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 2.4 percent for all hourly rates, certain unit rates, and the administrative tonnage fee. These fees apply to official inspection and weighing services performed 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 4.8 percent mandated January 2000 Federal pay increase.

EFFECTIVE DATE:

May 1, 2000.

FOR FURTHER INFORMATION CONTACT:

Dave 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, James R. Baker, Administrator, GIPSA, has 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. In fiscal year (FY) 1998, GIPSA's operating costs were $23,021,166 with revenue of $21,776,323, resulting in a loss of $1,244,843 and a reserve balance of $55,862. In FY 1999, GIPSA's operating costs were $22,883,063 with revenue of $22,971,204 that resulted in a positive margin of $88,141. As of December 31, 1999, GIPSA's FY 2000 operating costs were $6,066,322 with revenue of $6,333,381 that resulted in a positive margin of $267,059. Even with the positive margins for FY 1999 and thus far for FY 2000, the reserve balance was $569,669, below the desired 3-month operating reserve of approximately $5.7 million.

Employee salaries and benefits are major program costs that account for approximately 84 percent of GIPSA's total operating budget. A general and locality salary increase that averages 4.8 percent for GIPSA employees, effective January 2000, will increase program costs by approximately $691,613.

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 2000 workload. Based on the review, we have concluded that nearly half of the projected $691,613 salary increase can be absorbed through existing program efficiencies. Therefore, the other half needs to be covered through an increase in fees that will collect an estimated $390,000 in additional revenues.

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 who 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 2.4 percent increase in the cost of official inspection and weighing services. This nominal increase should not significantly affect any business requesting official inspection and weighing services. Furthermore, any of these 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 record keeping requirements imposed by this action. In compliance with the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35), the information collection and record keeping 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 3, 2000, GIPSA proposed in the Federal Register (65 FR 75) to increase fees for official inspection and weighing services performed under the USGSA by approximately 2.4 percent.

The USGSA (7 U.S.C. 71 et seq.) 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 December 23, 1998 (63 FR 70990), and became effective on February 1, 1999. A correction to the minimum fees for stowage examinations was published in the Federal Register and became effective on February 11, 1999 (64 FR 6783).

GIPSA regularly reviews its user-fee financed programs to determine if the fees are adequate. While GIPSA continues to explore ways to reduce its costs, the existing fee schedule will not generate sufficient revenues to cover program costs while maintaining an adequate reserve balance. In FY 1998, GIPSA's operating costs were $23,021,166 with revenue of $21,776,323, resulting in a loss of $1,244,843 and a reserve balance of $55,862. In FY 1999, GIPSA's operating costs were $22,883,063 with revenue of $22,971,204, resulting in a positive margin of $88,141. As of December 31, 1999, GIPSA's FY 2000 operating costs were $6,066,322 with revenue of $6,333,381 that resulted in a positive margin of $267,059. Even with the positive margins for FY 1999 and thus far for FY 2000, the reserve balance was $569,669, below the desired 3-month operating reserve of approximately $5.7 million.

Employee salaries and benefits are major program costs that account for approximately 84 percent of GIPSA's total operating budget. The January 2000 general and locality salary increase that averages 4.8 percent for GIPSA employees will increase program costs by an estimated $691,613. Based on a review of projected FY 2000 workload and operating costs, the Agency has determined that approximately half of the projected $691,613 salary increase can be absorbed through existing program efficiencies. The other half needs to be covered through an increase in fees that will collect an estimated $390,000 in additional revenues.

The hourly fees covered by this rule will generate revenue to cover the basic salary, benefits, and leave for those employees providing direct service delivery. Other associated costs, including nonsalary related overhead, are collected through other fees contained in the fee schedule and are at levels that would not require any change under this rule.

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 2.4 percent cost-of-living increase to salaries and benefits covered by the administrative tonnage fee results in an average overall increase of 2.4 percent to the administrative tonnage fee.

Comment Review

GIPSA received two comments during the 60-day comment period. The comments came from two grain trade associations. Both associations generally supported the proposed rule; however, each one encouraged the Agency to seek ways to streamline operations in an effort to reduce costs. One commentor suggested that GIPSA strive to reduce overall staffing, thereby reducing the impact of future cost-of-living raises. The commentor further suggested that GIPSA set a goal for administrative and supervisory costs not to exceed 20 percent of the total cost of service. Finally, one association suggested the fee increases only be applied to the hourly rates and certain unit rates and not to the administrative tonnage fee. This, in the association's view, would serve as a financial incentive to automate the inspection and weighing services at export facilities.

GIPSA has and will continue to explore ways to reduce costs. Current program improvements have enabled the Agency to avoid passing the full 4.8 percent salary increase on to its customers through increased fees. Similar efforts will continue in the future, including the introduction of new technology that improves program efficiencies and reduces staffing needs.

The Agency's efforts to reduce the number of employees providing service has been a direct result of program initiatives designed to streamline operations at export elevators. The Agency has and will continue to explore ways to streamline these operations. Over the past several years, automated material handling systems have been introduced at export locations. These systems have reduced the number of employees needed to perform service. Other efforts currently underway, including inspection automation and automation of specific administrative functions, will provide more timely and efficient service. These initiatives not only address future costs of providing service, but are designed to help improve the operational efficiencies of export facilities, thereby reducing the overall exporters' costs.

Increasing only the hourly and unit fees fails to address the increased supervision and administrative salary costs covered by the administrative tonnage fee. The recommendation to establish a 20 percent cap on supervision and administrative costs reflects a strong desire to control costs. The USGSA has had a 40 percent cap since FY 1985. Since that time, the Agency has operated well below that level and will continue to establish appropriate goals and objectives to address future supervision and administrative costs.

Efforts to contain and reduce these costs have and will continue to be taken. However, these efforts will not adequately cover the increased salary costs incurred by the pay raise. GIPSA, therefore, must increase all hourly fees, certain unit fees, and the administrative tonnage fee by 2.4 percent in order to recover the increased supervision administrative costs.

Final Action

Accordingly, GIPSA is applying an approximate 2.4 percent increase to those 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: