Rule2023-08957
Exceptions to Geographic Boundaries
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
May 3, 2023
Effective
August 1, 2023
Issuing agencies
Agriculture DepartmentAgricultural Marketing Service
Abstract
This final rule sets forth a process by which applicants for official grain inspection services (applicants) may request a service exception, allowing an official agency (OA) to cross boundary lines and perform services outside of its assigned geographic area. While four exception types are authorized in the United States Grain Standards Act (USGSA or Act), this final rule focuses on two: the inability to provide services in a timely manner and the nonuse of service from the OA assigned to the applicant's geographic area (assigned OA). This final rule establishes a three-tiered system under which applicants can request a one-time, 90-day, or long-term timely service exception due to untimely service issues. This rule provides that nonuse of service exception requests must be preceded by ninety days without service from the assigned OA. This final rule further amends the regulations to provide criteria the Federal Grain Inspection Service ("FGIS" or "the Service") will use to review, validate, and determine whether to grant service exception requests. This final rule also establishes a process that allows an assigned OA to challenge requests for service exceptions. Finally, this rule provides for FGIS review to ensure the validity of requests.
Full Text
<html>
<head>
<title>Federal Register, Volume 88 Issue 85 (Wednesday, May 3, 2023)</title>
</head>
<body><pre>
[Federal Register Volume 88, Number 85 (Wednesday, May 3, 2023)]
[Rules and Regulations]
[Pages 27685-27692]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-08957]
========================================================================
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.
========================================================================
Federal Register / Vol. 88, No. 85 / Wednesday, May 3, 2023 / Rules
and Regulations
[[Page 27685]]
DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 800
[Doc. No. AMS-FGIS-19-0062]
RIN 0581-AD90
Exceptions to Geographic Boundaries
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: This final rule sets forth a process by which applicants for
official grain inspection services (applicants) may request a service
exception, allowing an official agency (OA) to cross boundary lines and
perform services outside of its assigned geographic area. While four
exception types are authorized in the United States Grain Standards Act
(USGSA or Act), this final rule focuses on two: the inability to
provide services in a timely manner and the nonuse of service from the
OA assigned to the applicant's geographic area (assigned OA). This
final rule establishes a three-tiered system under which applicants can
request a one-time, 90-day, or long-term timely service exception due
to untimely service issues. This rule provides that nonuse of service
exception requests must be preceded by ninety days without service from
the assigned OA. This final rule further amends the regulations to
provide criteria the Federal Grain Inspection Service (``FGIS'' or
``the Service'') will use to review, validate, and determine whether to
grant service exception requests. This final rule also establishes a
process that allows an assigned OA to challenge requests for service
exceptions. Finally, this rule provides for FGIS review to ensure the
validity of requests.
DATES: Effective August 1, 2023.
FOR FURTHER INFORMATION CONTACT: Karla Whalen, Director, Quality
Assurance and Compliance Division, Federal Grain Inspection Service,
AMS, USDA: telephone: (202) 720-7312, email: <a href="/cdn-cgi/l/email-protection#5412131d070515171014212730357a333b22"><span class="__cf_email__" data-cfemail="8fc9c8c6dcdececccbcffafcebeea1e8e0f9">[email protected]</span></a>.
SUPPLEMENTARY INFORMATION: Under the USGSA (7 U.S.C. 71 et seq.), each
OA that is designated to provide inspection and weighing services in
the United States is assigned a specific geographic area where it
performs such services for applicants within that geographic area (7
U.S.C. 79(f)(2)(A)). This ensures effective and efficient delivery of
official services to applicants within the assigned OA's geographic
area and enhances the orderly marketing of grain. The USGSA also
provides that applicants may obtain inspection and weighing services
from another OA (gaining OA) under certain circumstances. OAs may cross
geographic boundaries to provide services to applicants if: (1) the
assigned OA is unable to provide inspection services in a timely manner
(timely service exception); (2) the applicant has not been receiving
official inspection services from the assigned OA (nonuse of service
exception); (3) the applicant requests a probe inspection on a barge-
lot basis; or (4) the assigned OA agrees in writing with the adjacent
OA to waive the current geographic area restriction at the applicant's
request (7 U.S.C. 79(f)(2)(B)). The regulations at 7 CFR 800.117
provide further clarification for requesting these exceptions.
Background on the Nonuse of Service Exception
In the past, under a nonuse of service exception, an applicant who
had not obtained official inspection or weighing services from the
assigned OA for a specified length of time could obtain services from
another designated OA. Over time, the procedural variance on whether a
request for nonuse of service exceptions was approved or not caused
concern for applicants and OAs.
In 2015, Congress eliminated the nonuse of service exception from
the USGSA.\1\ FGIS subsequently removed that exception provision from
the regulations in 2016.\2\ As a result, FGIS terminated existing
nonuse of service exceptions. However, in 2018, Congress reinstated
authority to allow a nonuse of service exception through an amendment
to the USGSA in the 2018 Farm Bill.\3\ The 2018 Farm Bill directed USDA
to allow for restoration of the terminated nonuse of service
exceptions, where appropriate. Interested parties were given an
opportunity to submit restoration requests to FGIS, as described in a
Notice to Trade published on March 5, 2019.\4\
---------------------------------------------------------------------------
\1\ 7 U.S.C. Ch. 3 Grain Standards; January 1, 2016.
\2\ 81 FR 49855; July 29, 2016.
\3\ 7 U.S.C. Ch. 3 Grain Standards; December 11, 2020.
\4\ <a href="https://www.ams.usda.gov/content/restoring-certain-exceptions-us-grain-standards-act">https://www.ams.usda.gov/content/restoring-certain-exceptions-us-grain-standards-act</a>; accessed 08/10/2022.
---------------------------------------------------------------------------
The amended USGSA also provides that the nonuse of service
exception may only be terminated if all parties to the exception
jointly agree on the termination. This means that the applicant, the
assigned OA, the gaining OA, and FGIS must agree to terminate the
exception. Such provision ensures all parties are aware of the change
and the assigned OA will resume providing service to the applicant.
On April 1, 2020, FGIS published an advanced notice of proposed
rulemaking \5\ to solicit industry comments on how FGIS should amend
its criteria for reviewing, approving, and implementing exceptions to
the USGSA's requirements for geographic boundaries. FGIS received
responses from six commenters. FGIS sought to incorporate industry
feedback from the advanced notice of proposed rulemaking, along with
input received during industry meetings, to develop a proposed rule,
which was published on August 19, 2021.\6\ FGIS requested comment on
proposed options for timely service and nonuse of service exceptions.
Particularly, FGIS sought input from industry participants, who use,
and OAs, who provide, official services and are familiar with grain
inspection services under the USGSA. FGIS received comments from four
entities. This final rule includes the AMS review and consideration of
those comments on this process.
---------------------------------------------------------------------------
\5\ 85 FR 18155; April 1, 2020.
\6\ 86 FR 46606; August 19, 2021.
---------------------------------------------------------------------------
Amended Exception Provisions: Inability To Provide Timely Service
Applicants may request a timely service exception when service is
not timely. Service is not timely when the assigned OA cannot provide
the requested official services within 6 hours of request or cannot
provide the
[[Page 27686]]
results and certificate in accordance with 7 CFR 800.160(c). The
applicant must submit a request for a timely service exception to FGIS.
The applicant may make this request orally or in writing. If the
applicant orally requests a timely service exception, the applicant
must submit a written request to the Service within two business days
after the oral request. The applicant must clearly state and support
the identified reason for the requested exception.
Applicants may also request an exception for delays caused by
weather events or requests for official services that are not offered
by the assigned OA, as they would not be able to offer such services in
a timely manner. Thus, for the inability to provide timely service,
FGIS intends to grant a timely service exception when: (1) the assigned
OA is unable to provide official services to an applicant within 6
hours; (2) or the assigned OA is unable to provide results and
certificates in accordance with 7 CFR 800.160(c); or (3) a request for
official services not offered by the assigned OA would result in an
inability to receive timely service; or (4) a weather event or other
short term disruption impacts the ability of an assigned OA to provide
timely service; with consideration that granting an exception is in the
best interest of the official system.
This final rule implements a tiered application process for
requesting exceptions when an assigned OA is unable to provide timely
service. The first tier is a one-time, timely service exception. In
this instance, a one-time exception to use another official agency
(gaining OA) may be allowed for applicants that have a pending service
request that meets the timely service exception criteria. The second
tier is a 90-day timely service exception due to the assigned OA's
inability to provide timely service. If, after the first-tier one-time,
timely service exception request is granted, a second instance occurs
in which an assigned OA is not able to provide timely service within
180 days of the first instance, the applicant may request a 90-day
exception. In this instance, a 90-day exception to use the gaining OA
may be allowed. Lastly, the third tier is a long-term timely service
exception due to the repeated inability of the assigned OA to provide
timely service. If there is another occurrence within 365 days of the
applicant's return to the assigned OA after their 90-day timely service
exception period has expired, the applicant may request a long-term
exception, extending until the termination date of the gaining OA's
designation. Along with the required data to support their timely
service exception request, the applicants may elect to send any
supporting documentation they feel would aid in the agency's
determination process. FGIS will then review and verify the accuracy
and thoroughness of each package.
If the applicant has an urgent timely service exception request,
outside of the Service's customary business hours, an OA from outside
the geographic area may provide one-time service. When providing an
urgent service, the gaining OA must provide written notification to the
Service within two business days after service. Upon returning to
official office hours, FGIS will review and verify the circumstances of
the urgent request, as well as its consistency with the USGSA and
implementing regulations.
For 90-day and long-term timely service exception requests, FGIS
will have a determination review period. Once the applicant has
provided all required information, FGIS will notify the applicant and
begin reviewing the service exception request. FGIS will make every
attempt to issue a determination within 15 business days of receipt for
90-day and long-term timely service exceptions, barring a challenge
from the assigned OA. To challenge a 90-day or long-term timely
exception, the assigned OA must submit the challenge and any supporting
documents within 14 calendar days of the date of notification of the
exception request. The challenge and supporting documentation must
clearly identify the objection to the exception request and support the
identified reason for the challenge. While awaiting a final decision on
90-day and long-term timely service exceptions, the applicant may
receive service from the potential gaining OA.
FGIS will provide its decision in writing to the assigned OA, the
applicant, and the potential gaining OA. The assigned OA may challenge
a request for a timely service exception for any reason. To challenge a
request for a timely service exception, the assigned OA must object, in
writing, and submit the challenge and any supporting documents to FGIS
within 14 calendar days.
If an applicant submits a request for a timely service exception
that FGIS determines to be false or misleading, FGIS will not grant the
exception and may elect to limit the applicant from submitting further
requests for a period of up to 180 days. If an urgent request for a
timely service exception, outside of customary business hours, was
granted on the basis of a false or misleading request, FGIS may deny
the applicant from future urgent timely service exceptions for a period
of up to 180 days.
The applicant maintains the option of returning to the assigned OA
within 60 days of notification of termination of the timely service
exception to all parties. The applicant must submit a written
notification requesting to terminate the exception to FGIS, the
assigned OA and the gaining OA. The exception will be cancelled, and
future exception requests must be considered at the beginning of
successive-tiered system.
If FGIS determines that the assigned OA's inability to provide a
specific service is limited due to weather events or the issue of
service availability has been resolved, FGIS, in consultation with all
the parties, may terminate the 90-day or long-term exception. If FGIS
terminates a timely service exception, the applicant, the assigned OA,
and the gaining OA, will be notified in writing, via any written form
to include email or autogenerated response, and the applicant will
resume service with the assigned OA within 60 days of notification.
However, if the existing exception was associated with the assigned
OA's inability to provide service in 6 hours or less, or with timely
issuance of the results and certificate, FGIS might elect not to
terminate the exception. During the duration of exceptions caused by a
failure of the assigned OA to supply timely service, this exception
period gives assigned OAs an opportunity to improve.
Amended Exception Provisions: Nonuse of Service Exceptions
For nonuse of service exception requests, this rule defines the
period of nonuse as 90-days prior to application for a nonuse of
service exception. The rule defines areas of inquiry but does not limit
factors FGIS will take into consideration when reviewing requests for
nonuse of service exceptions. These considerations include: (1) the
location of the service need(s); (2) the impact of expanding the
applicant/customer base for the gaining OA; (3) the types of services
requested by the applicant and offered by the assigned OA; (4) whether
the applicant has ever utilized the official system (i.e., a facility
that has never used the official system before may not qualify for
nonuse of service exception, nor may a facility that is under new
ownership by a company with no history of use of the official system);
and (5) the impact on the applicant in the event it continues services
with the assigned OA.
For a nonuse of service exception request, FGIS intends to grant an
exception when: (1) the applicant has
[[Page 27687]]
not received service from the assigned OA within the established time
period, (2) the applicant submits, to FGIS, its request for a nonuse of
service exception, and (3) granting an exception is in the best
interest of the official system. FGIS will notify the assigned OA in
writing upon receipt of the request for a nonuse of service exception.
At the completion of the process, FGIS will issue written notification
of the determination on the request to the applicant, the assigned OA,
and the gaining OA.
If an applicant submits a request that FGIS determines is false or
misleading, FGIS will not grant the nonuse of service exception and may
elect to limit the applicant from submitting further requests for a
period of up to 180 days.
A nonuse of service exception will remain in place during the
period of the gaining OA's designation. At the end of the designation,
FGIS will review current information concerning the exception. Unless
the applicant, the assigned OA, the gaining OA, and FGIS request to
terminate the exception, the FGIS will renew the exception for the
gaining OA's new designation period, if applicable. In the event the
gaining OA is no longer designated, the exception will automatically
terminate, and the applicant will return to the assigned OA. If the
applicant transfers ownership of its facility, the exception will
automatically terminate, and the new applicant/owner of the facility
must request a new nonuse of service exception, if it wishes to receive
service from an OA other than the assigned OA for that geographic area.
At any point in the designation cycle, if the applicant, the assigned
OA, the gaining OA, and FGIS agree to terminate the nonuse of service
exception, FGIS will terminate the exception. In this case, the
assigned OA must resume service within 60 days of notification.
FGIS recognizes there may be instances where granting an exception
may impact the assigned OA. For example, in some cases, the cost of the
equipment necessary to provide the requested service is more than the
assigned OA would be able to recoup, due to the infrequency of the
requests for such a special service. Therefore, as stated in the
proposed rule, FGIS is establishing a challenge process for requested
nonuse of service exceptions. The timeline for the challenge initiates
when FGIS notifies the assigned OA of the requested nonuse of service
exception. FGIS will consider factors provided by an assigned OA in
such challenge. Requests for a challenge must state and support the
identified reason for the challenge. FGIS may request additional
documentation to support the challenge.
Comment Summary and Analysis
AMS received a total of four comments on the proposed rule, one
from a State department of agriculture OA and three industry
associations. While generally supportive, three of the commenters
offered suggestions for improving or clarifying processes.
Comment: One commenter expressed support and congratulated FGIS on
the overall nature of the proposed rule. The commenter noted that
multiple revisions to the OA boundary exception provisions of the USGSA
and the FGIS regulations had created uncertainty among both applicants
and OAs for some time. The commenter suggested that the proposed rule
would accomplish FGIS's goal to create a clear, consistent, and fair
framework for considering and granting exceptions for customer needs
and offered no concerns or suggestions.
Comment: Comments from two associations recommended additional
procedural changes. The commenters urged FGIS to develop a template for
submitting exception requests due to an inability to provide timely
service and nonuse of service. The commenters stated that the template
should outline the necessary information for FGIS to review and process
the request, as well as identify the persons at FGIS and the respective
OAs that should receive the application. The commenters also suggested
that such template should be available online.
Further, the commenters recommended that FGIS and the assigned OA
be required to acknowledge receipt of the request and determine, within
12 hours, whether services can be provided by an alternate OA. The
commenters noted that although the proposed rule states that an
applicant can notify FGIS verbally or in writing to request a service
exception, it does not offer an alternative contact in the event the
applicant cannot reach a live person. Commenters recommended FGIS
provide a secondary contact option. The commenters also recommended
that the point of contact at the grain handling facility requesting the
service exception should be notified by verbal and written
communication regarding the decision on the request.
AMS response: In 2023, FGIS will create a web page with
instructions and templates for requesting designation service
exceptions due to the inability to provide timely service and nonuse of
service. For one-time, timely service exception requests, if the
request is made during customary business hours, FGIS will provide its
decision that day. FGIS will acknowledge receipt of the request in
writing, via any written form to include email or autogenerated
response. Notably, the newly designed regulations allow applicants to
proceed with one-time urgent timely service exception requests outside
of business hours without prior approval from FGIS to avoid a delay in
the marketing of grain.
Since urgent timely service exception requests submitted outside of
business hours can proceed without prior approval, AMS determined it is
not necessary to provide a second point of contact in the regulations.
Further, the request template is to be submitted to a group recipient
office inbox monitored by multiple staff. FGIS will make every effort
to issue its determination for 90-day and long-term timely service
exceptions within 15 business days, barring a challenge from the
assigned OA. To ensure the applicant's receipt of service is not
delayed, it may utilize the potential gaining OA while awaiting a final
determination from FGIS.
Regarding exception requests for nonuse of service, AMS has
determined not to include a 12-hour response time for such requests
because of the 14-day challenge period that has been established for
the assigned OA to challenge the exception request and the time
required for the FGIS to review the matter. AMS intends to reconcile
appropriate FGIS directives in conjunction with the release of this
rule. However, AMS has included wording in the regulations that
addresses the timeline.
Comment: An association asked AMS to explain, in the final rule or
in the FGIS Directive, who within the agency is responsible for
reviewing exception applications and whether applications would be
reviewed by more than one office.
AMS response: 7 CFR 800.0(b) clarifies that the Federal Grain
Inspection Service is referred to in the regulations as the
``Service.'' The Service administers the regulations pertaining to
Federal grain inspection, including those established by this final
rule. The request template will not further define the FGIS
representative responsible for receiving these requests as FGIS
organizational structure and staffing responsibilities can change
rapidly. This also ensures no undue external pressure is placed on an
individual staff member while allowing for AMS executives to be
consulted and apprised of individual situations. FGIS may have other
offices involved in decision making, as appropriate. FGIS
[[Page 27688]]
contact information is available on the FGIS website.
Comment: An association commented that, in some cases, an assigned
OA can be delayed in providing timely service due to weather conditions
over which it has no control. The commenter recommended that FGIS take
this factor into consideration and ``not penalize the OA if there is
another request from the same grain handling facility for a different
reason.''
AMS response: FGIS acknowledges that some situations requiring
timely service exceptions may be temporary and out of the control of
the assigned OA. Accordingly, FGIS will consider relevant factors
related to the reason(s) for the inability to provide timely service
during the decision-making process. As stated in the proposed rule, the
long-term exceptions may be cancelled by FGIS, in consultation with the
parties, if the issue that caused the lack of timely service has been
addressed.
Comment: A commenter recommended that nonuse of service exceptions
should be strictly limited to situations where the OA is unable to
provide the service requested by the facility in a timely manner. The
commenter asserted that allowing the requesting facility to receive a
nonuse of service exception for the sake of convenience or other
arbitrary or subjective reasons undermines the integrity of the grain
inspection system, as well as the purpose behind the designated
geographic boundaries. The comment supported adding a challenge process
to review newly requested and previously issued nonuse of service
exceptions. This commenter provided specific situational details
regarding four elevators.
AMS response: FGIS concurs that requests for exceptions should be
evidence-based and provide the assigned OA an opportunity to
demonstrate the ability to deliver timely service. The process takes
this need into account through a variety of factors in the revised
evaluation criteria that governs how exception requests will be
determined. Regarding the commenter's reference to the four applicants
that elected to return to out-of-State service providers, those
applicants were allowed to revert back to those service providers based
on their previously approved nonuse of service exceptions that were
reinstated in accordance with amendments to the USGSA.
Comment: A State department of agriculture comment suggested AMS
further clarify the definition of ``period of nonuse as 90 days'' in
the proposed rule. The commenter also asked AMS to specify what factor
determines the start of the 90-day period. The comment further
suggested that 120 days would be a more reasonable period for defining
nonuse, explaining that 120 days would give the assigned OAs sufficient
time to resolve staffing or equipment deficiencies, which, according to
the comment, have become more challenging in the last 18 months.
AMS response: FGIS will require an applicant to demonstrate,
through documentation, the last date of official inspection service
from the assigned OA. FGIS also believes that a period of 90 days
nonuse is reasonable and sufficient for establishing a period of
nonuse, prior to submission of a nonuse of service exception request
and accounting for review time. As a point of reference, the proposed
rule stated that the feedback on the number of days without official
service (for nonuse of service exceptions) had a wide range, from 30 to
180 days. As stated in the advanced notice of proposed rulemaking,
prior ranges allowed were between 90 to 180 days in length. A period of
90 days is within timeframes used for the nonuse of service exceptions
in the past and is a compromise based on timeframes suggested in the
public comments. FGIS also considered that during the time it takes
FGIS to review the request, the applicant must continue with nonuse of
service, so the period of nonuse will extend beyond the applicant's
original 90 days of nonuse. Due to the strictly defined timely service
exceptions criteria, FGIS believes most applicant issues will be
satisfied under that category. Allowing this full nonuse of service
time period enables the assigned OA additional time to work out any
service difficulty with its customer. Applicant requests that meet the
requirements of timely service exceptions, may be handled under the
timely service exception tiers.
Executive Orders 12866 and 13563
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 action has been determined to be not significant for the
purposes of Executive Order 12866, as supplemented by Executive Order
13563. The final rule is not expected to create any new material costs
for industry.
Baseline
Under the USGSA, the USDA regulates the inspection of barley,
canola, corn, flaxseed, mixed grain, oats, rye, sorghum, soybeans,
sunflower seed, triticale, and wheat. This rule impacts the 41 OAs that
provide USDA-regulated grain certification and the over 5,000
commercial entities they serve. In FY2021, OAs performed 3,150,029
grain inspections of 257.8 million metric tons of grain. Based on
current data, FGIS expects fewer than one percent of the entities
served by OAs to request and be granted exceptions under the two types
of exceptions detailed in this rule.
Official inspection costs represent a very small percentage of the
total value of grain shipments. In 2021, FGIS calculated the weighted
average costs for inspections for different carriers as follows: $18.68
for a semi-truck capable of carrying 58,000 pounds, $30.75 for a
railcar capable of carrying 220,000 pounds, and $316.90 for a barge
capable of carrying 3,000,000 pounds of grain. For example, if the
price of wheat was $8 for a 60-pound bushel, the cost of the inspection
would represent 0.24% of the revenue for a truck load, 0.11% of the
revenue for a railcar load, and 0.08% of the revenue for a barge load
of wheat.
Need for the Rule
Federally regulated grain inspection is designed to remedy two
competing sources of market failure--asymmetric information and market
power--while preserving the ability of small producers to access
markets. This rule increases the flexibility of the existing inspection
program without affecting the program's quality standards or the
ability of small sellers to access inspection services. The rule's
greater flexibility in allowing producers to obtain inspection
services, however, will save costs and provide them greater ability to
meet potential market opportunities and inspection challenges.
Many agricultural products, including grain, vary in important
quality characteristics due to both farm production decisions and
idiosyncratic factors. In the absence of a quality verification
process, sellers in a transaction may have more knowledge of a
product's quality than buyers, a condition called asymmetric
[[Page 27689]]
information. Akerlof (1978) showed asymmetric information can cause
economic inefficiencies in which producers forego investments that are
less costly to implement than the benefit they provide consumers.\7\
Third-party inspection that verifies a product's quality resolves this
source of market failure.
---------------------------------------------------------------------------
\7\ Akerlof, George A. ``The market for ``lemons'': Quality
uncertainty and the market mechanism.'' Uncertainty in economics.
Academic Press, 1978. 235-251.
---------------------------------------------------------------------------
Grain inspectors certify the protein content, kernel size, and
other quality factors related to product's market value to simplify
transactions. Since the outcome of grain inspections directly affects
the sale price, biases and inconsistences in inspection methods might
potentially redistribute the gains to trade from seller to buyer, or
vice versa. Market power might exacerbate biases and inconsistencies
if, for instance, large sellers or buyers can influence the outcome of
quality inspections in their favor. In addition to fairness concerns,
such opportunistic behavior creates economic inefficiencies by reducing
the returns on investment in quality improvement and creating costs for
downstream producers (i.e., bakers and food processors) expecting
products of certain quality.
Domestic grain inspection is an optional service. When information
asymmetries are a concern, inspection facilitates simpler, more rapid,
and less risky transaction of final product. By allowing producers to
recoup the costs of quality improvement, grain inspection also
encourages investment in quality improvement.
Under its regulatory authority, the USDA approves grain inspection
standards and monitors their uniform application by OAs in a variety of
ways, including inspection sample review, fee schedule approvals, and
periodic OA audits. To promote a competitive market for grain in which
all producers have access to inspection services, FGIS requires that
OAs provide inspection services to all producers in an assigned area
and regulates marketing fee schedules charged by OAs for these
services. FGIS approves rates to cover various labor, laboratory, and
travel costs and only approves differential rates across geographic
areas if the underlying costs differ across assigned regions. For this
reason, FGIS does not expect this rule to impact the price paid by
inspection users or the fees received by OAs. Instead, FGIS expects
this rule will allow the small fraction of inspection users who need
timely service and nonuse of service exceptions greater flexibility in
obtaining inspections services to meet immediate business requirements.
Benefits and Costs of the Rule
FGIS assesses the economic benefits of this rule as being three-
fold. First, the rule provides clarity to grain inspection applicants
(e.g., producers, elevators, merchandisers, etc.), as well as OAs,
regarding the terms under which exceptions are granted. Second, the
rule increases the options to producers, elevators, merchandisers,
etc., who require inspection services to market their grain. FGIS
expects that this option will be utilized by fewer than one percent of
applicants who need inspections services, quickly, but face service
constraints by OAs. Third, the rule may heighten attention to service
issues among OAs that have received nonuse of service exception
requests. The validation process FGIS will establish and maintain to
review all exception requests will ensure all granted requests are in
the best interest of the official system and confirm an exception will
not undermine the congressional policies in Sec. 2 of the USGSA. OAs
may offer additional services, such as a broader range of testing, as a
result.
FGIS does not ascribe any direct compliance costs to either OAs or
producers as a result of the potential increase for timely service and
nonuse of service exceptions under this rule. FGIS does not expect that
the inspection fees it approves will change as a result of this rule.
To the extent that this rule provides greater flexibility to how
applicants can obtain inspection services, it will provide improved
services or reduce total costs to producers by, for instance, allowing
those needing immediate inspections to get them from an OA other than
the one to which they are assigned. Moreover, FGIS does not believe the
rule will create significant indirect costs, aside from the minor costs
to market participants learning the rule and documenting exception
requests.
To the extent that some OAs conduct fewer inspections because
applicants in their assigned area have requested more exceptions, other
OAs will conduct more inspections. FGIS believes that any business
losses to an OA will be small and that any losses will be offset by
gains to other OAs. This rearrangement of business activity constitutes
a transfer of benefits from one OA to another and has a neutral effect
on total costs and benefits of the rule.
To summarize, FGIS believes that the total impact of the rule on
the grain inspection industry is not economically significant and that
the benefits of this rule exceed its costs, which are negligible.
Regulatory Flexibility Analysis
The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires
agencies to consider the impact of their rules on small entities and to
evaluate alternatives that would accomplish the objectives of the rule
without unduly burdening small entities when the rules impose a
significant economic impact on a substantial number of small entities.
This rule has an economic impact on farms selling grain that require
inspections (classified under North American Industry Classification
System, or NAICS, codes 111110, 111120, 111130, 111140, 111150, 111191,
111160, 111191, and 111199), grain elevators and grain certifiers that
conduct post-harvest crop activities (NAICS code 115114) and either
require or perform inspections. The Small Business Administration
considers grain farms to be small if their sales are less than $1
million and grain elevators and grain certifiers (OAs) to be small if
their sales are less than $30 million (13 CFR 121.201).
The AMS Administrator certifies that this rule does not have a
significant economic impact on small businesses. This determination is
made based on the expectation that any small entities requiring grain
inspection, including grain farms and grain elevators, or entities
performing grain inspection, including OAs, will see neither a change
in prices paid or fees charged nor a loss in access to inspection
services or change in territorial boundaries for which they can perform
inspections. Further, FGIS believes the new challenge process addresses
the concern that some small OAs may lose economic viability when
exceptions are granted to applicants under the exceptions to geographic
boundary requirement. Finally, AMS does not believe that OAs qualifying
as small business will be any more likely to be subject to exception
requests than those OAs not qualifying as small businesses.
Executive Order 12988
This rule has been reviewed under Executive Order 12988--Civil
Justice Reform. This rule is not intended to have retroactive effect.
The USGSA provides in sec. 87g that no State or subdivision thereof may
require or impose any requirements or restrictions concerning the
inspection, weighing, or description of grain under the Act.
This rule will not preempt any State or local laws, regulations, or
policies,
[[Page 27690]]
unless they represent 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.
Executive Order 13175
This rule has been reviewed in accordance with the requirements of
Executive Order 13175, Consultation and Coordination with Indian Tribal
Governments. Executive Order 13175 requires Federal agencies to consult
and coordinate with Tribes on a government-to-government basis on: (1)
Policies that have Tribal implications, including regulations,
legislative comments or proposed legislation; and (2) other policy
statements or actions that have substantial direct effects on one or
more Indian Tribes, on the relationship between the Federal Government
and Indian Tribes, or on the distribution of power and responsibilities
between the Federal Government and Indian Tribes.
AMS has assessed the impact of this rule on Indian Tribes and
determined that this rule will not have Tribal implications that
require consultation under Executive Order 13175. AMS hosts a quarterly
teleconference with Tribal leaders where matters of mutual interest
regarding the marketing of agricultural products are discussed.
Information about the proposed changes was shared during the quarterly
call on July 22, 2021, and Tribal leaders were informed about the
proposed revisions to the regulation and the opportunity to submit
comments. AMS received no questions or requests for additional
information or outreach. If requested, AMS will provide additional
support and information.
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 final
rule as not a major rule as defined by 5 U.S.C. 804(2).
Paperwork Reduction Act and E-Government Act
In compliance with the Paperwork Reduction Act of 1995 (44 U.S.C.
Chapter 35), there are no information collection and record keeping
requirements implications associated with this rule. Should any changes
become necessary, they will be submitted to OMB for approval.
USDA is committed to complying with the E-Government Act (44 U.S.C.
3601 et seq.) by promoting 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 800
Administrative practice and procedure, Exports, Grains, Reporting
and recordkeeping requirements.
For the reasons set forth in the preamble, AMS amends 7 CFR part
800 as follows:
PART 800--GENERAL REGULATIONS
0
1. The authority citation for part 800 continues to read as follows:
Authority: 7 U.S.C. 71-87k.
0
2. Amend Sec. 800.117 by:
0
a. Adding paragraph (b) introductory text;
0
b. Revising paragraph (b)(1);
0
c. Redesignating paragraphs (b)(2) and (3) as paragraphs (b)(3) and
(4), respectively; and
0
d. Adding a new paragraph (b)(2).
The additions and revisions read as follows:
Sec. 800.117 Who shall perform original services.
* * * * *
(b) Exceptions for official agencies to provide service. Under an
exception, an official agency may provide service to an applicant
outside of their geographic area. The Service may grant exceptions in
instances when: the assigned official agency is unable to provide
inspection services in a timely manner; a person requesting inspection
services in that geographic area has not been receiving official
inspection services from the official agency for that geographic area;
a person requesting inspection services in that geographic area
requests a probe inspection on a barge-lot basis; or, the assigned
official agency for that geographic area agrees in writing with the
adjacent official agency to waive the current geographic area
restriction at the request of the applicant for service. Excluding
requests for probe inspections on a barge-lot basis, applicants
requesting an exception must submit requests for a service exception to
the Service.
(1) Timely service. Service is not timely when an official agency
cannot provide the requested official services within 6 hours or cannot
provide the results and certificate in accordance with Sec.
800.160(c). Timely service exception requests will also be considered
for delays caused by weather events or for official services that the
assigned official agency does not offer. The applicant must submit a
request for a timely service exception to the Service. The applicant
may make this request orally or in writing. If the applicant requests a
timely service exception orally, the applicant must submit a written
request to the Service within two business days of the request. The
applicant must clearly state and support the identified reason for the
requested timely service exception. There are three consecutive tiers
of timely service exceptions: one-time, 90-day, and long-term.
Applicants requesting 90-day or long-term timely service exceptions
must progress through each previous tier sequentially. The Service will
review timely service exception requests and may contact the applicant,
the assigned official agency, or potential gaining official agency with
questions during its review.
(i) One-time. In the case of an assigned official agency's
inability to provide timely service, an applicant may be granted a one-
time approval to use another official agency for the associated pending
service request, as applicable.
(A) For one-time, timely service exception requests, if the request
is made during customary business hours, the Service will provide its
decision that day.
(B) If the applicant has an urgent timely service exception
request, outside of the Service's customary business hours, an official
agency from outside the geographic area may provide one-time service.
When providing an urgent service, the gaining official agency must
provide written notification to the Service within two business days
after service.
(C) Upon returning to official office hours, the Service will
review and verify the circumstances of the urgent request, as well as
its consistency with the U.S. Grain Standards Act and implementing
regulations.
(ii) 90-day. If there is an occurrence of untimely service within
180 days of the date of the occurrence in paragraph (b)(1)(i) of this
section, the applicant may request a 90-day timely service exception.
This 90-day window will begin the day the exception is granted.
(iii) Long-term. If there is an occurrence of untimely service
within 365 days after the applicant's return to service with the
assigned official agency, following an exception granted under
paragraph (b)(1)(ii) of this section, the applicant may request a long-
term timely service exception. When granting this exception, the
Service may continue the exception up to the date on which the gaining
official agency's designation terminates.
(iv) Supporting documentation. The applicant must submit a request
for a timely service exception to the Service.
[[Page 27691]]
This request may include any associated supporting documentation the
applicant feels is warranted. After receipt of the request, the Service
will provide the applicant, assigned official agency, and potential
gaining official agency an opportunity to submit any additional
information in support of the timely service exception request in
writing. The Service will request additional information, if needed.
(v) Review and verification. Except as provided in paragraph
(b)(1)(i) of this section, prior to granting a timely service
exception, the Service must review and verify information submitted
with the request. When a timely service exception request is received,
the Service will issue a written notification to acknowledge the
receipt of the request to the applicant, the assigned official agency,
and the potential gaining official agency. When possible, the Service
should also attempt to make oral contact.
(vi) Timeline. Once the applicant's request is received, the
Service will notify the applicant and begin the review timeline. The
Service will issue a determination within 15 business days for 90-day
and long-term timely service exceptions, barring a challenge from the
assigned official agency. While awaiting a final decision on 90-day and
long-term timely service exceptions, the applicant may receive service
from the potential gaining official agency.
(vii) Notification. The Service must notify the assigned official
agency in writing upon receipt of the request for a timely service
exception. At the completion of the request review process, the Service
will issue written notification of the determination on the request to
the applicant, the assigned official agency, and the gaining official
agency. When possible, the Service should also attempt to make oral
contact.
(viii) Challenge. The assigned official agency may challenge a
request for a timely service exception for any reason. To challenge a
request for a timely service exception, the assigned official agency
must object, in writing, and submit the challenge and any supporting
documents to the Service.
(A) Given the urgency of a one-time service request, if the
assigned official agency wishes to challenge the request, it must be
done in a manner which does not further delay the applicant from
receiving the pending service. If the one-time timely service exception
has already been granted or used, the assigned official agency may
still challenge the Service's determination within 14 calendar days.
(B) To challenge a 90-day or long-term timely service exception,
the assigned official agency must submit the challenge and any
supporting documents within 14 calendar days of the date of
notification of the timely service exception request. The documents
must clearly identify the objection and support the identified reason
for the challenge.
(ix) Determination. In the event the Service determines that the
assigned official agency is unable to provide official services in a
timely manner, the Service will grant a timely service exception.
(x) False or misleading requests. If an applicant submits a request
for a timely service exception that the Service determines to be false
or misleading, the Service will not grant the exception and may elect
to limit the applicant from submitting further requests for a period of
up to 180 days. If an urgent request for a timely service exception,
outside of customary business hours, was granted on the basis of a
false or misleading request, the Service may deny the applicant from
future timely service exceptions for a period of up to 180 days.
(xi) Return to the assigned official agency. The applicant
maintains the option of returning to the assigned official agency
within 60 days of notification of termination of the timely service
exception to all parties. The applicant must submit a written
notification requesting to terminate the timely service exception to
the Service, the assigned official agency and the gaining official
agency. The timely service exception will be cancelled, and future
timely service exception requests must be considered at the beginning
of successive-tiered system.
(xii) Termination. If the Service determines the assigned official
agency's inability to provide a specific service was limited due to
weather events or for official services that the assigned official
agency does (did) not offer, the cause of which has been resolved, the
Service, in consultation with all the parties, may terminate the 90-day
or long-term timely service exception. However, if the timely service
exception was associated with the official agency's inability to
provide service in 6 hours or less, or with its failure to issue the
results and certificate in a timely manner, then the Service might
elect not to terminate the timely service exception. The Service must
notify the applicant, the assigned official agency, and the potential
gaining official agency of all timely service exception termination
decisions in writing. The assigned official agency must resume service
within 60 days of notification.
(2) Nonuse of service exception. If an applicant has not received
official inspection services from the assigned official agency within
the last 90 days, the applicant may request, in writing, a nonuse of
service exception. Periods of nonuse resulting from timely service
exceptions will not qualify as part of a period of nonuse.
(i) Supporting documentation. Along with the request for an
exception, the applicant must submit supporting documentation pursuant
to paragraph (b)(2)(i)(A) of this section and may submit any additional
supporting material the applicant wishes to submit to the Service.
After receipt of the request, the Service will provide the applicant,
assigned official agency, and potential gaining official agency an
opportunity to submit any additional information in writing. The
Service will request additional information, if needed.
(A) Required information. The applicant's request for a nonuse of
service exception must include the following information:
(1) The last date of service from the assigned official agency;
(2) The reason service has not been received during this time
frame; and
(3) The identified reason for the request.
(B) Additional relevant information. Applicants may submit any
additional relevant supporting information. This may include, but is
not limited to:
(1) The location of the specified service need(s);
(2) The types of services requested by the applicant and offered by
the assigned official agency;
(3) The ability of the assigned official agency to provide the
requested service;
(4) Whether the applicant's facility has ever used the official
system; and
(5) The impact on the applicant in the event it continues with the
assigned official agency.
(ii) Review and verification. The Service will review the request
for a nonuse of service exception and supporting documentation, then
conduct any necessary analysis to estimate the exception's impact prior
to making a determination, as defined in paragraph (b)(2)(vi) of this
section. When the Service receives a nonuse of service exception
request, the Service will issue a written notification to acknowledge
the receipt of the request to the applicant, the assigned official
agency, and the potential gaining official agency.
(iii) Timeline. The Service will make every attempt to complete the
[[Page 27692]]
determination process in a timely manner, during which the applicant
must continue with nonuse of service. This time period will include the
allotted 14 calendar days in which the assigned official agency may
challenge the request. The Service may extend the determination
timeline when necessary.
(iv) Notification. The Service must notify the assigned official
agency in writing upon receipt of the request for a nonuse of service
exception. At the completion of the process, the Service will issue
written notification of the determination on the request to the
applicant, the assigned official agency, and the gaining official
agency. When possible, the Service should also attempt to make oral
contact.
(v) Challenge. The assigned official agency may challenge a request
for a nonuse of service exception for any reason. To challenge a nonuse
of service exception, the assigned official agency must object in
writing and must submit the challenge and any supporting documentation
to the Service within 14 calendar days from the date of notification
from the Service of receipt of the request for a nonuse of service
exception for the applicant. The documents must clearly identify the
objection and support the identified reason for the challenge.
(vi) Determination. The Service will consider impacts on the
applicant, the assigned official agency, and the potential gaining
official agency when deciding whether to grant a nonuse of service
exception. These impacts may include, but are not limited to, the
viability of the assigned official agency given the loss of business.
The Service will also consider the impact on the official system and
confirm a nonuse of service exception will not undermine the
congressional policies in section 2 of the United States Grain
Standards Act. The Service will provide its decision, in writing, to
the applicant, the assigned official agency, and the potential gaining
official agency. If approved, the applicant can receive service from
either the originally assigned official agency or the gaining official
agency.
(vii) False or misleading requests. If an applicant submits a
request that the Service determines is false or misleading, the Service
will not grant the nonuse of service exception and may elect to limit
the applicant from submitting further requests for a period of up to
180 days.
(viii) Renewal or termination of exception. The nonuse of service
exception is for the period of the gaining official agency's
designation. At the end of the designation, the Service will review the
nonuse if service exception and verify the information. Unless the
applicant, the assigned official agency, the gaining official agency,
and the Service all agree to terminate the nonuse of service exception,
the Service will renew the nonuse of service exception for the gaining
official agency's new designation period. In the event the gaining
official agency is no longer designated, the nonuse of service
exception will automatically terminate, and the applicant will return
to the assigned official agency. If the applicant transfers ownership
of its facility, the nonuse of service exception will automatically
terminate, and the new applicant/owner of the facility must request a
new nonuse of service exception to receive service from an official
agency other than the assigned official agency for that geographic
area. At any point in the designation cycle, if the applicant, the
assigned official agency, the gaining official agency, and FGIS jointly
agree to terminate nonuse of service exception in writing, the Service
will terminate the exception. In this case, the assigned official
agency must resume service within 60 days of notification that the
nonuse of service exception has been terminated.
(ix) Historic exceptions. All nonuse of service exceptions that
were in place as of March 30, 2019, and that are currently active as of
the date of effectuation of this rule, are incorporated within the list
of active nonuse of service exceptions.
* * * * *
Melissa Bailey,
Associate Administrator, Agricultural Marketing Service.
[FR Doc. 2023-08957 Filed 5-2-23; 8:45 am]
BILLING CODE P
</pre><script data-cfasync="false" src="/cdn-cgi/scripts/5c5dd728/cloudflare-static/email-decode.min.js"></script></body>
</html>Indexed from Federal Register on May 3, 2023.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.