06-3507. Fees for Rice Inspection Services

AGENCY:

Grain Inspection Packers and Stockyards Administration, USDA.

ACTION:

Proposed rule.

SUMMARY:

This proposed rule would revise the regulations governing the sampling, inspection, weighing, and certification for rice by increasing certain fees charged for the services by approximately 18 percent. Further, the rice fees would be increased an additional 3 percent each year through fiscal year 2010 and establish a stowage examination fee. These revisions are necessary in order to recover, as nearly as practicable, the costs of performing these services under the Agricultural Marketing Act of 1946 (AMA).

DATES:

Comments must be received on or before June 12, 2006.

ADDRESSES:

We invite you to submit comments on this proposed rule. You may submit comments by any of the following methods:

• E-Mail: Send comments via electronic mail to [e-mail].
• Mail: Send hardcopy written comments to Tess Butler, GIPSA, USDA, 1400 Independence Avenue, SW., room 1647-S, Washington, DC 20260-3604.
• Fax: Send comments by facsimile transmission to: [phone].
• Hand Delivery or Courier: Deliver comments to: Tess Butler, GIPSA, USDA, 1400 Independence Avenue, SW., Room 1647-S, Washington, DC 20250-3604.
• Federal eRulemaking Portal: Go to http://www.regulations.gov. Follow the online instructions for submitting comments.

Instructions: All comments should make reference to the date and page number of this issue of the Federal Register.

Read Comments: All comments will be available for public inspection in the above office during regular business hours (7 CFR 1.27(b)).

FOR FURTHER INFORMATION CONTACT:

John Giler, Deputy Director, Field Management Division, at his E-mail address: [e-mail], telephone [phone].

SUPPLEMENTARY INFORMATION:

Executive Order 12866 and Regulatory Flexibility Act

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

Also, pursuant to the requirements set forth in the Regulatory Flexibility Act (RFA); the Grain Inspection, Packers and Stockyards Administration (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. The proposed action described herein is being taken because additional user fee revenues are needed to cover the costs of providing current and future program operations and services.

There are approximately 135 applicants who receive rice inspection and weighing services. A small portion of these users are small entities under the criteria established by the Small Business Administration (13 CFR 121.201). There would be no additional reporting, recordkeeping, 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 does not have a significant economic impact on a substantial number of small entities as defined under the RFA. The majority of applicants that apply for services do not meet the requirements of small entities. Rice inspection and weighing services are provided upon request and the fees charged to users of these services vary with usage. However, the impact on all businesses, including small entities, is very similar. Further, the rice industry businesses are under no obligation to use these services, and, therefore, any decision on their part to discontinue the use of the services should not prevent them from marketing their products.

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 its 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 the Agency 3-month operating retained earnings. During fiscal year 2004, the rice program revenue was nearly $4.3 million with costs at approximately $4.4 million resulting in an approximate $0.2 million program deficit. Current revenue for GIPSA's rice program during fiscal year 2005 was $4.4 million with costs at $4.7 million resulting in a $0.3 million program deficit. GIPSA's costs of operating the rice program are expected to be approximately $4.4 million during fiscal year 2006 and will gradually escalate to approximately $4.9 million by fiscal year 2010. These cost increases (2006 to 2010) are due to employee salaries and benefits coupled with estimated annual cost of living adjustments, the future costs of $50,000 to replace aging rice inspection equipment in the offices, and the need to fund $300,000 for an information technology upgrade to improve certification efficiency and program management. The current fee structure will not fully fund the rice program this fiscal year or future fiscal years resulting in continued program deficits. GIPSA will also remain below the Agency's 3-month operating retained earnings level.

This proposed 18 percent fee increase will initially increase the revenue of the program; however, this will not cover all of GIPSA's costs. GIPSA will need to continue to increase fees by 3 percent annually through fiscal year 2010 in order to cover the program's operating cost and replenish the 3-month retained earnings balance. 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 fee rates that will collect sufficient revenue over time to cover operating expenses, while striving to create a 3-month operating reserve by FY 2010. The cost of living projections used in calculating future salary, benefits, and all other non-salary expenses out to FY 2010 were supplied by the Office of Management and Budget (OMB) as set forth in their Federal Register publication (69 FR 26900) on May 14, 2004. GIPSA will evaluate the financial status of the rice program on a continuous basis to determine if it is meeting the goal of obtaining a 3-month operating reserve by FY 2010, and to determine if other adjustments are necessary.

GIPSA's financial projections indicate the retained earnings balance will meet the target level by the end of fiscal year 2010 after an initial 18 percent increase in fees followed by the annual 3 percent increases. GIPSA financial projections also considered plans to introduce program changes which will better control increases in long-term costs. These program changes will involve a realignment of staff to better control rising personnel costs in the future.

The following table reflects GIPSA's financial rice program projections through fiscal year 2010.

Table 1.—Rice Program Projections

[Million Dollars]*

	FY05	FY06	FY07	FY08	FY09	FY10
Revenue	$4.4	$4.0	$4.7	$4.9	$5.0	$5.2
Obligations	4.7	4.4	4.5	4.6	4.7	4.7
Retained Earnings—Projected	0.4	0	0.3	0.5	0.8	1.2
Retained Earnings—Target (3-months operating obligations)	1.2	1.1	1.1	1.2	1.2	1.2
* Figures may not sum due to rounding.

This proposed rule will initially increase user fees by 18 percent and will follow with subsequent 3 percent increases until fiscal year 2010. GIPSA is also proposing a new fee for stowage examination services which are provided as a service upon request.

This action is authorized under the AMA (7 U.S.C. 1622 (h)) which 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 and benefits, travel, rent, communications, utilities, contractual services, supplies, and equipment.

Paperwork Reduction Act and Government Paperwork Elimination Act

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

GIPSA is committed to compliance 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 the maximum extent possible.

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. This rule will not preempt any state or local laws, 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.

Proposed Action

The AMA of 1946 authorizes official inspection and weighing services, on a user-fee basis, of rice. The AMA of 1946 provides that reasonable fees be collected from the users of the services to cover, as nearly as practicable, the costs of the services rendered. This proposed rule would amend the schedule for fees and charges for inspection and weighing services rendered to the rice industry to reflect the costs necessary to operate the program.

GIPSA regularly reviews its user-fee programs to determine if the fees are adequate. While GIPSA continues to search for opportunities to reduce its costs, the existing fee schedule will not generate sufficient revenues to cover program costs while maintaining the Agency 3-month operating retained earnings. During fiscal year 2004, the rice program revenue was nearly $4.3 million with costs at approximately $4.4 million resulting in an approximate $0.2 million program deficit. Current revenue for GIPSA's rice program during fiscal year 2005 was $4.4 million with costs at $4.7 million resulting in a $0.3 million program deficit. GIPSA's costs of operating the rice program are expected to be approximately $4.4 million during fiscal year 2006 and will escalate to approximately $4.9 million by fiscal year 2010. These cost increases (2006 to 2010) are due to employee salaries and benefits coupled with estimated annual cost of living adjustments, the future costs of $50,000 to replace aging rice inspection equipment in the offices, and the need to fund $300,000 for an information technology upgrade to improve certification efficiency and program management. The current fee structure will not fully fund the rice program this fiscal year or future fiscal years resulting in a continued program deficit. GIPSA will also remain below the Agency's 3-month operating retained earnings level.

This proposed 18 percent fee increase will initially increase the revenue of the program; however, this will not cover all of GIPSA's costs. GIPSA will need to continue to increase fees by 3 percent annually through fiscal year 2010 in order to cover the program's operating cost and replenish the 3-month retained earnings balance. GIPSA believes that an initial increase in fees followed by annual incremental increases is appropriate at this time. GIPSA's financial projections indicate the retained earnings balance will meet the target level by the end of fiscal year 2010 after an initial 18 percent increase in fees followed by the annual 3 percent increases (see Table 1 in preceding section of the document). GIPSA financial projections also considered plans to introduce program changes which will better control increases in long-term costs.

This proposed rule will initially increase user fees by 18 percent and will follow with subsequent 3 percent increases until fiscal year 2010. GIPSA is also proposing a new fee for stowage examination services which are provided as a service upon request.

Based on the aforementioned analysis of this program's costs, GIPSA proposes to increase the fees for services under the rice program. GIPSA will review its cost, revenue, and operating reserve levels to ensure that the fee increases for the noted calendar years are required at the levels specified and sufficient to maintain official rice inspection and weighing services, upon request. In the event a change in the fees is necessary, GIPSA will engage in notice and comment rulemaking before making any changes.

The following table compares current fees and charges with the proposed 18 percent fee increase as found in 7 CFR 868.91. This table also reflects the additional fees for stowage examination services that are provided upon request.

Table 2

Hourly rates/unit rate per CWT	Current fees and charges		Proposed fees and charges
	Regular workday (Monday-Saturday)	Nonregular workday (Sunday-Holiday)	Regular workday (Monday-Saturday)	Nonregular workday (Sunday-Holiday)
Contract (per hour per Service representative)	$46.40	$64.40	$54.80	$76.00
Noncontract (per hour per Service representative)	56.60	78.00	66.80	92.10
Export Port Services (per hundredweight)	.056	.056	0.066	0.066

Unit Rates	Current fees and charges	Proposed fees and charges
Rough Rice:
Inspection for quality (per lot, sublot, or sample inspection)	$35.50	$41.90
(a) Milling yield (per Sample)	27.50	32.50
(b) All other factors (per factor)	13.20	15.60
Brown Rice for Processing:
Inspection for quality (per lot, sublot, or sample inspection)	30.50	36.00
(a) Milling yield (per Sample)	27.50	32.50
(b) All other factors 9per factor)	13.20	15.60
Total oil and free fatty acid	43.00	50.80
Milled Rice:
Inspection for quality (per lot, sublot, or sample inspection)	22.00	26.00
All other factors (per factor)	13.20	15.60
Total oil and free fatty acid	43.00	50.80
Interpretive line samples:
(a) Milling degree (per set)	94.00	111.00
(b) Parboiled light (per sample)	23.00	27.20
Stowage Examination (service on request):
Ship (per stowage space) (minimum $252.50 per ship)		50.50
Subsequent ship examinations (same as original) (minimum $151.50 per ship):
Barge (per examination)		$40.50
All other carriers (per examination)		$15.50

A 60-day comment period is provided for interested persons to comment on this proposed action.

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 proposed to be 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:

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

Service 1	Regular workday (Monday-Saturday)	Nonregular workday (Sunday-Holiday)
Effective October 1, 2006
Contract (per hour per Service representative)	$54.80	$76.00
Noncontract (per hour per Service representative)	66.80	92.10
Export Port Services (per hundredweight) 2	0.066	0.066
Effective October 1, 2007
Contract (per hour per Service representative)	$56.40	$78.30
Noncontract (per hour per Service representative)	68.80	94.80
Export Port Services (per hundredweight) 2	0.068	0.068
Effective October 1, 2008
Contract (per hour per Service representative)	$58.10	$80.70
Noncontract (per hour per Service representative)	70.90	97.70
Export Port Services (per hundredweight) 2	0.070	0.070
Effective October 1, 2009
Contract (per hour per Service representative)	$59.90	$83.10
Noncontract (per hour per Service representative)	73.00	100.60
Export Port Services (per hundredweight) 2	0.072	0.072
Effective October 1, 2010
Contract (per hour per Service representative)	$61.70	$85.60
Noncontract (per hour per Service representative)	75.20	103.60
Export Port Services (per hundredweight) 2	0.074	0.074
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.

Table 2.—Unit Rates Service ¹, ³

Effective October 1, 2006
Inspection for quality (per lot, sublot, or sample inspection):
(a) Rough rice	$41.90
(b) Brown rice for processing	36.00
(c) Milled rice	26.00
Factor analysis for any single factor (per factor):
(a) Milling yield (per sample) (Rough or Brown rice)	32.50
(b) All other factors (per factor) (all rice)	15.60
Total oil and free fatty acid	50.80
Interpretive line samples: 2
(a) Milling degree (per set)	111.00
(b) Parboiled light (per sample)	27.20
Faxed and extra copies of certificates (per copy)	3.00
Stowage Examination (service-on-request): 4
(a) Ship (per stowage space) (minimum $252.50 per ship)	50.50
(b) Subsequent ship examination (same as original) minimum $151.50 per ship)
(c) Barge (per examination)	40.50
(d) All other carriers (per examination)	15.50
Effective October 1, 2007
Inspection for quality (per lot, sublot, or sample inspection):
(a) Rough rice	$43.20
(b) Brown rice for processing	37.10
(c) Milled rice	26.80
Factor analysis for any single factor (per factor):
(a) Milling yield (per sample) (Rough or Brown rice)	33.50
(b) All other factors (per factor) (all rice)	16.10
Total oil and free fatty acid	52.30
Interpretive line samples:2
(a) Milling degree (per set)	114.30
(b) Parboiled light (per sample)	28.00
Faxed and extra copies of certificates (per copy)	3.00
Stowage Examination (service-on-request): 4
(a) Ship (per stowage space) (minimum $252.50 per ship)	50.50
(b) Subsequent ship examination (same as original) minimum $151.50 per ship)
(c) Barge (per examination)	40.50
(d) All other carriers (per examination)	15.50
Effective October 1, 2008
Inspection for quality (per lot, sublot, or sample inspection):
(a) Rough rice	$44.50
(b) Brown rice for processing	38.20
(c) Milled rice	27.60
Factor analysis for any single factor (per factor):
(a) Milling yield (per sample) (Rough or Brown rice)	34.50
(b) All other factors (per factor) (all rice)	16.60
Total oil and free fatty acid	53.90
Interpretive line samples:2
(a) Milling degree (per set)	117.70
(b) Parboiled light (per sample)	28.80
Faxed and extra copies of certificates (per copy)	3.00
Stowage Examination (service-on-request): 4
(a) Ship (per stowage space) (minimum $252.50 per ship)	50.50
(b) Subsequent ship examination (same as original) minimum $151.50 per ship)
(c) Barge (per examination)	40.50
(d) All other carriers (per examination)	15.50
Effective October 1, 2009
Inspection for quality (per lot, sublot, or sample inspection):
(a) Rough rice	$45.80
(b) Brown rice for processing	39.40
(c) Milled rice	28.40
Factor analysis for any single factor (per factor):
(a) Milling yield (per sample) (Rough or Brown rice)	35.50
(b) All other factors (per factor) (all rice)	17.10
Total oil and free fatty acid	55.50
Interpretive line samples:2
(a) Milling degree (per set)	121.30
(b) Parboiled light (per sample)	29.70
Faxed and extra copies of certificates (per copy)	3.00
Stowage Examination (service-on-request): 4
(a) Ship (per stowage space) (minimum $252.50 per ship)	50.50
(b) Subsequent ship examination (same as original) minimum $151.50 per ship)
(c) Barge (per examination)	40.50
(d) All other carriers (per examination)	15.50
Effective October 1, 2010
Inspection for quality (per lot, sublot, or sample inspection):
(a) Rough rice	$47.20
(b) Brown rice for processing	40.60
(c) Milled rice	29.30
Factor analysis for any single factor (per factor):
(a) Milling yield (per sample) (Rough or Brown rice)	36.60
(b) All other factors (per factor) (all rice)	17.60
Total oil and free fatty acid	57.20
Interpretive line samples:2
(a) Milling degree (per set)	124.90
(b) Parboiled light (per sample)	30.60
Faxed and extra copies of certificates (per copy)	3.00
Stowage Examination (service-on-request): 4
(a) Ship (per stowage space) (minimum $252.50 per ship)	50.50
(b) Subsequent ship examination (same as original) minimum $151.50 per ship)
(c) Barge (per examination)	40.50
(d) All other carriers (per examination)	15.50
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, GIPSA, FGIS, Technical Services Division, 10383 North Ambassador Drive, Kansas City, Missouri 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 Director, Field Management Division, USDA, GIPSA, FGIS, 1400 Independence Avenue, SW., STOP 3630, Washington, D.C. 20250-3630. 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 § 868.91, Table 1.
4 If performed outside of normal business hours, 11/2 times the applicable unit fee will be charged.

James E. Link,

Administrator, Grain Inspection, Packers and Stockyards Administration.