in metric tons inspected and/or weighed which in conjunction with a projected decrease in the number of paid hours could have offset the remaining half of the Federal salary increase. However, there was a 7 percent decrease in metric tons FGIS inspected in FY 2000. This decrease caused a reduction in hours billed. FGIS also experienced a shift from noncontracted service hours to contracted service hours, which caused an increase in nonrevenue productive hours in some locations. These factors were not enough to offset the remaining 2.4 percent Federal salary increases. The salary increase that became effective January 2001 averages 3.7 percent for FGIS employees. This final rule will increase overall program revenues by approximately $575,000.

The fee increase primarily applies to entities engaged in the export of grain. Under the provisions of the USGSA, grain exported from the United States must be officially inspected and weighed. Mandatory inspection and weighing services are provided by GIPSA on a fee basis at 37 export facilities. All of these facilities 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 Small Business Administration.

Some entities that request nonmandatory official inspection and weighing services at other than export locations could be considered small entities. The impact on these small businesses would be to incur an approximate 6.1 percent increase in the cost of official inspection and weighing services. This increase should not significantly affect any business requesting official inspection and weighing services. Furthermore, any of these small businesses that wish to avoid the fee increase may elect to do so by using an alternative source for inspection and weighing services. Such a decision should not prevent the business from marketing its products.

There would be no additional reporting or recordkeeping requirements imposed by this action. In compliance with the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35), the information collection and recordkeeping requirements in Part 800 have been previously approved by the Office of Management and Budget under control number 0580-0013. GIPSA has not identified any other Federal rules which may duplicate, overlap, or conflict with this final rule.

Executive Order 12988

This final 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 § 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 final rule will not preempt any State or local laws, regulations, or policies unless they present irreconcilable conflict with this final rule. There are no administrative procedures that must be exhausted prior to any judicial challenge to the provisions of this final rule.

Background

On April 4, 2001, GIPSA proposed in the Federal Register (66 FR 17817) to increase fees for official inspection and weighing services performed under the USGSA (7 U.S.C. 71 et seq.) by approximately 6.1 percent. The USGSA authorizes GIPSA to provide official grain inspection and weighing services and to charge and collect reasonable fees for performing these services. The fees collected are to cover, as nearly as practicable, GIPSA's costs for performing these services, including related administrative and supervisory costs. The current USGSA fees were published in the Federal Register on March 30, 2000 (65 FR 16783), and became effective on May 1, 2000.

GIPSA regularly reviews its user-fee-financed programs to determine if the fees are adequate. GIPSA has and will continue to seek out cost saving opportunities and implement appropriate changes to reduce costs. However, even with these efforts, GIPSA's existing fee schedule will not generate sufficient revenues to cover program costs while maintaining an adequate reserve balance. In FY 1999, GIPSA's operating costs were $23,176,643 with revenue of $22,971,204, resulting in a negative margin of $205,440. In FY 2000, GIPSA's operating costs were $24,146,428 with revenue of $23,150,188 that resulted in a negative margin of $996,240 and a negative reserve balance of $938,147. As of April 30, 2001, GIPSA's FY 2001 operating costs were $14,988,809 with revenue of $14,348,665 that resulted in a negative margin of $640,114. The current reserve negative balance of $954,547 continues to be well below the desired 3-month reserve of approximately $3 million.

Employee salaries and benefits are major program costs that account for approximately 84 percent of GIPSA's total operating budget. Effective May 1, 2000, GIPSA increased fees as published March 30, 2000, in the Federal Register (65 FR 16783), by 2.4 percent. The average Federal salary increase that became effective January 2000 was 4.8 percent. GIPSA had anticipated that savings could offset the remaining 2.4 percent of the Federal salary increase. GIPSA had anticipated an increase in metric tons inspected and/or weighed which in conjunction with a projected decrease in the number of paid hours could have offset the remaining half of the Federal salary increase. However, there was a 7 percent decrease in metric tons FGIS inspected in FY 2000. This decrease caused a reduction in hours billed. FGIS also experienced a shift from noncontracted service hours to contracted service hours, which caused an increase in nonrevenue productive hours in some locations. These factors were not enough to offset the remaining 2.4 percent Federal salary increases. The salary increase that became effective January 2001 averages 3.7 percent for FGIS employees.

We have reviewed the financial position of our inspection and weighing program based on the increased salary and benefit costs, along with the projected FY 2001 workload of 82 million metric tons. Based on the review, we have concluded that an approximate 6.1 percent increase will have to be recovered at this time through increases in fees.

The current hourly fees are:

GIPSA has also identified certain unit fees, for services not performed at an applicant's facility, that contain direct labor costs and would require a fee increase. Further, GIPSA has identified those costs associated with salaries and benefits that are covered by the administrative metric tonnage fee. The 6.1 percent cost-of-living increase to salaries and benefits covered by the administrative tonnage fee results in an overall increase of an average of 6.1 percent to the administrative tonnage fee. Accordingly, GIPSA is increasing certain hourly rates, certain unit rates, and the administrative tonnage fee in 7 CFR 800.71, Table 1-Fees for Official Services Performed at an Applicant's Facility in an Onsite FGIS Laboratory; Table 2-Services Performed at Other Than an Applicant's Facility in an FGIS Laboratory; and Table 3, Miscellaneous Services.

Comment Review

GIPSA received one comment during the 30-day comment period from a grain trade association. The trade association stated that it consists of 1,000 grain, feed, processing and grain-related companies, 70 percent of which are small entities. The commenter did not support the proposed rule. A summary of the comment and GIPSA's response is as follows:

The commenter stated that the proposed fee increase was excessive and suggested GIPSA offset anticipated increases in costs for this fiscal year through improved operating efficiencies and additional reductions in overhead. In addition, the commenter suggested GIPSA aggressively seek ways to reduce direct employee expenses through increased automation and contracting for official services so future mandated Federal pay increases will have less impact on the cost of providing official services.

GIPSA disagrees that the approximate 6.1 percent fee increase is excessive. GIPSA is constantly exploring actions to reduce official inspection and weighing costs. However, as previously discussed in this final rule, unexpected export market developments and actions during the past year have reduced projected revenue. During the past 2 years, there has been a 12.7 percent shift from non-contract to contract services. This shift from non-contract to contract services generates less revenue for GIPSA. Furthermore, the use of more efficient export facilities has resulted in more metric tons loaded per hour while using fewer GIPSA official inspection and weighing personnel to provide that service. Consequently, there has been a 10.8 percent decrease in non-contract-billed hours and a 14 percent reduction in paid hours.

The USGSA requires GIPSA to maintain a workforce of sufficient size and experience to meet the inspection and weighing needs of its applicants. GIPSA views its skilled and well-trained employees as valuable resources which facilitate the marketing of grain. Whenever possible, GIPSA has replaced vacant full time permanent positions with part time and intermittent employees to reduce administrative overhead costs related to employee salaries and benefits. Further, GIPSA is constantly reviewing the inspection and weighing programs to assess service delivery and service demand. Whenever possible, available employees are used for temporary duty assignments within other Federal programs to further reduce administrative overhead costs. This action allows GIPSA the ability to temporarily downsize while maintaining a skilled and well-trained workforce available for duty when service demands increase. GIPSA is also reviewing the issue of contracting for official services when appropriate. Efforts to contain and reduce costs have and will continue to be a high priority issue with GIPSA. GIPSA has and will continue to take action to reduce inspection and weighing costs whenever possible.

Final Action

In the April 4, 2001, proposal there were four errors. The first error occurred on page 17817, column 2. The revenue figure for FY 2001 should have read $6,326,583. The second error occurred in Table 1(1) Inspection and Weighing Services Hourly Rates (for service personnel). The hourly rates for the 3-and 6-month contract rates were transposed. The correct rates are that the 3-month contract hourly rates are higher than the 6-month contract hourly rates. The third error occurred in Table 2(3) Stowage examination. The minimum fee for a ship should have read $255, not $252.50; the minimum fee for a ship reinspection should have read $153, not $151.50. The fourth error was corrected in a Federal Register document published on April 16, 2001 (66 FR 19608). The document corrected the E-mail address for comments and the Table 1 heading on page 17819.

Accordingly, GIPSA is applying an approximate 6.1 percent increase to hourly rates, certain unit rates, and the administrative tonnage fee, as proposed, in 7 CFR 800.71. Table 1—Fees for Official Services Performed at an Applicant's Facility in an Onsite GIPSA Laboratory; Table 2—Services Performed at Other Than an Applicant's Facility in a GIPSA Laboratory; and Table 3—Miscellaneous Services.

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 Schedule A in paragraph (a) to read as follows: