97-24814. Fees for Official Inspection and Official Weighing Services  

  • [Federal Register Volume 62, Number 181 (Thursday, September 18, 1997)]
    [Rules and Regulations]
    [Pages 48936-48939]
    From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
    [FR Doc No: 97-24814]
    
    
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    DEPARTMENT OF AGRICULTURE
    
    Grain Inspection, Packers and Stockyards Administration
    
    7 CFR Part 800
    
    RIN 0580-AA56
    
    
    Fees for Official Inspection and Official Weighing Services
    
    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 implementing, effective October 1, 1997, a 12.5-percent 
    increase in the administrative service fee for official inspection and 
    weighing services performed in the United States under the United 
    States Grain Standards Act (USGSA), as amended. The fee
    
    [[Page 48937]]
    
    adjustment is necessary to cover indirect field office and headquarters 
    operational costs and to maintain a 3-month operational reserve. GIPSA 
    is also deleting from the fee schedule the unit fees for submitted 
    samples and factor only analysis performed online at an applicant's 
    facility.
    
    EFFECTIVE DATE: October 1, 1997.
    
    FOR FURTHER INFORMATION CONTACT: George Wollam, USDA, GIPSA, at (202) 
    720-4628.
    
    SUPPLEMENTARY INFORMATION:
    
    Executive Order 12866
    
        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.
    
    Executive Order 12988
    
        This 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 Section 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 rule will not preempt any State or local laws, regulations, or 
    policies unless they present irreconcilable conflict with this proposed 
    rule. There are no administrative procedures which must be exhausted 
    prior to any judicial challenge to provisions of this rule.
    
    Effects on Small Entities
    
        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.). Most users of the official inspection and weighing 
    services do not meet the requirements for small entities. FGIS is 
    required by statute to make services available and to recover costs of 
    providing such services, as nearly as practicable.
        The fee revision applies to entities engaged in the export of 
    grain. Under provisions of the USGSA, most grain exported from U.S. 
    export port locations must be officially inspected and weighed. 
    Mandatory inspection and weighing services are provided by FGIS on a 
    fee basis at 37 export facilities. All of the export facilities are 
    owned and managed by multi-national corporations, large cooperatives, 
    or public entities that do not meet the criteria for small entities as 
    defined under the Regulatory Flexibility Act and the regulations issued 
    thereunder. A 3-percent increase in hourly and certain unit fees went 
    into effect June 15, 1997, and will recover the increased operational 
    costs caused by mandated cost-of-living increases to Federal salaries. 
    That increase is anticipated to generate $218,100 in additional 
    revenue, bringing to $22.21 million the projected total revenue for 
    fiscal year 1997. This 12.5-percent increase in the administrative fee 
    is designed to generate sufficient revenue to cover indirect costs 
    associated with field office and headquarters operations and to 
    maintain the retained earnings at a 3-month operating reserve for the 
    inspection and weighing program. Additional revenue estimated for 
    fiscal year 1998 is projected to be $440,000 at an 85.6 million metric 
    ton level. The 12.5-percent increase will not have a significant 
    economic impact on small entities.
    
    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 
    contained in Part 800 have been previously approved by the Office of 
    Management and Budget under control number 0580-0013.
    
    Background
    
        The USGSA requires GIPSA to charge and collect reasonable fees for 
    performing official inspection and weighing services. The fees are to 
    cover, as nearly as practicable, FGIS' costs for performing these 
    services, including related administrative and supervisory costs.
        Effective October 1, 1996, GIPSA changed the methodology it uses 
    for fees charged for its inspection and weighing services. The current 
    fee structure for these services consists of three basic components: 
    (1) An hourly rate charged to recover the direct labor costs of 
    providing service; (2) a unit test or service rate; and (3) a per 
    metric ton administrative charge to recover the indirect costs, such as 
    salaries and benefits for office management and support staff and rent, 
    incurred both at field offices and headquarters. Fees charged in the 
    first two components of the structure were increased by approximately 3 
    percent effective June 15, 1997 (62 FR 31701, June 11, 1997, corrected 
    at 62 FR 34342, June 25, 1997), to cover increased costs due to 
    mandated Federal cost-of-living increases. At that time, GIPSA noted 
    that a further adjustment of fees, including an adjustment to the 
    administrative fee to recover the indirect costs of field offices and 
    headquarters and to replenish the operating reserve, would be addressed 
    in future rulemaking.
        The current USGSA administrative fee was published in the August 
    22, 1996, Federal Register (61 FR 43301) and became effective on 
    October 1, 1996. The per metric ton administrative charge recovers the 
    indirect costs and administrative costs of FGIS field offices and 
    headquarters such as the salaries and benefits for office management 
    and support staff, Departmental charges, Animal and Plant Health 
    Inspection Service and Agricultural Marketing Service charges, 
    management of computers and software, utilities, and rent. The 3-
    percent increase that became effective June 15, 1997, was intended to 
    recover only increases to the salaries of service personnel responsible 
    for inspection and weighing of grain. The administrative fee is 
    assessed on all outbound grain inspected and/or weighed at an 
    applicant's facility.
        Six levels of fees exist, ranging from 1 metric ton or less to over 
    7,000,001 metric tons, with fees decreasing as the number of metric 
    tons inspected increases. The charge is assessed in addition to the 
    hourly rate. At the beginning of each fiscal year (October 1), all 
    applicants pay the same per metric-ton-fee. Once a level has been 
    reached, the fee for additional metric tons is reduced until the 
    maximum volume is reached.
    
                               Administrative Fees                          
    ------------------------------------------------------------------------
                                                        Current    Proposed 
                       Metric tons                        fees       fees   
    ------------------------------------------------------------------------
    1-1,000,000......................................     $0.090     $0.1013
    1,000,000-1,500,000..............................       .082       .0923
    1,500,001-2,000,000..............................       .042       .0473
    2,000,001-5,000,000..............................       .032       .0360
    5,000,001-7,000,000..............................       .017       .0192
    7,000,000 +......................................       .002       .0023
    ------------------------------------------------------------------------
    
        This 12.5-percent increase in the administrative fee is designed to 
    generate additional revenue to cover the indirect costs associated with 
    field office and headquarters operations and maintain the retained 
    earnings at a 3-month operating reserve for the inspection and weighing 
    program.
        GIPSA estimates collecting $22.2 million in revenue for fiscal year 
    1997 under the current fee schedule. This is $1 million less than the 
    $23.2 million estimated cost of operations for fiscal year 1997. 
    Similar losses have occurred for the past 3 years, with $753,000 in
    
    [[Page 48938]]
    
    fiscal year 1994; $630,000 in fiscal year 1995; and $1,273,000 in 
    fiscal year 1996. These losses resulted in a retained earning balance 
    of only $922,000 at the beginning of fiscal year 1997, significantly 
    below a desired 3-month operating reserve of $6 million.
        Indirect costs for the inspection and weighing program are 
    estimated at $4.68 million, or 20 percent of the total $23.2 obligation 
    for the program. Because of a downturn in metric tons exported, the 
    current administrative fee will generate only an estimated $3.5 million 
    for fiscal year 1997, resulting in an estimated loss of $1.18 million. 
    The administrative fee must be increased to ensure sufficient revenue 
    is collected to recover indirect costs for an average export volume 
    year. This will permit any excess revenue collected during high volume 
    years, such as 89.9 million metric tons in fiscal year 1996, to offset 
    low volume years such as this year, estimated at 76 million metric 
    tons.
        The current administrative fee generates an estimated $4.09 million 
    at the 5-year average export volume of 85.6 million metric tons. The 
    12.5-percent increase will generate an estimated $4.53 million at the 
    85.6 million metric ton level, or increase actual revenue by $440,000, 
    or 10.75 percent.
    
    Comment Review
    
        A proposed rule was published in the Federal Register on July 18, 
    1997, (62 FR 38488). GIPSA received five comments from trade 
    associations and industry representatives during the 30-day comment 
    period. All five commentors opposed the 12.5-percent increase.
        In general, the commentors recommended that GIPSA initiate action 
    to reduce administrative costs prior to any fee increase and that fee 
    increases should not be used as the primary tool to reverse declining 
    financial conditions. GIPSA agrees that all efforts should be taken to 
    control administrative costs before proposing fee increases. This has 
    been done in the past and GIPSA will continue to contain costs, as 
    practicable, in the future.
        The administrative fee implemented on October 1, 1996, was designed 
    to collect sufficient revenue to recover fiscal year 1993 indirect 
    costs which were $4.09 million. Since fiscal year 1993, the Agency has 
    experienced an estimated $1.7 million increase in indirect costs 
    primarily due to Federal pay increases, coupled with a redistribution 
    of indirect costs associated with headquarters operations beginning in 
    fiscal year 1995. GIPSA has reduced its indirect costs by $1.1 million 
    by staff reductions, consolidating financial management into the 
    Department's Animal and Plant Health Inspection Service, and reducing 
    the number of field locations from 31 to 23.
        Despite the Agency's aggressive cost containment efforts, indirect 
    costs have increased $590,000 over the $4.09 million fiscal year 1993 
    base and must be recovered. The suggestions by several commentors that 
    overhead (indirect costs) be further reduced in general or by specific 
    percentages, is not practical at this time. GIPSA has and will continue 
    to reduce costs as is appropriate and cost effective where feasible.
        While the fee increase generally addresses cost recovery by GIPSA 
    for original inspection and weighing services performed at export 
    locations, several commentors suggested that these costs be passed on 
    to all users of GIPSA services. In addition, commentors stated that the 
    proposed fee increase would adversely impact on the competitive 
    position of U.S. grain exports. Further, references were made that 
    increased costs associated with export operations would be passed on to 
    other industry members, including farmers, with one commentor 
    indicating that the fees would have an economic impact on small 
    entities as defined in the Regulatory Flexibility Act.
        With regard to expanding the base for cost recovery to all users of 
    GIPSA's services, GIPSA has gone to great lengths to identify specific 
    costs associated with the vast number of different customers we serve. 
    This has allowed us to develop separate fee schedules that specifically 
    address services to these unique customers. This process has worked 
    well and GIPSA sees no need to change it based on the suggestions.
        An exporters' ability to compete in the international market place 
    is influenced by many factors, not just the cost of inspection and 
    weighing services. All inspection and weighing costs, regardless of 
    where they are incurred in the marketing chain, i.e., farmer to 
    exporter, are just one item used to determine the overall cost of a 
    product. The additional $440,000 in fees, when spread over the total 
    volume of grain traded in both the domestic and export markets, will 
    not create a significant impact.
        Several commentors questioned whether the fees and the expenses 
    upon which they are based were reasonable under the USGSA. GIPSA has 
    reviewed this issue and determined that the proposed fees and expenses 
    are consistent and reasonable under the provisions of the USGSA.
        One commentor suggested that the projected revenue from the 
    proposed fee increase did not represent an across the board 12.5-
    percent increase and should be $510,000 instead of the stated $440,000. 
    They apparently based this on a straightline projection of 12.5 percent 
    of total cost. They further questioned how the proposed increase will 
    offset the projected $1.18 million loss.
        In order to calculate additional revenue for the administrative 
    fee, one must first consider the existing fee structure. With the 
    administrative fee decreasing as the number of metric tons increases 
    and the volume of grain handled by export elevators varies, the 
    estimated revenue collected from a 12.5 percent fee increase cannot be 
    determined using a straightline projection. As stated in the proposal, 
    an increase of 12.5 percent will generate an estimated $4.53 million at 
    the 85.6 million metric ton level, or increase actual revenue by 
    $440,000, or 10.75 percent.
        Also, as stated in the proposal, GIPSA expected to collect only 
    $3.5 million in administrative fees in fiscal year 1997. With projected 
    costs at $4.68 million, there is a $1.18 million shortfall. The current 
    fees are set to collect $4.09 million at 85.6 million tons. As stated 
    in the proposal, the proposed fee level is designed to collect $4.53 
    million at an export volume of 85.6 million metric tons. Consequently, 
    a revenue shortfall such as $1.18 million in 1997 with exports at 76 
    million metric tons will be offset by increased revenue during high-
    volume years such as 89.9 million metric tons in 1996. GIPSA is setting 
    its fees at a reasonable level based on a 5-year level of exports.
        One commentor suggested that GIPSA make previously recommended 
    program changes prior to proposing fee increases. The commentor had 
    recommended the suggested program changes during GIPSA's overall review 
    of existing regulations. The suggested program changes are being 
    considered and will be addressed in a separate rulemaking, as 
    appropriate.
        GIPSA has and will continuously monitor and adjust its resources to 
    obtain optimum utilization of its personnel, in both direct and 
    indirect areas, prior to proposing fee increases. However, as 
    previously stated, GIPSA must recover its expenses for providing 
    services and maintenance of a 3-month operating reserve and therefore 
    must do so by implementing a 12.5-percent increase in the 
    administrative fees.
        No comments were received in response to the proposal to delete 
    Table I (3)(ii), fees for submitted samples and
    
    [[Page 48939]]
    
    factor only analysis performed online at an applicant's facility.
    
    Final Action
    
        Effective October 1, 1997, the Agency will apply a 12.5-percent 
    increase to Administrative Fees in 7 CFR 800.71, Table 1 (3), and will 
    delete fees for Additional Service (assessed in addition to all other 
    fees) in Table 1 (3)(ii).
        Good cause exists for not postponing the effective date of this 
    rule until 30 days after publication in the Federal Register (5 U.S.C. 
    553) because an October 1, 1997, effective date corresponds to the 
    beginning of the 1998 fiscal year and the start of a new accounting 
    cycle.
    
    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 Table 1(3) in Schedule A 
    of paragraph (a) to read as follows:
    
    
    Sec. 800.71  Fees assessed by the Service.
    
        (a)
    * * * * *
    
    Schedule A--Fees for Official Inspection and Weighing Services 
    Performed in the United States
    
        Table 1.--Fees For Official Services Performed at an Applicant's    
                    Facility in an Onsite FGIS Laboratory \1\               
                      *        *        *        *        *                 
      (3) Administrative Fee (assessed in addition to all other applicable  
     fees, only one administrative fee will be assessed when inspection and 
              weighing services are performed on the same carrier).         
                                                                            
                                                                            
    ------------------------------------------------------------------------
    (i) All outbound carriers (per-metric-ton) \4\                          
      (a) 1-1,000,000............................................    $0.1013
      (b) 1,000,001-1,500,000....................................      .0923
      (c) 1,500,001-2,000,000....................................      .0473
      (d) 2,000,001-5,000,000....................................      .0360
      (e) 5,000,001-7,000,000....................................      .0192
      (f) 7,000,001 +............................................     .0023 
    ------------------------------------------------------------------------
    \1\ Fees for original inspection and weighing, reinspection, and appeal 
      inspection service include, but are not limited to, sampling, grading,
      weighing, prior to loading stowage examinations, and certifying       
      results performed within 25 miles of an employee's assigned duty      
      station. Travel and related expenses will be charged for service      
      outside 25 miles as found in Sec.  800.72 (a).                        
                                                                            
     *        *        *        *        *                                  
    \4\ The administrative fee is assessed on an accumulated basis beginning
      at the start of the Service's fiscal year (October 1 each year).      
    
    * * * * *
        Dated: September 12, 1997.
    James R. Baker,
    Administrator.
    [FR Doc. 97-24814 Filed 9-17-97; 8:45 am]
    BILLING CODE 3410-EN-P
    
    
    

Document Information

Effective Date:
10/1/1997
Published:
09/18/1997
Department:
Grain Inspection, Packers and Stockyards Administration
Entry Type:
Rule
Action:
Final rule.
Document Number:
97-24814
Dates:
October 1, 1997.
Pages:
48936-48939 (4 pages)
RINs:
0580-AA56
PDF File:
97-24814.pdf
CFR: (1)
7 CFR 800.71