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 certain fees by approximately 4.6 percent; i.e., contract and non-contract hourly rates, certain unit rates, and the administrative tonnage fee. These fees apply only to official inspection and weighing services performed by GIPSA in the United States under the United States Grain Standards Act (USGSA), as amended. These increases are needed to cover increased operational costs resulting from the approximate 4.6 percent January 2002 Federal pay increase. GIPSA anticipates the increase in the user fees will generate approximately $703,000 in additional revenue.

EFFECTIVE DATE:

April 22, 2002.

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. Such actions can provide alternatives to fee increases. 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. Retained earnings balances are adjusted to reflect prior year revenue and obligations realized in the year reported. 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. GIPSA's FY 2001 operating costs were $25,670,126 with revenue of $23,977,240 that resulted in a negative margin of $1,692,886. Using the most current financial data available for FY 2002, December 2001, GIPSA's operating costs were $6,923,247 with revenue of $7,131,883 that resulted in a positive margin of $208,247. However, the current reserve negative balance of $2,882,270 is well below the desired 3-month reserve of approximately $6 million. Employee salaries and benefits are major program costs that account for approximately 84 percent of GIPSA's total operating budget. The approximate general and locality salary increase averages 4.6 percent for GIPSA employees, effective January 2002, will increase GIPSA's costs by approximately $703,000.

GIPSA has reviewed the financial position of the inspection and weighing program based on the increased salary and benefit costs, along with the revised projected FY 2002 workload of 79 million metric tons. Based on the review, GIPSA has concluded that the approximate 4.6 percent salary increase will have to be recovered through increases in fees.

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 32 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 is similar to any other business; that is, an average 4.6 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 January 2, 2002, GIPSA proposed in the Federal Register (67FR25) to increase fees for official inspection and weighing services performed under the USGSA (7 U.S.C. 71 et seq.) by approximately 4.6 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 July 9, 2001 (66 FR 35751), and became effective on August 8, 2001. 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. Such actions can provide alternatives to fee increases. 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. Retained earnings balances are adjusted to reflect prior year revenue and obligations realized in the year reported. 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. GIPSA's FY 2001 operating costs were $25,670,126 with revenue of $23,977,240 that resulted in a negative margin of $1,692,886. Using the most current financial data available for FY 2002, December 2001, GIPSA's operating costs were $6,923,247 with revenue of $7,131,883 that resulted in a positive margin of $208,247. However, the current reserve negative balance of $2,882,270 is well below the desired 3-month reserve of approximately $6 million. Employee salaries and benefits costs, which account for approximately 84 percent of GIPSA's total operating budget, have risen significantly over the years. GIPSA's average cost per hour in FY 1996 was $20.83 and has risen to $26.60 in FY 2001, a 27.7 percent increase. Since FY 1996, GIPSA has increased fees six times to recover the Congressionally mandated salary increases each year as well as other pay and benefit increases such as longevity pay. The six fee increases have raised fees by approximately 22 percent over the FY 1996 levels.

While individual salary and benefit costs have increased since 1996, GIPSA has reduced overall salary and benefits costs by 12.8 percent through greater utilization of part-time and intermittent employees and improved program efficiencies. GIPSA has also reduced non-employee costs such as rent, utilities, and Departmental overhead by 1.4 percent.

The January 2002 salary increase averaged 4.6 percent for GIPSA employees, which equates to an estimated $703,000 increase. GIPSA has reviewed the financial position of the inspection and weighing program and concluded that fee increases are necessary to recover the estimated $703,000 increase in program costs. An average increase of 4.6 percent to hourly, certain unit fees, and the administrative tonnage fee is needed.

The current hourly fees are:

GIPSA has also identified certain unit fees, for services not performed at an applicant's facility, which contain direct labor costs and 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 4.6 percent cost-of-living increase to salaries and benefits covered by the administrative tonnage fee results in an overall increase of an average of 4.6 percent to the administrative tonnage fee.

Comment Review

GIPSA received 1 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 commentor did not support the proposed rule. A summary of the comment and GIPSA's response is as follows:

The commentor opposed the fee increase and suggested that the proposed fee increase be offset through improved operating efficiencies and additional reductions in overhead. In addition, the commentor 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. The commentor also stated that the agency should determine what programs could be terminated, scaled back, or consolidated to reduce administrative overhead.

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 employees as valuable resources that 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. Since FY 1996, GIPSA has decreased headquarters paid hours of overhead by 14.44 percent and other obligations by 1.4 percent. However, these reductions have not been enough to offset the increases in salaries and benefits. Further, GIPSA is constantly reviewing the inspection and weighing programs to assess service delivery and 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 an experienced workforce available for duty when service demands increase. GIPSA is continuing to review 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

Accordingly, GIPSA is applying an approximate 4.6 percent increase to certain 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 FGIS Laboratory; Table 2-Services Performed at Other Than an Applicant's Facility in an FGIS 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:

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