Fees for Rice Inspection Services and Removal of Specific Fee References
| Published date | 30 January 2020 |
| Record Number | 2020-01205 |
| Section | Rules and Regulations |
| Court | Agricultural Marketing Service |
Federal Register, Volume 85 Issue 20 (Thursday, January 30, 2020)
[Federal Register Volume 85, Number 20 (Thursday, January 30, 2020)]
[Rules and Regulations]
[Pages 5299-5302]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-01205]
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Rules and Regulations
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains regulatory documents
having general applicability and legal effect, most of which are keyed
to and codified in the Code of Federal Regulations, which is published
under 50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by the Superintendent of Documents.
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Federal Register / Vol. 85, No. 20 / Thursday, January 30, 2020 /
Rules and Regulations
[[Page 5299]]
DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 868
[Doc. No. AMS-FGIS-18-0088]
RIN 0581-AD85
Fees for Rice Inspection Services and Removal of Specific Fee
References
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Final rule.
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SUMMARY: This final rule revises the regulations governing the
sampling, inspection, weighing, and certification of rice performed
under authority of the Agricultural Marketing Act of 1946 (AMA), as
amended, by decreasing fees by 20 percent for fiscal year (FY) 2020 and
by another 20 percent for FY 2021. These revisions are necessary to
lower the balance in the program's operating reserve to a level
adequate to cover three to six months' expenses. AMS is implementing
the standardized AMS user-fee calculations used in other AMS programs
for rice inspection services beginning in FY 2022.
DATES: Effective January 30, 2020, and applicable beginning January 1,
2020.
FOR FURTHER INFORMATION CONTACT: Denise Ruggles, FGIS Executive Program
Analyst, AMS, USDA; Telephone: (816) 659-8406; Email:
[email protected].
SUPPLEMENTARY INFORMATION: The AMA (7 U.S.C. 1621-1638) authorizes the
Federal Grain Inspection Service (FGIS) to provide official inspection
and weighing services--on a user-fee basis--for rice (7 U.S.C.
1622(h)). The AMA provides for the assessment and collection of
reasonable fees from the users of the services to cover, as nearly as
practicable, the costs of the services rendered. AMS receives no
directly appropriated funds to provide inspection and weighing
services. AMS ability to provide these services depend on user fees.
The fees reflect direct and indirect costs of providing services.
Direct costs include employee salaries and benefits, and certain
operating expenses, such as travel. Indirect overhead costs include
expenses related to FGIS and AMS activities supporting the services
provided to the industry, including administrative and supervisory
expenses, rent, communication, utilities, contractual services,
supplies, and equipment. The formula used to calculate the fee rates
also includes the cost of building and maintaining an operating
reserve, as required by AMS. Reserves are held to meet financial
obligations in case of program closure or other unexpected events.
AMS invited comments on the proposed rule identifying changes to
the FGIS user fees for rice inspection and weighing services (84 FR
45439). AMS received no comments.
The fees for rice inspection services were last revised in 2007 (72
FR 1931). The fee schedule at 7 CFR 868.91 provides for fee increases
at set intervals, the most recent taking effect in October 2010 for the
2011 fiscal year and beyond. Although fees have not increased since
then, the current fee structure has generated a recurring annual
operating surplus for several years, resulting in an estimated reserve
balance at the end of FY 2019 that would cover 21 months of rice
inspection program expenses, exceeding AMS's target of maintaining
funds to cover 3 to 6 months' expenses. Estimated monthly costs to
operate the rice inspection program in FY 2019 are $457,000. Thus, AMS
would consider an operating reserve of between $1.37 million and $2.74
million (3 and 6 times the monthly operating cost, respectively) at the
end of FY 2019 to be appropriate. Financial data for the rice
inspection program for fiscal years 2015 through 2019 is reviewed in
Table 1.
Table 1--Rice Program Financial Analysis
[Millions of Dollars] *
----------------------------------------------------------------------------------------------------------------
FY 15 FY 16 FY 17 FY 18 FY 19 **
----------------------------------------------------------------------------------------------------------------
Revenue......................... $6.93 $5.79 $5.84 $5.50 $5.49
Obligations..................... 5.13 5.36 5.44 5.39 5.48
Annual Surplus or (Deficit)..... 1.80 0.43 0.40 0.11 0.01
Operating Reserve--running 8.45 8.88 9.28 9.38 9.39
balance........................
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* Figures may not sum due to rounding and adjustments of prior year obligations.
** FY 2019 values are projections.
As illustrated by Table 1, even though revenues have generally
declined due to varying requests for service and increased
efficiencies, and obligations have generally increased over the last
five years due to inflation and costs of living adjustments, year-
after-year surpluses have continued to increase. The result is an
operating reserve running balance exceeding the range AMS deems
appropriate.
AMS addresses the surplus by reducing fees for rice inspection
services by 20 percent across the board for FY 2020 and by another 20
percent for FY 2021. AMS expects that reducing fees in this manner
would gradually reduce the balance in the reserve fund while also
allowing FGIS to continue making strategic operational expenditures to
meet industry expectations and achieve United States Department of
Agriculture (USDA) goals.
The rates in this rule are for Federal inspection services only.
Third-party inspection service providers establish their rates
independently.
Fees for fiscal years 2020 and 2021 are shown in Tables 2 and 3
below:
[[Page 5300]]
Table 2--Hourly Rates/Unit Rate Per CWT
------------------------------------------------------------------------
Regular Nonregular
workday workday
Service 1 (Monday- (Sunday and
Saturday) Holiday)
------------------------------------------------------------------------
FY 2020 (Effective 01/01/2020):
Contract (per hour per Service $49.40 $68.50
representative)....................
Noncontract (per hour per Service 60.20 82.90
representative)....................
-------------------------------
Export Port Services (per
hundredweight) \2\................. 0.059
-------------------------------
FY 2021 (Effective 10/01/2020):
Contract (per hour per Service 39.50 54.80
representative)....................
Noncontract (per hour per Service 48.20 66.30
representative)....................
-------------------------------
Export Port Services (per
hundredweight) \2\................. 0.047
------------------------------------------------------------------------
Table 3--Unit Rates Service 3
------------------------------------------------------------------------
FY 2020 FY 2021
Inspection for quality (per lot, sublot, effective 01/ effective 10/
or sample inspection) 01/2020 01/2020
------------------------------------------------------------------------
(a) Rough rice...................... $37.80 $30.20
(b) Brown rice for processing....... 32.50 26.00
(c) Milled rice..................... 23.40 18.70
Factor analysis for any single factor
(per factor):
(a) Milling yield (per sample) 29.30 23.40
(Rough or Brown rice)..............
(b) All other factors (per factor) 14.10 11.30
(all rice).........................
Total free and fatty acid....... 45.80 36.60
Stowage Examination (service-on-
request):
(a) Ship (per stowage space) 40.40 32.30
(minimum 5 spaces per ship)........
(b) Subsequent ship examination 40.40 32.30
(same as original) (minimum 3
spaces per ship)...................
(c) Barge (per examination)......... 32.40 25.90
(d) All other carriers (per 12.40 9.90
examination).......................
------------------------------------------------------------------------
For FY 2022 and beyond, AMS will determine rice inspection service
fees by using the standardized formulas AMS has established for
calculating user fees for Cotton, Dairy, Fruits and Vegetables, Meat
and Livestock, Poultry, Science and Technology, and Tobacco.
Established in 2014 (79 FR 67313), the standardized method enables AMS
to use current information about resource needs and projected costs of
providing services to update rates for services on an annual basis,
thus better avoiding unexpected financial shortfalls or unintended
reserve surpluses. AMS announces the fees pertaining to all the AMS
inspection-related services for the coming year annually through a
notice in the Federal Register by the preceding June 1. AMS posts the
fees on the Agency's website for customer reference during the year.
AMS believes this action for rice would help FGIS adjust the rice
inspection reserve account as necessary and provide its customers with
information they need for planning purposes. Once the reserve balance
has reached an appropriate level, AMS anticipates that the standardized
formula for fee rates will appropriately account for increases in the
actual costs of providing inspection services.
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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.
\3\ 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 the applicant's facility.
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Currently, 7 CFR 868.91--Fees for certain Federal rice inspection
services--provides the fees for rice inspections. Section 868.91 lists
the fees in two tables: Hourly rates or per unit rates per
hundredweight for contract and noncontract services, and unit rates for
inspecting, analyzing, or providing other related services. The tables
give annual rates effective in 2007, 2008, 2009, and 2010. The current
rates have not been adjusted since October 1, 2010. AMS is removing the
two tables from Sec. 868.91 for FY 2020. AMS will publish instead
reduced fees--as described in Tables 2 and Table 3 above--on the AMS
website for FY 2020 and FY 2021.
For FY 2022 and beyond, AMS adds a new Sec. 868.91(b) specifying
the formulas for calculating rice inspection fees on an annual basis.
As with other programs, AMS would perform financial analyses each year
to determine whether the current fees are adequate to recover the costs
incurred by providing rice inspection services. AMS would use
historical or prior year cost and workload data, along with applicable
projections to generate estimates of future obligations and revenues.
On the bases of these analyses and formulas, AMS would determine the
rates necessary to sustain rice inspection program services. Using the
formulas to calculate the fees, and reviewing the fees on an annual
basis, would more accurately reflect the actual cost of providing
inspection services each year and would provide greater transparency
and predictability to the rice industry. AMS would publish the fees for
each upcoming fiscal year in the annual AMS user-fee notice in the
Federal Register by the preceding June 1. The yearly notice would
include both the per-hour rates and the per-unit rates. Updated fees
schedules would no longer appear in the Code of Federal Regulations but
would be available on the AMS website.
Calculations
AMS will base salary, hours, and most factors used in the
calculations on the
[[Page 5301]]
prior year's actual costs, workload data, projection of expenses
impacting program costs, cost of living increase, and inflation. AMS
would base cost of living increase and inflation factors on the most
recent economic data released by the Office of Management and Budget
(OMB) for budget development purposes. AMS would round the final rates
up to make the amounts divisible by the quarter hour (15 minutes).
Under the rate formulas, the minimum charge for services covered by the
inspection fee rates would be for 15 minutes. As explained later in
this document, the applicant requesting inspection service would be
charged travel costs on an actual basis. AMS chose to use these
formulas for rice inspection fees, so they would be consistent with the
formulas used agency wide in other AMS programs.
Currently, some rice inspection service fees are charged on a per
hour basis, and some are charged on a per unit basis. AMS will continue
providing costs on both bases to maintain continuity. As well, AMS
would provide the specific amounts used to calculate each year's rates
upon request.
AMS adds a new paragraph Sec. 868.91(b)(1) to include the formulas
for calculating regular, overtime, and holiday fee rates for FY 2022
and succeeding fiscal years. AMS further adds a new paragraph Sec.
868.91(b)(2) to include the component formulas for benefits, operating,
and allowance for bad debt rates.
Finally, AMS adds a new Sec. 868.91(b)(3), which specifies that
AMS will use the most recently released OMB economic data to generate
the cost of living and inflation factors used in the above formulas.
Travel Expense
One factor that may have contributed to the operating reserve
buildup over time is the incorporation of an allowance for travel
expenses in the current rice inspection fee rates that may not have
reflected actual travel costs. AMS addresses this by specifying in the
fee calculation formulas that travel expenses related to providing
inspection services, such as commercial transportation costs, mileage,
and per diem, will be based on actual travel costs incurred to perform
the service. The fee rate calculations in Sec. 868.91(b) will specify
that actual travel expenses for rice inspection services may be added
to the cost of providing the service, consistent with current practice
under most other AMS programs. This change will be applicable to fee
rates beginning in FY 2022.
As a conforming change, AMS removes the language in Sec.
868.92(a)(2)--Explanation of service fees and additional fees, which
makes specific reference to the inclusion of travel expenses in the
current rice inspection fee calculations, as that language would be
obsolete.
Effective Date
This is a substantive rule that relieves restrictions and, pursuant
to the provisions of 5 U.S.C. 553, may be made effective less than 30
days after publication in the Federal Register. Retroactive
implementation of this rule is necessary to provide relief to those
persons who are adversely affected by being assessed a user fee rate
higher than would be collected under this rule. Making this rule
effective retroactively will allow interested producers and others in
the marketing chain to benefit from the reduced user fee assessment
immediately. Therefore, the Administrator of the Agricultural Marketing
Service has determined that this rule should be effective retroactively
starting January 1, 2020.
Executive Orders 12866, 13563, and 13771
Executive Orders 12866--Regulatory Planning and Review, and 13563--
Improving Regulation and Regulatory Review, direct agencies to assess
all costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). Executive
Order 13563 emphasizes the importance of quantifying both costs and
benefits of reducing costs, harmonizing rules, and promoting
flexibility. This rule does not meet the criteria of a significant
regulatory action under Executive Order 12866 as supplemented by
Executive Order 13563. Therefore, OMB has not reviewed this rule under
those Orders. Additionally, because this rule does not meet the
definition of a significant regulatory action under Executive Order
12866, it does not trigger the requirements contained in Executive
Order 13771. See OMB's memorandum titled ``Interim Guidance
Implementing Section 2 of the E.O. of January 30, 2017, titled
`Reducing Regulation and Controlling Regulatory Costs''' (February 2,
2017).
AMS considered several alternatives to the changes in this rule,
including making larger decreases to the FY 2020 and FY 2021 rates to
bring the reserve balance down more quickly or making a larger fee rate
decrease for FY 2020 only. Ultimately, AMS determined that the approach
of making smaller--but still significant--reductions two years in a row
before transitioning to the standardized fee calculations would be the
alternative least disruptive to the industry while moving toward
desirable reserve levels. AMS expects the changes to benefit the rice
industry by reducing rates by 20% for each of the next two years and
then adjusting rates as needed annually thereafter to reflect actual
expenses related to rice inspections. Under the rule, rice inspection
service users would likely enjoy further savings since most inspection
sites are near FGIS field offices and charges for travel will be based
on actual expenses rather than the standard flat amount incorporated
into the current fee rates. AMS does not expect the rule to provide any
environmental, public health, or safety benefits. AMS has not
identified any costs related to this action.
Executive Order 12988
This rule has been reviewed under Executive Order 12988--Civil
Justice Reform. This rule 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. No administrative proceedings would be required before parties
could file suit in court challenging the provisions of this rule.
Congressional Review Act
Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq.),
the Office of Information and Regulatory Affairs designated this rule
as not a major rule, as defined by 5 U.S.C. 804(2).
Regulatory Flexibility Analysis
Pursuant to the requirements set forth in the Regulatory
Flexibility Act (RFA) (5 U.S.C. 601-602), AMS 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.
There are approximately 169 applicants who receive rice inspection
services. AMS estimates 42 percent of these users would be considered
small businesses based on criteria established by the Small Business
Administration (13 CFR 121.201) to differentiate between large and
small business entities. SBA uses the North American Industry
Classification System (NAICS) to categorize various industry
businesses. SBA defines small rice farmers, NAICS code 111160, as those
[[Page 5302]]
whose annual receipts do not exceed $750,000 and small rice millers,
NAICS code 311212, as those with no more than 500 employees.
When the current rice inspection fees were set in 2007, an 18
percent increase was implemented to cover program deficits caused by
increases in employee salaries and benefits, the replacement of aging
rice inspection equipment, and upgrading the information technology
system used to generate certificates. The increase also was intended to
create the operating reserve. However, as explained earlier in this
document, revenues have continued to exceed expenditures, indicating
that an adjustment to the fee schedule is now warranted. In addition,
travel expenses were built into the hourly and unit fees currently
charged by the program, resulting in higher than necessary revenues to
cover the actual service provided.
Changes to the fees will reduce the cost of rice inspections by 20
percent for all services in FY 2020 across the board, regardless of the
business entity's size, for a projected savings of approximately $1.17
million to the industry. A further 20 percent reduction for FY 2021
will net approximately $2.13 million in savings to the industry. All
entities using rice inspection services, large and small, would be
expected to benefit from reduced expenses for these services. Savings
would be proportionate to the number of inspection services an entity
requests each year. Use of standardized AMS user-fee rate calculations
for FY 2022 and beyond would benefit all inspection applicants,
regardless of size, as fees would more closely reflect the current cost
of inspections, and the fee calculation process would be more
transparent. Through its annual review, AMS would be able to monitor
the financial status of the rice inspection program to determine
whether further adjustments are necessary.
AMS has determined this rule would not have a significant economic
impact on a substantial number of entities as defined under the RFA
because fewer than half the applicants for rice inspection services
meet the definition of small entities. Further, rice inspection and
weighing services are provided upon request, and rice industry
businesses are under no obligation to use these services.
Finally, USDA has not identified any relevant Federal rules that
duplicate, overlap, or conflict with this rule.
Paperwork Reduction Act and E-Government Act
In compliance with the Paperwork Reduction Act of 1995 (44 U.S.C.
Chapter 35), the information collection and record keeping requirements
of the rice inspection program have previously been approved by OMB
under control number 0580-0013. No additional reporting, record
keeping, or other compliance requirements would be imposed as a result
of this rule.
AMS is committed to complying with the E-Government Act (44 U.S.C.
3601, et seq.), to promote the use of the internet and other
information technologies to provide increased opportunities for citizen
access to Government information and services, and for other purposes.
List of Subjects in 7 CFR Part 868
Administrative practice and procedure, Agricultural commodities.
For the reasons set out in the preamble, AMS amends 7 CFR part 868
as follows:
PART 868--GENERAL REGULATIONS AND STANDARDS FOR CERTAIN
AGRICULTURAL COMMODITIES
0
1. The authority citation for part 868 continues to read as follows:
Authority: 7 U.S.C. 1621-1627.
0
2. Revise Sec. 868.91 to read as follows:
Sec. 868.91 Fees for certain Federal rice inspection services.
The fees for services in paragraph (a) apply to Federal inspection
services. Starting with fiscal year 2022, calculations provided in
paragraph (b) will be used to determine annual fee rates.
(a) Fees for services are published on the Service's website.
(b) For each fiscal year, starting with 2022, the Administrator
will calculate the rates for services, issue a public notice, and
publish fees on the Service's website with an effective date of October
1 of each year.
(1) For each year, the Administrator will calculate the rates for
services, per hour per inspection program employee using the following
formulas:
(i) Regular rate. The Service's total inspection program personnel
direct pay divided by direct hours, which is then multiplied by the
next year's percentage of cost of living increase, plus the benefits
rate, plus the operating rate, plus the allowance for bad debt rate. If
applicable, actual travel expenses may also be added to the cost of
providing the service.
(ii) Overtime rate. The Service's total inspection program
personnel direct pay divided by direct hours, which is then multiplied
by the next year's percentage of cost of living increase and then
multiplied by 1.5, plus the benefits rate, plus the operating rate,
plus an allowance for bad debt. If applicable, actual travel expenses
may also be added to the cost of providing the service.
(iii) Holiday rate. The Service's total inspection program
personnel direct pay divided by direct hours, which is then multiplied
by the next year's percentage of cost of living increase and then
multiplied by 2, plus the benefits rate, plus the operating rate, plus
an allowance for bad debt. If applicable, actual travel expenses may
also be added to the cost of providing the service.
(2) For each year, based on previous year/historical actual costs,
the Administrator will calculate the benefits, operating, and allowance
for bad debt components of the regular, overtime, and holiday rates as
follows:
(i) Benefits rate. The Service's total inspection program direct
benefits costs divided by the total hours (regular, overtime, holiday)
worked, which is then multiplied by the next year's percentage of cost
of living increase. Some examples of direct benefits are health
insurance, retirement, life insurance, and Thrift Savings Plan (TSP)
retirement basic and matching contributions.
(ii) Operating rate. The Service's total inspection program
operating costs divided by total hours (regular, overtime, and holiday)
worked, which is then multiplied by the percentage of inflation.
(iii) Allowance for bad debt rate. Total allowance for bad debt,
divided by total hours (regular, overtime, holiday) worked.
(3) The Administrator will use the most recent economic factors
released by the Office of Management and Budget for budget development
purposes to derive the cost of living expenses and percentage of
inflation factors used in the formulas in this section.
Sec. 868.92 [Amended]
0
3. Amend Sec. 868.92 by removing paragraph (a)(2) and redesignating
paragraphs (a)(3) through (5) as paragraphs (a)(2) through (4),
respectively.
Dated: January 21, 2020.
Bruce Summers,
Administrator, Agricultural Marketing Service.
[FR Doc. 2020-01205 Filed 1-29-20; 8:45 am]
BILLING CODE 3410-02-P
