Formulas for Calculating Hourly and Unit Fees for FGIS Services

<RULE> DEPARTMENT OF AGRICULTURE <SUBAGY>Agricultural Marketing Service</SUBAGY> <CFR>7 CFR Part 800</CFR> <DEPDOC>[Doc. No. AMS-FGIS-24-0027]</DEPDOC> <RIN>RIN 0581-AE31</RIN> <SUBJECT>Formulas for Calculating Hourly and Unit Fees for FGIS Services</SUBJECT> <HD SOURCE="HED">AGENCY:</HD> Agricultural Marketing Service, Department of Agriculture (USDA). <HD SOURCE="HED">ACTION:</HD> Final rule. <SUM> <HD SOURCE="HED">SUMMARY:</HD> The Agricultural Marketing Service (AMS), Federal Grain Inspection Service (FGIS or Service) is amending its user fee regulations to establish standardized formulas the agency will use to calculate hourly and unit fees. The changes allow FGIS to charge reasonable fees sufficient to cover the costs of providing official services and re-establish a 3-to 6-month operating reserve, as required by the United States Grain Standards Act (USGSA). This final rule also makes specified conforming changes and minor technical changes to correct two typographical errors. </SUM> <EFFDATE> <HD SOURCE="HED">DATES:</HD> This final rule is effective February 5, 2025. </EFFDATE> <FURINF> <HD SOURCE="HED">FOR FURTHER INFORMATION CONTACT:</HD> Denise Ruggles, Executive Program Analyst, USDA, AMS, FGIS, Telephone: 816-702-3897, Email: <E T="03">Denise.M.Ruggles@usda.gov;</E> or Anthony Goodeman, Senior Policy Advisor, USDA, AMS, FGIS, Telephone: 202-720-2091, Email: <E T="03">Anthony.T.Goodeman@usda.gov.</E> </FURINF> <SUPLINF> <HD SOURCE="HED">SUPPLEMENTARY INFORMATION:</HD> This final rule supersedes the provisions of the interim final rule titled “Fees for Official Inspection and Weighing Services under the United Stated Grain Standards Act,” and all associated rulemakings, and amends FGIS's user fee regulations to establish new formulas to calculate hourly and unit fees. The new formulas, which are similar to the standardized formulas used in other AMS user-fee funded grading programs, amend the regulations at 7 CFR 800.71. The formulas will enable the agency to sustain operations and comply with the USGSA, which requires FGIS to charge fees sufficient to cover the costs of the official services it provides and to adjust fees annually in order to maintain an operating reserve of not less than 3 and not more than 6 months. Prospective customers can find FGIS's fee schedules posted on AMS's public website at: <E T="03">https://www.ams.usda.gov/about-ams/fgis-program-directives.</E> <HD SOURCE="HD1">Comment Review</HD> An interim final rule concerning user fees for grain inspection and weighing services was published in the <E T="04">Federal Register</E> on June 6, 2024 (89 FR 48257). The interim final rule was effective on July 8, 2024. A proposed rule concerning fee formulas by which FGIS would calculate future grain inspection and weighing fees was published October 8, 2024 (89 FR 81396). Copies of the interim rule and proposed rule were sent via email to FGIS stakeholders. The interim rule and proposed rule were also made available through the internet by AMS via <E T="03">https://www.regulations.gov.</E> AMS provided a 30-day comment period, ending July 8, 2024, to give interested persons an opportunity to respond to the interim final rule, and a 45-day comment period, ending November 22, 2024, to give interested persons an opportunity to respond to the proposed rule. FGIS received one comment to the proposed rule jointly submitted by two trade organizations. One of the trade organizations represents grain, feed, processing, exporting, and other grain handling companies who collectively operate over 8,000 facilities. The other trade association represents private and publicly owned companies and farmer-owned cooperatives that are involved in, and provide services to, the agri-bulk products international trading industry. <HD SOURCE="HD2">Proposed Rule for Calculating Hourly Rates and Unit Fees</HD> Two trade associations expressed support for the proposed rule fee formulas in a joint comment. Their comment urged FGIS to maintain transparency regarding the calculation data and to regularly share this information with industry stakeholders. By increasing the flow of information, the comment conveyed that stakeholders can collaborate more effectively with FGIS to discover additional solutions that meet current market rates and requirements. The comment reiterated, similar to feedback on FGIS's interim final rule that revised its user fees, that significant increases in fees paid by industry are unsustainable. Concern was expressed that there is too little transparency in the existing calculation process, which makes it “difficult for both the FGIS and [stakeholders] to budget and plan for services provided. User fees should be predictable and market-based to provide enough funding and properly reflect the work performed.” The comment also suggested that FGIS uncouple hourly fee calculations from the existing five-year rolling average calculation used for tonnage fees. FGIS agrees with the comment. The formulas adopted in this final rule will ensure greater transparency regarding the calculation of hourly rates for industry participants, as well as help mitigate large, one-time increases. This final rule also separates the calculation of hourly rates from the five-year rolling average calculation for tonnage fees. After consideration of all relevant material presented in the comment and other available information, FGIS has determined that it is appropriate to finalize the proposed rule, as published in the <E T="04">Federal Register</E> on October 8, 2024 (89 FR 81396), without change. <HD SOURCE="HD1">Conforming Regulatory Changes</HD> In an interim rule published in the June 6, 2024, edition of the <E T="04">Federal Register</E> (89 FR 48257), FGIS established revised fees for the remainder of 2024 (and until new fees are established using the formulas in this final rule). To implement the revised fees, the interim rule imposed a stay on §§ 800.71 and 800.72(b). To amend these sections, this rulemaking lifts the stay imposed on them by the interim rule. This rule also makes certain conforming changes in 7 CFR part 800. Specifically, this rule restores references to §§ 800.71 and 800.72 that were amended by the interim rule. In order to implement revised fees for 2024, the interim rule replaced references to § 800.71, which was stayed, with references to a newly added temporary section, § 800.74. Because § 800.72(b) was also stayed, the interim rule replaced a reference to that section in § 800.73(d) with a reference to §§ 800.72(a) and 800.74. As this final rule revises § 800.71 to incorporate the formulas, these internal substitutions are no longer needed. Accordingly, this rule replaces references to § 800.74 with references to § 800.71 in §§ 800.34, 800.36, 800.156(d)(5), and 800.197(b)(3). This rule also replaces the reference to §§ 800.72(a) and 800.74 in § 800.73(d) with a reference to § 800.72. Finally, because the changes to § 800.71 will render § 800.74 obsolete, this rule also removes that section. <HD SOURCE="HD1">Technical Corrections</HD> This rule also corrects two typographical errors—a reference to 5 U.S.C. 6103 and a reference to Executive Order 10358—in the definition of <E T="03">Holiday</E> in 7 CFR 800.0—Meaning of terms. These corrections do not create new or amend existing requirements or interpretations. <HD SOURCE="HD1">Required Regulatory Analyses</HD> <HD SOURCE="HD1">Executive Orders 12866, 13563, and 14094</HD> This rule is being issued in conformance with Executive Order 12866, “Regulatory Planning and Review,” Executive Order 13563, “Improving Regulation and Regulatory Review,” and Executive Order 14094, “Modernizing Regulatory Review.” Executive Orders 12866 and 13563 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, reducing costs, harmonizing rules, and promoting flexibility. Executive Order 14094 reaffirms, supplements, and updates Executive Order 12866 and further directs agencies to solicit and consider input from a wide range of affected and interested parties through a variety of means. The Office of Management and Budget (OMB) has designated this rule as not significant under Executive Orders 12866, 13563, and 14094. Accordingly, OMB has not reviewed this rule under those orders. Since grain export volume can vary significantly from year to year, estimating the impact of future fee changes can be difficult. FGIS recognizes the need to provide predictability to the industry for inspection and weighing fees. The statutory requirement to maintain an operating reserve between 3 to 6 months of operating expenses ensures that FGIS can adequately cover its costs without imposing an undue burden on its customers. FGIS regularly reviews its user-fee financed programs to determine whether the fees charged for performing official inspection and weighing services adequately cover the costs of providing those services. Due to limitations in the current regulations (7 CFR 800.71(b)(3)), which permit fee increases of no more than 5 percent per year, combined with four years of rate decreases, and noneconomic factors that led to the 2020-2023 period having highest inflation in more than 40 years, <SU>1</SU> <FTREF/> FGIS faced an operating deficit that was forecasted to grow without corrective action. <FTNT> <SU>1</SU>  For example, the Consumer Price Index (CPI) Calculator ( <E T="03">https://data.bls.gov/cgi-bin/cpicalc.pl</E> ) shows prices up 20 percent between January 2020 and February 2024, and up 31 percent betwee ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 32k characters. 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