Fees for Rice Inspection

AGENCY:

Grain Inspection, Packers and Stockyards Administration, USDA.

ACTION:

Final rule.

SUMMARY:

The Grain Inspection, Packers and Stockyards Administration (GIPSA) is increasing fees by approximately 4.8 percent for all hourly rates and certain unit rates. The fees apply to federal rice inspection performed under the Agricultural Marketing Act (AMA) of 1946. These increases are needed to cover increased operational costs resulting from the 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 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 $3,820,820 with revenue of $4,011,446, resulting in a positive margin of $190,626 and a negative reserve balance of $895,584. In FY 1999, GIPSA's operating costs were $4,105,564 with revenue of $4,412,131 that resulted in a positive margin of $306,567 and a negative reserve balance of $508,628. As of December 31, 1999, GIPSA's FY 2000 operating costs were $1,246,614 with revenue of $1,429,461 that resulted in a positive margin of $182,847 and a negative reserve of $168,447.

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. This salary adjustment will increase GIPSA's costs by approximately $135,000, based on the projected FY 2000 work volume of 3.9 million metric tons.

We have reviewed the financial position of our rice inspection program based on the increased salary and benefit costs, along with the projected FY 2000 workload. Based on that review, we have concluded that we cannot absorb the increased costs due to the FY 2000 Federal salary increase with the current negative reserve balance. This fee increase will collect an estimated $138,000 in additional revenues.

This fee increase primarily applies to GIPSA customers that produce, process, and market rice for the domestic and international markets. There are approximately 550 such customers located primarily in the States of Arkansas, Louisiana, and Texas. Many of these customers meet the criteria for small entities established by the Small Business Administration criteria for small businesses. Even though the fees are being increased, the increase will not be excessive (4.8 percent) and should not significantly affect those entities. Those entities are under no obligation to use our service and, therefore, any decision on their part to discontinue the use of our service should not prevent them from marketing their products.

There will 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 868 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 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. This action will not preempt any State or local laws, regulations, or policies unless they present irreconcilable conflict with this rule. There are no administrative procedures that must be exhausted prior to any judicial challenge to the provisions of this rule.

Background

On January 3, 2000, GIPSA proposed in the Federal Register (65 FR 78) to increase fees for official rice inspection services performed under the AMA by approximately 4.8 percent. Under the provisions of the AMA of 1946 (7 U.S.C. 1621, et seq.), rice inspection services are provided upon request and GIPSA must collect a fee from the customer to cover the cost of providing such services. Section 203 (h) of the AMA (7 U.S.C. 1622(h)) provides for the establishment and collection of fees that are reasonable and, as nearly as practicable, cover the costs of the services rendered. These fees cover the GIPSA administrative and supervisory costs for the performance of official services, including personnel compensation, personnel benefits, travel, rent, communications, utilities, contractual services, supplies, and equipment.

The rice inspection fees were last amended on February 12, 1999, and became effective March 1, 1999 (64 FR 7057). These fees were to cover, as nearly as practicable, the level of operating costs as projected for FY 1999. They presently appear at 7 CFR 868.91 in Tables 1 and 2.

GIPSA continually monitors its cost, revenue, and operating reserve levels to ensure that there are sufficient resources for operations. During FY 1998, GIPSA implemented cost-saving measures in an effort to provide more cost effective services. The purpose of these measures was to reduce operating costs in order to reduce the negative retained earnings in this program. The cost containment measures included employee buyouts and better cross utilization of personnel between programs.

In FY 1998, the program generated revenue of $4,011,446 with operating costs of $3,820,820, resulting in a positive margin of $190,626. Even though we generated a positive margin for the year, we continued to operate with a negative reserve balance of $895,584. The rice program's FY 1999 revenue was $4,412,131 with operating costs of $4,105,564, that resulted in a positive margin of $306,567 and a negative reserve balance of $508,628. The rice inspection program has been slowly recovering from a long-standing deficit. Through a series of small fee increases and cost-cutting measures, GIPSA has reduced the level of the negative reserve balance from $939,147 in FY 1994 through FY 1999 to a negative level of $508,628. As of December 31, 1999, GIPSA's FY 2000 operating costs were $1,246,614 with revenue of $1,429,461 that resulted in a positive margin of $182,847 and a negative reserve of $168,447.

However, 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. This salary adjustment will increase GIPSA's costs by approximately $135,000. GIPSA cannot absorb this increase in salary costs with a deficit in the reserve balance and, at the same time, continue our efforts to reduce costs to eliminate the existing deficit. In FY's 1998 and 1999, GIPSA inspected 3.9 million metric tons of rice, and projections indicate that similar amounts will be inspected for FY 2000. The Agency will continue its efforts to streamline costs associated with providing service to further reduce the negative reserve balance. However, we must recover the projected $135,000 increase in salaries and benefits in order to accomplish this goal. GIPSA estimates that the fee increase will generate an additional $138,000 in revenue, based on the projected FY 2000 work volume of 3.9 million metric tons.

The costs associated with salaries and benefits are recovered by the hourly rates for personnel performing direct service. Other associated costs, including non-salary related overhead, are collected through other fees contained in the fee schedule and are at levels that do not require any change. GIPSA is implementing a 4.8 percent increase to the hourly rates and certain unit rates in 7 CFR Part 868.91, Table 1—Hourly Rates/Unit Rate Per CWT and Table 2—Unit Rates. Currently, the regular workday contract and noncontract fees are $40.80 and $50.00, respectively, while the nonregular workday contract and noncontract fees are $56.80 and $69.00, respectively. The unit rate per hundredweight for export port services is currently $.05 per hundredweight. The other current unit rates are:

Comment Review

GIPSA received no comments in response to the proposed rulemaking published January 3, 2000, at 65 FR 78.

Final 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. These fees cover the GIPSA costs, including administrative and supervisory costs, for the performance of official services, including personnel compensation, personnel benefits, travel, rent, communications, utilities, contractual services, supplies, and equipment.

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 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 868.91 is revised to read as follows: