Fees for Rice Inspection

DEPARTMENT OF AGRICULTURE

Grain Inspection, Packers and Stockyards Administration

7 CFR Part 868

RIN 0580-AA47

Fees for Rice Inspection

AGENCY: Grain Inspection, Packers and Stockyards Administration, USDA.

ACTION: Final rule.

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SUMMARY: The Federal Grain Inspection Service (FGIS), of the Grain

Inspection, Packers and Stockyards Administration (GIPSA) is increasing

the fees for Federal Rice Inspection Services, as performed under the

Agricultural Marketing Act (AMA) of 1946. This fee increase is intended

to cover, as nearly as practicable, the projected operating costs,

including related supervisory and administrative costs, for Federal

Rice Inspection Services rendered and to generate sufficient revenues

to cover costs and maintain an appropriate operating reserve.

EFFECTIVE DATE: August 2, 1996.

FOR FURTHER INFORMATION CONTACT:

George Wollam, USDA-GIPSA, Room 0623--South Building, 1400 Independence

Avenue, SW, Washington, D.C., 20090-6454, telephone (202) 720-0292.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

This rule has been determined to be significant for the purposes of

Executive Order 12866 and, therefore, has been reviewed by the Office

of Management and Budget. This increase in the service fees is

necessary to recover operating losses in the Federal Rice Inspection

Services. These fees were last increased on January 1, 1995 56 FR

15483), but revenue is still not covering operating costs. The overall

cost of operating the Federal Rice Inspection Service program increased

between fiscal years (FY) 1994 and 1995 by more than 6 percent. In FY

1955, the program generated revenue of $3,982,744 with operating costs

of $4,274,733, resulting in a 1-year operating loss of $291,990.

Executive Order 12778

This final rule has been reviewed under Executive Order 12778,

Civil Justice Reform. This action is not intended to have a retroactive

effect. This final rule will not preempt any State or local laws,

regulations, or policies unless they present irreconcilable conflict

with this rule. There are no administrative procedures which must be

exhausted prior to any judicial challenge to provisions of this rule.

Effect on Small Entities

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.) because most users of the rice inspection

services do not meet the requirements for small entities. In addition,

GIPSA is required by statute to recover the costs of providing rice

inspection services.

Information Collection and Record Keeping Requirements

In compliance with the Paperwork Reduction Act of 1980 (44 U.S.C.

Chapter 35), the information collection and recordkeeping requirements

concerning applications for official inspection services, including

rice inspections, have been approved by the Office of Management and

Budget under control number 0580-0013.

Background

On January 11, 1996, FGIS proposed in the Federal Register (61 FR

1013) to increase fees charged for Federal Rice Inspection Services.

The rice inspection fees were last amended on January 1, 1995 (56 FR

15483). They presently appear in Sec. 868.91 in Tables 1 and 2 of the

regulations (7 CFR 868.91 (Tables 1 and 2)). Since publication of the

proposed rule, FY 96 cost and revenue information has become available

and has been included in the discussion herein.

FGIS continually monitors its cost, revenue, and operating reserve

levels to ensure that there are sufficient resources for operations.

During FYs 1993, 1994, and 1995, respectively, FGIS implemented cost-

saving measures in an effort to provide more cost effective services.

However, while the quantity of rice inspections may fluctuate, certain

FGIS costs remain constant. Consequently, revenues ($3,758,893;

$3,500,597; $3,982,744) did not cover operating costs ($3,847,762;

$4,022,194; and $4,274,733) for FYs 1993, 1994, and 1995, respectively.

This reflects a reduction in operating reserves for all three fiscal

years.

At the time of the publication of the proposed rule, FY 94 offered

the most current 1-year figures available to compare FGIS' rice

inspection operating costs with revenue. The figures for this year were

used to project the budgeted FY 95 rice inspection operating costs and

establish revenue levels necessary to cover projected operating costs.

During the period of October 1, 1994, to July 31, 1995, the actual

operating cost was $3,760,305 and revenue was $3,438,683, resulting in

a reduction in operating reserves of $321,667.

Since the publication of the proposed rule, FY 95 offers the most

current 1-year figures available to compare FGIS' rice inspection

operating costs with revenue. The figures for FY 95 used to project the

budgeted FY 96 rice inspection operating costs and establish revenue

levels necessary to cover those projected costs confirms the trend

toward reducing operating reserves. From October 1, 1994, to September

30, 1995, the actual operating cost was $4,274,733 and revenue was

$3,982,744, resulting in a reduction in operating reserves of $291,990.

The trend, as reflected in FY 94 to FY 95 data, is expected to

continue. This overall trend necessitates an increase in fees and an

increase to the per-hundred-weight volume charge for services performed

at export port locations on lots at rest in order to recover the

projected operating costs and maintain

[[Page 34715]]

a 3-month operating reserve. As of September 30, 1995, the reserve was

at a level of negative $1,089,741.

In fiscal year 1995, FGIS reduced costs to the rice program by

closing and/or reducing field offices to suboffices. Two field offices

were reduced to suboffices and one field office was closed entirely.

The estimated savings from these measures is $220,000 over two years.

FGIS believes that actions taken to this point represent an appropriate

balance between running an efficient operation and providing a high

level of service to our customers. However, we will continue to seek

out further cost savings that do not compromise our service. In

addition, numerous talks were held with rice industry trade groups

outlining FGIS' intention of increasing fees. Industry realized the

need for the increase.

Alternatives Considered

FGIS considered several options to the final fees. It considered:

(1) a straight 14 percent increase in fees and (2) reforming the

current system of fees to gather revenue in a manner less dependent

upon seasonal shifts, and (3) incremental increases of fees. The third

alternative was selected. It was decided to propose three incremental

six percent fee increases, the first increase to be implemented May 1,

1996, second on January 1, 1997, and third on January 1, 1998. This

alternative was selected for several reasons: the negative balance in

retained earnings requires the increases be implemented in a more

timely manner; the trade is familiar with incremental increases and

incremental increases allows the rice industry time to adjust their

operations to the increased fees. We will propose the second option at

a later date when we have had a chance to evaluate the operation of a

current proposal to reform the Grain Inspection and Weighing. That

proposal, under the United States Grain Standards Act will change the

methodology in fee collection from the current system, an hourly rate

basis, to a combination of reduced hourly rates, more contract options,

and per metric ton administrative charge to recover obligations.

Comment Review

FGIS received no comments during the 30-day comment period.

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 FGIS administrative and supervisory costs for the performance

of official services, including personnel compensation, personnel

benefits, travel, rent, communications, utilities, contractual

services, supplies, and equipment.

Section 868.91, Tables 1 and 2 (as currently shown in section

868.91, Tables 1 and 2 of the regulations), are revised to provide for

the increase in rice inspection fees. A 3-stage increase plan to raise

hourly rates and unit fees by approximately 6 percent per year for

calendar years 1996, 1997, and 1998 is implemented. These incremental

increases will lessen the impact of the amount of increase required to

replenish retained earnings to appropriate levels.

FGIS will review its costs, revenue, and operating reserve levels

to ensure that the fee increases scheduled for calendar years 1997 and

1998 are required at the levels specified. FGIS, as the fee increases

are implemented, will review the level of the operational reserve and

if available funds exceed what is needed to maintain a reasonable

reserve, we will consider proposing a reduction in fees. In the event

that a change in the fees appears necessary, FGIS will engage in

rulemaking before making any changes.

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:

Sec. 868.91 Fees for Certain Federal Rice Inspection Services.

The fees shown in Tables 1 and 2 apply to Federal Rice Inspection

Services.

Table 1.--Hourly Rates/Unit Rate Per CWT

[Fees for Federal Rice Inspection Services]

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Regular Workday (Monday- Nonregular Workday (Sunday-

Service \1\ Saturday) Holiday)

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Effective August 2, 1996

Contract (per hour per Service representative). $35.80......................... $49.80

Noncontract (per hour per Service 43.50.......................... 60.50

representative).

Export Port Services \2\....................... .042/CWT....................... .042/CWT

Effective January 1, 1997

Contract (per hour per Service representative). 37.90.......................... 52.80

Noncontract (per hour per Service 46.10.......................... 64.10

representative).

Export Port Services \2\....................... .045/CWT....................... .045/CWT

Effective January 1, 1998

Contract (per hour per Service representative). 40.20.......................... 56.00

Noncontract (per hour per Service 48.90.......................... 67.90

representative).

Export Port Services \2\....................... .048/CWT....................... .048/CWT

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\1\ Original and appeal inspection services include: Sampling, grading, weighing, and other services requested

by the applicant when performed at the applicant's facility.

\2\ Services performed at export port locations on lots at rest.

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Table 2.--Unit Rates

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Brown rice

Service \1\ \3\ Rough rice for Milled rice

processing

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Effective August 2, 1996

Inspection for quality (per lot, sublot, or sample inspection........ $29.20 $25.30 $18.00

Factor analysis for any single factor (per factor):

(a) Milling yield (per sample)................................... 22.70 22.70 ...........

(b) All other factors (per factor)............................... 10.80 10.80 10.80

Total oil and free fatty acid........................................ ........... 35.40 35.40

Interpretive line samples:\2\ ........... ........... ...........

(a) Milling degree (per set)..................................... ........... ........... 75.80

(b) Parboiled light (per sample)................................. ........... ........... 19.00

Extra copies of certificates (per copy).............................. 3.00 3.00 3.00

Effective January 1, 1997

Inspection for quality (per lot, sublot, or sample inspection)....... 31.00 26.80 19.10

Factor analysis for any single factor (per factor):

(a) Milling yield (per sample)................................... 24.10 24.10 ...........

(b) All other factors (per factor)............................... 17.40 11.40 11.40

Total oil and free fatty acid........................................ ........... 37.50 37.50

Interpretive line samples: \2\ ........... ........... ...........

(a) Milling degree (per set)..................................... ........... ........... 80.30

(b) Parboiled light (per sample)................................. ........... ........... 20.10

Extra copies of certificates (per copy).............................. 3.00 3.00 3.00

Effective January 1, 1998

Inspection for quality (per lot, sublot, or sample inspection)....... 32.90 28.40 20.20

Factor analysis for any single factor (per factor):

(a) Milling yield (per sample)................................... 25.50 25.50 ...........

(b) All other factors per factor):............................... 12.10 12.10 12.10

Total oil and free fatty acid........................................ ........... 39.80 39.80

Interpretive line samples: \2\

(a) Milling degree (per set)..................................... ........... ........... 85.10

(b) Parboiled light (per sample)................................. ........... ........... 21.30

Extra copies of certificates (per copy).............................. 3.00 3.00 3.00

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\1\ Fees apply to determinations (original or appeals) for kind, class, grade, factor analysis, equal to type,

milling yield, or any other quality designation as defined in the U.S. Standards for Rice or applicable

instructions, whether performed singly or in combination at other than at the applicant's facility.

\2\ Interpretive line samples may be purchased from the U.S. Department of Agriculture, Grain Inspection,

Packers and Stockyards Administration; Technical Services Division; Board of Appeals and Review; FGIS

Technical Center, 10383 North Executive Hills Boulevard, Kansas City, MO 64153-1394. Interpretive line samples

also are available for examination at selected FGIS field offices. A list of field offices may be obtained

from the Deputy Director, Field Management Division, USDA, GIPSA, FGIS, P.O. Box 96454, Washington, DC 20090-

6454. The interpretive line samples illustrate the lower limit for milling degrees only and the color limit

for the factor ``Parboiled Light'' rice.

\3\ Fees for other services not referenced in Table 2 will be based on the noncontract hourly rate listed in

Section 868.90, Table 1.

Dated: June 27, 1996.

Michael V. Dunn,

Assistant Secretary, Marketing and Regulatory Programs.

[FR Doc. 96-16993 Filed 7-2-96; 8:45 am]

BILLING CODE 3410-EN-M