General Regulations and Standards for Certain Agricultural Commodities

DEPARTMENT OF AGRICULTURE

Grain Inspection, Packers and Stockyards Administration

7 CFR Part 868

RIN 0580-AA54

General Regulations and Standards for Certain Agricultural

Commodities

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

ACTION: Final rule.

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SUMMARY: The Grain Inspection, Packers and Stockyards Administration

(GIPSA) is amending the regulations under the Agricultural Marketing

Act (Act) of 1946 to allow GIPSA and State cooperators to use

contractors to perform specified inspection services. GIPSA has

determined that private firms, institutions, and individuals, working

under contract with GIPSA field offices and State cooperators, may be

able to perform some inspection services, at certain locations, more

effectively or at less cost than if those services were performed by

Department or State employees. Consequently, GIPSA is amending the

regulations to allow GIPSA and State cooperators to contract for

service work and to license individual contractors and those employed

by contractors.

EFFECTIVE DATE: July 1, 1998.

FOR FURTHER INFORMATION CONTACT: George Wollam, USDA, GIPSA, Room 0623-

S, Stop 3649, Washington, D.C. 20250-3649; FAX (202) 720-4628; or E-

mail [email protected].

SUPPLEMENTARY INFORMATION:

Executive Order 12866

This final 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.

Executive Order 12988

This final rule has been reviewed under Executive Order 12988,

Civil Justice Reform. This action is not intended to have preemptive

effect with respect to any State or local laws, regulations, or

policies unless they present an irreconcilable conflict with this rule.

This final rule is not intended to have retroactive effect. There are

no administrative procedures which must be exhausted prior to any

judicial challenge to the provisions of this rule or application of its

provisions.

Effects on Small Entities

GIPSA has determined that this final rule will not have a

significant economic impact on a substantial number of small entities

as defined under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.).

GIPSA believes that allowing contracts with private firms,

institutions, individuals, and others for inspection work will foster

more cost-effective operations. Many users of the inspection services

do not meet the requirements for small entities as defined in the

Regulatory Flexibility Act. For example, the primary user of pulse

inspection services is the U.S. Government. It is estimated that

between 80 and 90 percent of all inspections are performed (directly or

indirectly) at the request of either the USDA's Farm Service Agency or

Foreign Agricultural Service, or the U.S. Agency for International

Development. The action will allow GIPSA and the 13 State cooperators

to use contractors to perform specified inspection services. Currently,

contract samplers are used by both GIPSA and State cooperators which

has resulted in reduced operating expenses and, in many cases, quicker

services to applicants for services. It is expected that this action

would result in similar benefits.

Information Collection and Recordkeeping Requirements

In compliance with the Paperwork Reduction Act of 1995 (44 U.S.C.

Chapter 35), the information collection and recordkeeping requirements

in Part 868 have been approved previously by OMB and assigned OMB No.

0580-0013.

Background

GIPSA is committed to carrying out its statutory and regulatory

mandates in a cost-effective manner that best serves the public

interest. Concurrently, GIPSA is constantly seeking ways to reduce the

cost of providing official services, without reducing the quality of

that service. One measure that has proven effective is the use of

contract samplers at outlying service points or during periods of peak

demand. By judiciously using contract samplers, GIPSA field offices and

State cooperators have been able to reduce their operating expenses

and, in many cases, provide quicker service to their applicants for

services. GIPSA believes that contract inspections may be equally

beneficial in certain situations; e.g., providing quality inspections

on an intermittent basis at geographically isolated service points.

On January 15, 1998, GIPSA published in the Federal Register (63 FR

2353) a proposal to amend the regulations under the Act of 1946 to

allow GIPSA and State cooperators to use contractors to perform

specified inspection services. The Act of 1946 provides authority to

the Secretary of Agriculture to enter into contracts and agreements

with States and agencies of States, private firms, institutions, and

individuals for the purpose of performing specified inspection

services. According to Section 868.1(b)(23) of the regulations, such

services may include ``applying such tests and making examinations of a

commodity and records by official personnel as may be necessary to

determine the kind, class, grade, other quality designation, the

quantity, or condition of commodity; performing condition of container,

carrier stowage examination; and any other services as related to

commodities, as necessary; and issuing an inspection certificate.''

However, Section 868.80(a)(1) of the regulations states that only

persons employed by a cooperator may be licensed to inspect commodities

or to perform related services. Consequently, GIPSA proposed to amend

the regulations to provide for GIPSA and State cooperators to contract

for quality (grading) inspection services and to license individual

contractors and those employed by a contractor.

Comment Review

During the 60-day comment period, GIPSA received eight comments:

One from a Midwest bean export company; one from a national association

that represents grain, feed, and processing companies; one from a

regional grain exchange; one from an animal welfare organization; and

four from privately-owned official inspection and weighing agencies.

Seven of the commenters supported the proposed action, as written. One

commenter noted several concerns, but did not object to the proposed

action.

Several of the commenters indicated that private firms,

institutions, and individuals, working under contract with GIPSA field

offices and State cooperators, would improve the timeliness of service.

One commenter stated that allowing GIPSA to use contractors ``would

eliminate time consumed by mailing samples to the field offices, which

should result in quicker turnaround and be more cost-effective.''

Another indicated that this action ``would greatly simplify and speed

up the process of exporting.''

[[Page 29531]]

The national grain industry association commented that, ``In

today's highly competitive business environment, it is important that

all service providers seek new ways to meet customer needs in the most

cost-effective way possible. We are not surprised to learn that GIPSA

has determined that private contractors can, in some cases, perform

inspection services more effectively or, at least, at less cost than

traditional service providers. For example, GIPSA reports that the use

of private contractors has proven effective when using contract

samplers at remote service points. Also, as GIPSA notes, the use of

private contractors can increase the flexibility of GIPSA and State

cooperators to meet customer needs during periods of peak demand.'' An

official agency also commented that using contractors would help lower

the cost of providing official services.

The animal welfare organization indicated several concerns about

any type of inspection services which the Government is considering

contracting out. The organization stated that it is imperative that

``All contractors, subcontractors, and employees of either must be

properly trained and free of any financial or other business interest

in any of the `commodities' they inspect.'' They went on to state that

``Citizens expect that the law and its regulations will be enforced

objectively, and the inspectors will be licensed using criteria which

is designed to select only experienced and qualified men and women.''

We do note that all official inspection personnel, whether employed by

GIPSA, a cooperator, or a contractor, will be held to the same

standards of fitness; i.e., they must be fully trained, tested

according to established GIPSA procedures, free of any conflicts of

interest, and licensed/authorized by GIPSA to inspect graded

commodities.

On the basis of these comments and other available information,

GIPSA has decided to amend the regulations to allow GIPSA and

cooperators to contract for service work and to license individual

contractors and those employed by contractors.

Final Action

To provide for more responsive, cost-effective inspection services

under the Act of 1946, GIPSA is revising:

1. Section 868.1(b)(13) to expand the definition of contractor to

provide for cooperators to use contractors for specified services.

2. Section 868.80(a)(1) to add provisions for licensing individual

contractors and employees of contractors.

List of Subjects in 7 CFR Part 868

Administrative practice and procedure, Agricultural commodities.

For reasons set forth 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 868.1(b)(13) is revised to read as follows:

Sec. 868.1 Meaning of terms.

* * * * *

(b) * * *

(13) Contractor. Any person who enters into a contract with the

Service or with a cooperator to perform specified inspection services.

* * * * *

3. Section 868.80(a)(1) is revised to read as follows:

Sec. 868.80 Who may be licensed.

(a) Inspectors. * * *

(1) Is employed by a cooperator, is a contractor, or is employed by

a contractor.

* * * * *

Dated: May 21, 1998.

James R. Baker,

Administrator, Grain Inspection, Packers and Stockyards Administration.

[FR Doc. 98-14054 Filed 5-29-98; 8:45 am]

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