Fees for Official Inspection and Official Weighing Services Under the United States Grain Standards Act (USGSA)

AGENCY:

Grain Inspection Packers and Stockyards Administration, USDA.

ACTION:

Proposed rule.

SUMMARY:

The Department of Agriculture (USDA), Grain Inspection, Packers and Stockyards Administration (GIPSA) is proposing several changes to the fee schedule for official inspection and weighing services performed under the United States Grain Standards Act (USGSA), as amended. The USGSA provides GIPSA's Federal Grain Inspection Service (FGIS) with the authority to charge and collect reasonable fees to cover the cost of performing official services. These fees also cover the costs associated with managing the program.

After a financial review of GIPSA's Fees for Official Inspection and Weighing Services, including a comparison of the costs and revenues associated with official inspection and weighing services, GIPSA is proposing to revise local and national tonnage fees (assessed in addition to all other applicable fees) for all export grain shipments serviced by GIPSA field offices.

DATES:

Comments must be received on or before February 13, 2013.

ADDRESSES:

You may submit your written or electronic comments on this proposed rule to:

• Federal eRulemaking Portal: Go to http://www.regulations.gov and follow the online instructions for submitting comments.
• Mail, hand deliver, or courier to: Dexter Thomas, GIPSA, USDA, 1400 Independence Avenue SW. room 2526-S, Washington, DC 20250-3642.
• Fax: (202) 690-2173.

Instructions: All comments will become a matter of public record and should be identified as “GIPSA inspection and weighing fees proposed rule comments,” making reference to the date and page number of this issue of the Federal Register. All comments received become the property of the Federal government, are made a part of the public record, and will generally be posted to www.regulations.gov without change. If you send a comment directly to GIPSA without going through www.regulations.gov , or you submit a comment to GIPSA via fax, the originating address or telephone number will be captured automatically and included as part of the comment that is placed in the public docket and made available on the Internet. Also, all personal identifying information (for example, name, address, etc.) voluntarily submitted by the commenter may be publicly accessible. Do not submit confidential business information or otherwise sensitive or protected information.

Electronic submissions should avoid the use of special characters, avoid any form of encryption, and be free of any defects or viruses, since these may prevent GIPSA from being able to read and understand, and thus consider your comment.

All comments will also be available for public inspection at the above address during regular business hours (7 CFR 1.27(b)). Please call the GIPSA Management and Budget Services staff (202) 720-6529 for an appointment to view the comments.

FOR FURTHER INFORMATION CONTACT:

Eric J. Jabs, USDA-GIPSA-FGIS-QACD, 10383 N Ambassador Drive, Kansas City, Missouri 64153; Telephone: (816) 659-8408; Fax Number: (816) 872-1257; Email: Eric.J.Jabs@usda.gov.

SUPPLEMENTARY INFORMATION:

Background

The USGSA (7 U.S.C. 71-87k) 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 associated administrative and supervisory costs.

The fees for official inspection and weighing services were last amended on May 13, 2004, and became effective on June 14, 2004 (69 FR 26476). After considering several alternatives in 2004, GIPSA adopted a fee structure to cover program-related costs based on a projected average tonnage of export grain inspected and/or weighed. This fee structure was adopted so that local export facilities financially support their field office administrative costs by evaluating field offices independently and encouraging FGIS customers to work directly with each field office to maximize grain handling efficiencies while raising the awareness of location program costs. In addition, national costs are collected regardless of where the grain is exported by assessing an identical fee to each field office to cover every ton of export grain inspected and/or weighed. This action was also taken to foster the further development and implementation of grain handling efficiencies by grain companies, to reduce the cost of GIPSA official grain inspection and weighing services, and to make GIPSA program costs more transparent to the grain industry.

When GIPSA established the current fee structure in 2004, GIPSA developed a fee rate to collect sufficient revenue to immediately cover operating expenses, while striving to create an operating reserve by fiscal year 2010. This fee structure was designed to collect sufficient revenue through fiscal year 2007 to achieve an average $1,000,000 balance annually. When GIPSA established the tonnage fees, certain assumptions were made to establish those fees, including the historic volume of grain moving through U.S. export facilities, and export projections. At the time, GIPSA assumed that the inspection volume would be based on 80 million metric tons (MMT) of grain exports inspected and/or weighed per year. The inspection volume, however, has fallen well short of the 80 MMT baseline, resulting in a revenue shortfall, precluding the maintenance of an operating reserve. For fiscal years 2006 to 2011, GIPSA inspected an average of 78.0 MMT of export grain. However, in fiscal year 2012, GIPSA only inspected 64.2 MMT, and expects to inspect 59.8 MMT during fiscal year 2013 and an average of 65.0 MMT for fiscal years 2014 to 2017.

GIPSA regularly reviews its user-fee programs to determine if the fees adequately cover the costs of program delivery. While GIPSA continuously seeks to reduce its operating costs, GIPSA has determined that the existing fee structure will not generate sufficient revenue to cover program costs through fiscal year 2017.

In fiscal year 2009, GIPSA's official inspection and weighing services program revenue was $31.2 million with program costs of $33.3 million, resulting in a $2.1 million program deficit. In fiscal year 2010, GIPSA revenue was $36.9 million with costs of $35.5 million, resulting in a $1.4 million margin. In fiscal year 2011, GIPSA revenue was $37.7 million with costs of $36.6 million, resulting in a $1.1 million margin. In fiscal year 2012, revenue is projected at $28.7 million and costs at $35.1 million, resulting in a projected $6.4 million program deficit. Program costs for fiscal years 2013 to 2017 are projected at $35.1 million. The costs include employee salaries and benefits including estimated annual cost of living adjustments, and future costs to replace and maintain aging program equipment in GIPSA offices. These fees also cover GIPSA's administrative and supervisory costs for the performance of GIPSA's official inspection and weighing services, including personnel compensation and benefits, travel, rent, communications, utilities, contractual services, supplies, and equipment. Given the above discussion, GIPSA believes that the current fee structure will not fully fund the delivery of GIPSA's official inspection and weighing services in future fiscal years and will result in program deficits.

After reviewing the fees for official inspection and weighing services, including a comparison of the costs and revenue associated with official inspection and weighing services, and assessing how GIPSA accounts for workers compensation costs at the local and national levels, GIPSA proposes to change local and national tonnage fees (assessed in addition to all other applicable fees) for all export grain shipments serviced by GIPSA field offices. GIPSA proposes to increase local tonnage fees in fiscal year 2013 for 1) League City, Texas from $0.115 to $0.125 per metric ton; 2) New Orleans, Louisiana from $0.015 to $0.033 per metric ton; 3) Portland, Oregon from $0.084 to $0.124 per metric ton and; 4) Toledo, Ohio from $0.132 to $0.233 per metric ton.

GIPSA proposes to increase the national tonnage fee approximately 5 percent in fiscal year 2013 from $0.052 to $0.055 per metric ton of export grain inspected and/or weighed and approximately 2 percent per year for fiscal years 2014 to 2017. In addition, workers compensation costs would be shifted from the national to the local level in order to fully reflect where those program costs originate. In response to the Grain Inspection Advisory Committee resolution in November 2010, stating that GIPSA should establish an equitable tonnage fee for all export tonnage utilizing the official system, GIPSA would also begin charging the national tonnage fee of $0.055 per metric ton on export grain inspected and/or weighed (excluding land carrier shipments to Canada and Mexico) from delegated States and designated agencies. Currently, delegated States and designated agencies pay only a supervision fee of $0.011 per metric ton on export grain officially inspected and/or weighed as found in the current fee structure (see Schedule C of § 800.71 of the USGSA regulations).

GIPSA would also revise the fee structure for official inspection and weighing services performed in Canada, which currently appear in Schedule B of § 800.71 of the USGSA regulations. As a result, the separate unit fees for official inspection and weighing services performed in Canada would be changed to the prevailing U.S. non-contract rate, plus the prevailing Toledo field office tonnage fee, plus the actual cost of travel. GIPSA would further replace the “Vomitoxin Qualitative” and “Vomitoxin Quantitative” fees with one fee, “All other Mycotoxins,” in order to simplify the fee schedule for the testing of mycotoxins, other than aflatoxin. GIPSA also created separate fees for applicants that provide test kits for aflatoxin and all other mycotoxin testing. The existing fee structure in Schedule B would be deleted and the existing Schedule C fee structure would become Schedule B.

While GIPSA's proposed fee increase in fiscal year 2013 is projected to increase program revenue in fiscal year 2013, the proposed fee increase would not provide sufficient revenue through fiscal year 2017. As stated previously, GIPSA believes that an initial increase in fees followed by annual incremental increases is the appropriate course to mitigate the effects that a larger one-time fee increase would have on our customers. GIPSA's financial projections indicate that implementing the proposed fee increase would allow the official inspection and weighing services to recover its costs and build an operating reserve.

Fees for foreign travel would be changed from the current daily rate of $510.00 to the established hourly fee for special projects, plus the actual cost of travel, per diem, and related expenditures. All remaining fees (except fees for FGIS supervision of domestic official inspection and weighing services, including land carrier shipments to Canada and Mexico, performed by delegated States and/or designated agencies) would be increased approximately 5 percent for fiscal year 2013 and approximately 2 percent for fiscal years 2014 to 2017 to cover projected costs.

Tables 1, 2, and 3 below compare current fees and charges found in Schedule A of § 800.71(a) of the regulations under the USGSA (7 CFR 800.71(a)) with fee increases proposed to take effect on May 1, 2013; October 1, 2013; October 1, 2014, October 1, 2015; and October 1, 2016. Program fees in Table 1 show the combined national and local tonnage fee for field offices and the national tonnage fee for delegated states and designated agencies.

The following table reflects GIPSA's financial official inspection and weighing program projections through fiscal year 2017.

Based on the analysis of program costs, GIPSA proposes to increase the fees for official inspection and weighing service. GIPSA would continue to review program costs, revenue, and operating reserve levels to ensure that the fee increases for the noted fiscal years are required at the levels specified and sufficient to maintain official inspection and weighing services. In the event that a change in the fees is necessary, GIPSA would address any changes at that time.

Executive Order 12866 and Regulatory Flexibility Act

This rule has been determined to be not significant for the purposes of Executive Order 12866 and, therefore, has not been reviewed by the Office of Management and Budget (OMB).

Pursuant to the requirements set forth in the Regulatory Flexibility Act (RFA) (5 U.S.C. 601-612), GIPSA has considered the economic impact of this action on small entities. The purpose of the RFA is to fit regulatory actions to the scale of businesses subject to such actions in order that small businesses will not be unduly or disproportionately burdened. This proposed action is being taken because additional user fee revenue is needed to cover the costs of providing current and future program operations and services.

The Small Business Administration (SBA) defines small businesses by their North American Industry Classification System Codes (NAICS). This proposed rule affects customers of GIPSA's official inspection and weighing services in the domestic and export grain markets (NAICS code 115114). Fees for that program are in Schedules A (Tables 1-3), B, and C of § 800.71 of the USGSA regulations (7 CFR 800.71).

Under the provisions of the USGSA, grain exported from the U.S. must be officially inspected and weighed. Mandatory inspection and weighing services are provided by GIPSA at 40 export facilities and by delegated States at 11 facilities, and seven facilities for U.S. grain transshipped through Canadian ports. All of these facilities are owned by multi-national corporations, large cooperatives, or public entities that do not meet the requirements for small entities established by the SBA. Further, the regulations are applied equally to all entities. The USGSA (7 U.S.C. 87f-1) requires the registration of all persons engaged in the business of buying grain for sale in foreign commerce. In addition, those persons who handle, weigh, or transport grain for sale in foreign commerce must also register. Section 800.30 of the USGSA regulations (7 CFR 800.30) define a foreign commerce grain business as persons who regularly engage in buying for sale, handling, weighing, or transporting grain totaling 15,000 metric tons or more during the preceding or current calendar year. At present, there are 129 registrants registered to export grain. While most of the 129 registrants are large businesses, we believe that some are small.

GIPSA also provides domestic and miscellaneous inspection and weighing services at other than export locations. Approximately 217 different applicants receive domestic inspection services each year and approximately 26 different locations receive track scale tests as a miscellaneous service each year. Most of these applicants are large businesses. Nonetheless, we believe that the proposed increases would not significantly affect small businesses requesting these official services. Furthermore, any applicant may use an alternative source for these services. Such a decision should not prevent the business from marketing its product or conducting business as usual.

GIPSA has determined that the total cost to the grain industry to implement the proposed changes will be approximately $5.3 million per year. These calculations are based on the assumption that GIPSA will collect revenue from 59.8 MMT in fiscal year 2013 and an average of 65.0 MMT per year for fiscal years 2014 to 2017, which was used to establish the proposed tonnage fee.

Most users of the official inspection and weighing services do not meet the requirements for small entities. Further, GIPSA is required by statute to make services available and to recover, as nearly as practicable, the costs of providing such services. There would be no additional reporting, record keeping, or other compliance requirements imposed upon small entities as a result of this proposed rule. GIPSA has not identified any other Federal rules which may duplicate, overlap or conflict with this proposed rule. 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 RFA.

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 measures and implement appropriate changes to reduce its costs. Such actions can provide alternatives to fee increases. Even with these efforts, however, GIPSA's existing fee schedule would not generate sufficient revenue to cover program costs. In fiscal year 2009, GIPSA's official inspection and weighing services program revenue was $31.2 million with program costs of $33.3 million, resulting in a $2.1 million program deficit. In fiscal year 2010, GIPSA revenue was $36.9 million with costs of $35.5 million, resulting in a $1.4 million margin. In fiscal year 2011, GIPSA revenue was $37.7 million with costs of $36.6 million, resulting in a $1.1 million margin. In fiscal year 2012, revenue is projected at $28.7 million and costs at $35.1 million, resulting in a projected $6.4 million program deficit. Program costs for fiscal years 2013 to 2017 are projected at $35.1 million. The costs include employee salaries and benefits including estimated annual cost of living adjustments, future costs to replace and maintain aging official inspection and weighing services equipment in GIPSA offices. These fees also cover GIPSA's administrative and supervisory costs for the performance of GIPSA's official inspection and weighing services, including personnel compensation and benefits, travel, rent, communications, utilities, contractual services, supplies, and equipment. The current fee structure will not fully fund GIPSA's official inspection and weighing services in future fiscal years, resulting in program deficits.

The proposed fee increase is projected to initially increase program revenue in fiscal year 2013, however this one time increase would not provide sufficient funds through fiscal year 2017. GIPSA needs to increase fees by approximately 5 percent in fiscal year 2013 and approximately 2 percent per year in fiscal years 2014 to 2017 in order to cover the program's operating cost and build an adequate operating reserve. The annual increases would apply to all fees (except for those fees charged for FGIS supervision of domestic official inspection and weighing services, including land carrier shipments to Canada and Mexico, performed by delegated States and/or designated agencies). GIPSA believes that an initial increase in fees followed by annual incremental increases is appropriate at this time. To minimize the impact of a fee increase, GIPSA has decided to propose a fee structure that would collect sufficient revenue over time to cover operating expenses, while striving to build an operating reserve by fiscal year 2017. GIPSA would continue to evaluate the financial status of the official inspection and weighing services to determine if it is meeting the goal of building an operating reserve and if other adjustments to the fee structure are necessary.

Without the proposed fee increase, the operating reserve for GIPSA's official inspection and weighing services is projected to equal negative 1.6 months of program obligations at the end of fiscal year 2013 and decline to negative 10.6 months of program obligations by the end of fiscal year 2017. Financial projections indicate that implementing the proposed fees would allow GIPSA's official inspection and weighing services program to cover its costs while building an operating reserve to ensure the financial stability of the FGIS program.

This rule proposes to revise local and national tonnage fees (assessed in addition to all other applicable fees) for all export shipments serviced by GIPSA field offices. In fiscal year 2013, GIPSA would increase the local tonnage fees for (1) League City, Texas from $0.115 to $0.125 per metric ton; (2) New Orleans, Louisiana from $0.015 to $0.033 per metric ton; (3) Portland, Oregon from $0.084 to $0.124 per metric ton and; (4) Toledo, Ohio from $0.132 to $0.233 per metric ton.

GIPSA proposes to increase the national tonnage fee approximately 5 percent in fiscal year 2013 from $0.052 to $0.055 per metric ton of export grain inspected and/or weighed and approximately 2 percent per year for fiscal years 2014 to 2017. In addition, workers compensation costs would be shifted from the national to the local level in order to fully reflect where those program costs originate. In response to the Grain Inspection Advisory Committee resolution in November 2010 that GIPSA should establish an equitable tonnage fee for all export tonnage utilizing the official system, GIPSA proposes to begin charging the national tonnage fee of $0.055 per metric ton on export grain inspected and/or weighed (excluding land carrier shipments to Canada and Mexico) from delegated states and designated agencies. Currently, delegated states and designated agencies only pay a supervision fee of $0.011 per metric ton on export grain inspected and/or weighed as found in Schedule C of § 800.71. Program fees in Table 1 above show the combined national and local tonnage fees for field offices, delegated states, and designated agencies.

GIPSA proposes to amend the fees for official inspection and weighing services performed in Canada. These fees currently appear in Schedule B of § 800.71. As a result, the separate unit fees for official inspection and weighing services performed in Canada would be changed to that of the prevailing U.S. non-contract rate, plus the prevailing Toledo field office tonnage fee, plus the actual cost of travel. GIPSA is also proposing to replace the “Vomitoxin Qualitative” and “Vomitoxin Quantitative” fees with one fee, “All other Mycotoxins,” in order to simplify the fee schedule for the testing of mycotoxins, other than aflatoxin. GIPSA also created separate fees for applicants that provide test kits for aflatoxin and all other mycotoxin testing. The existing Schedule B would be deleted and the existing Schedule C would become Schedule B.

Fees for foreign travel would be changed from the current daily rate of $510.00 to the same established hourly fee for special projects and the actual cost of travel, per diem, and related expenditures. All remaining fees (except those fees for FGIS supervision of domestic official inspection and weighing services, including land carrier shipments to Canada and Mexico, performed by delegated States and/or designated agencies) would be increased approximately 5 percent in fiscal year 2013 and approximately 2 percent in fiscal years 2014 to 2017 to cover projected costs. (See Tables 1, 2, and 3 above.)

This action is authorized under the USGSA which provides for the establishment and collection of fees that are reasonable and, as nearly as practicable, cover the costs of the services rendered, including associated administrative and supervisory costs. These fees cover the GIPSA administrative and supervisory costs for the performance of GIPSA's official inspection and weighing services, including personnel compensation and benefits, travel, rent, communications, utilities, contractual services, supplies, and equipment.

Executive Order 12988

This proposed rule has been reviewed under Executive Order 12988, Civil Justice Reform. This action is not intended to have retroactive effect. The USGSA provides in section 87g that no subdivision may require or impose any requirements or restrictions concerning the inspection, weighing, or description of grain under the USGSA. Otherwise, this rule would not preempt any State or local laws, or 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.

Executive Order 13175

This proposed rule has been reviewed with the requirements of Executive Order 13175, Consultation and Coordination with Indian Tribal Governments. This rule would not have substantial and direct effects on Tribal governments and would not have significant Tribal implications.

Paperwork Reduction Act

In compliance with the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35), the information collection and record keeping requirements included in this proposed rule has been approved by the OMB under control number 0580-0013.

GIPSA is committed to complying with the Government Paperwork Elimination Act, which requires Government agencies in general to provide the public the option of submitting information or transacting business electronically to maximum extent possible.

E-Government Compliance

GIPSA is committed to complying with the E-Government Act, to promote the use of the Internet and other information technologies to provide increased opportunities for citizen access to Government information and services, and for other purposes.

List of Subjects in 7 CFR Part 800

• Administrative practice and procedure, exports, grains, reporting and recordkeeping requirements

For the reasons set out in the preamble, we propose to amend 7 CFR Part 800 as follows:

PART 800—GENERAL REGULATIONS

1. The authority citation for part 800 continues to read as follows:

Authority: 7 U.S.C. 71-87k.

2. Section 800.71 is revised to read as follows: